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Shoe Sunshine, Inc. filed for bankruptcy protection under Chapter 11 and submitted a plan of reorganization within 120 days after filing for relief. Two of the classes of creditors voted against the plan. However, the bankruptcy judge considered the plan to be feasible, fair, and in the best interests of the creditors; the judge approved it in spite of these creditors' objections. This action by the judge is called a "cramdown."

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Bankruptcy is regulated by federal law.

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Which of the following is a primary goal of the Bankruptcy Code?


A) to preserve as much of the debtor's property as possible
B) to pay off the debtor's creditors as quickly as possible
C) to secure debt counseling for the debtor
D) to keep the debtor from falling behind in payments

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Alimony and child support obligations are considered priority claims.

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Debts that cannot be discharged in bankruptcy include all EXCEPT


A) money owed for alimony.
B) income taxes for 3 years prior to filing.
C) money owed to utility companies.
D) money obtained fraudulently.

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Jun-seo owes $20,000 in unsecured claims to 15 different creditors, and he has generally not been paying debts that are due. Two of Jun-seo's creditors want to force him into bankruptcy by filing an involuntary petition; the other creditors do not agree. Which of the following statements is correct about this situation?


A) An involuntary petition cannot be filed because Jun-seo is not that deeply in debt.
B) An involuntary petition cannot be filed because not enough creditors want to force Jun-seo into bankruptcy.
C) An involuntary petition can be filed because Jun-seo is not making his payments in a timely way.
D) An involuntary petition can be filed because any one of Jun-seo's creditors can force him into bankruptcy.

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Karen has filed for bankruptcy. Who has the authority to confirm or reject a plan of payment, and what factors will be considered when deciding whether to approve a repayment plan under Chapter 13?

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The court has the sole authority to conf...

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Which is an example of a priority claim?


A) alimony
B) income tax
C) child support
D) All of these are correct.

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Creditor claims are divided into classes, and the highest class must be satisfied in full before going to the next category.

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Artistic Framing, a business with $120,000 of unsecured debt, needs to file for bankruptcy but wants to continue in business. Discuss what chapter of the Bankruptcy Code should be used, and explain the plan of reorganization that should be used.

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If Artistic wants to continue in busines...

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Andy's business is not able to pay its debts, and the prospects for its finances to improve are slim. Andy decides not to continue the business. In this case, Andy should file a voluntary petition for which type of bankruptcy?


A) Chapter 7.
B) Chapter 11.
C) Chapter 13.
D) Chapter 12.

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In Chapter 11 bankruptcy, only the debtor may propose plans of reorganization.

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When Dudley files his Chapter 7 petition, he lists the following debts: a. $25,000 in back child support and alimony b. $15,000 for liabilities incurred after drinking and driving c.$10,000 for past-due student loans d.$5,000 for past-due rent to his landlord e. $550 for a past-due phone bill How will each of these debts be treated by the bankruptcy court.

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Certain debts are never discharged, and ...

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A trustee can void any transfer that meets all of the following requirements EXCEPT


A) if the transfer was to a creditor of the debtor.
B) if the pre-petition payment was made in the ordinary course.
C) if the transfer was used to pay an existing debt.
D) if the debtor's liabilities exceeded assets at the time of the transfer.

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Which of the following statements concerning a Chapter 11 reorganization plan is true ?


A) A reorganization plan will be confirmed by the court only if a majority of each class of creditors votes in favor of the plan.
B) A reorganization plan can be confirmed by the court over objections of some creditors if the court determines that the plan is feasible and fair.
C) Only the bankruptcy court has the authority to confirm or reject the reorganization plan. Creditors do not have a right to vote on the plan.
D) A reorganization plan binds only the debtor and not the creditors.

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Under what circumstances might the court reject a debtor's Chapter 13 plan?


A) The plan requires future earnings to pay off debts.
B) The plan promises to pay all secured and priority claims.
C) The plan anticipates paying the unsecured creditors less than what they would get under Chapter 7.
D) The plan treats all unsecured classes equally.

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In a voluntary petition, a claim of exemptions lists


A) the names and addresses of all creditors.
B) all assets that the debtor is entitled to keep.
C) the debtor's job, income, and expenses.
D) the debtor's assets and debts.

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What is the "gap period"?


A) the period between the time a debtor files for bankruptcy and the time that he is granted discharge
B) the period of time that creditors must wait to be paid once a plan of payment is approved
C) the period between the time that a creditor files for an involuntary petition and the court issues the order for relief
D) the period between the time a debtor files for bankruptcy and the time that the plan of payment is approved

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Francesca cannot serve as a trustee in a bankruptcy case because she is not a lawyer.

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Mark and Cynthia work for Bryson Supply Co. If the company files for Chapter 7 bankruptcy before paying their last month of wages and benefits, will they be able to recover anything from the company?

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One goal of the Bankruptcy Code is to en...

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