Business Law, 8e: Chapter 28

Chapter 28
Bankruptcy:

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1. Jurisdiction over bankruptcy proceedings is vested in the federal district courts.: a. True
b. False

2. Usually, unsecured creditors receive most of what they are owed in a Chapter 7 bankruptcy.: a. True
b. False

3. Banks and Insurance companies can file for Chapter 7 bankruptcy protection.: a. True
b. False

4. The debtor automatically obtains an order of relief when she files a voluntary bankruptcy petition.: a. True
b. False

5. A consumer debtor must be insolvent or "broke" to file for bankruptcy.: a. True
b. False

6. In order to be involuntarily petitioned into a Chapter 7 bankruptcy, the debtor must not be paying his or her debts as they come due, or must have appointed a receiver, or must have made a general assignment for the benefit of his or her creditors.: a. True
b. False

7. The filing of a bankruptcy operates as an automatic stay on legal actions involving the debtor.: a. True
b. False

8. Chapter 13 bankruptcy is available to both corporations and individual persons.: a. True
b. False

9. A preferential transfer is a payment made to an existing creditor in excess of what would have been received in a Chapter 7 liquidation.: a. True
b. False

10. The trustee may set aside transfers of debtor's property made within six months of the filing of the petition if the transfer was made to defraud creditors.: a. True
b. False

11. A bankruptcy trustee is generally responsible for representing the interests of:: a. the debtor.
b. the unsecured creditor.
c. the secured creditor.
d. All of the above.

12. Voidable preferences to someone who is not an insider can be set aside if made up to how long before the bankruptcy petition was filed?: a. 1 year.
b. 90 days.
c. 120 days.
d. 6 months.

13. Fidiorligi has ten creditors. One creditor, Gudinov, signs a petition for the involuntary bankruptcy of Fidiorligi. Fidiorligi owes Gudinov $7,000, of which $4,000 is secured by collateral. If Gudinov is able to convince only one of Fidiorligi's following creditors to join him in the petition, which one will be sufficient to satisfy the requirements of Chapter 7?: a. Aida, who is owed $15,000, $3,000 of which is secured by collateral.
b. Figaro, who is owed $7,000, $1,000 of which is secured by collateral.
c. Sorastro, $6,000, none of which is secured by collateral.
d. Gudinov would be unsuccessful regardless of which creditor joined him.

14. Which of the following debts is not dischargeable in bankruptcy?: a. judgments based on negligence
b. judgments based on breach of contract
c. judgments for willful and malicious injuries
d. judgments in which the creditors would receive no distribution

15. Which of the following would be deemed a voidable preference if made by an insolvent debtor?: a. a transfer to pay for a new debt or obligation.
b. a transfer to pay for a debt arising in the ordinary course of business.
c. a transfer involving the payment of a purchase money security interest.
d. a transfer as payment in full of a fully unsecured debt.