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Practice Final Summer 2009 Test

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5 Written Questions

5 Matching Questions

  1. 12. The Frog Inc. saga continues. Frog Inc. wants to retain its current French-socialist management during the bankruptcy proceedings. Although current management has missed the dietary changes of Americans to modern types of cuisine, management has not engaged in fraud nor wasted corporate assets. All managers agrees to obtain M.B.A. degrees from USC and become capitalist imperial dogs. They also agree to go to Charm School for one year. Management is therefore allowed to remain in place during the bankruptcy under which of the following doctrines?

    A. Reaffirmation contract
    B. Executory contract
    C. Lien release
    D. Debtor in possession
    E. Cram down
  2. 16. To keep up with the times, Frog Inc. converts its snooty high-end expensive and saucy French restaurants to French fast food restaurants serving "American Fries." However, the Depression of 2006-2012 hits and no one wants to pay to eat at fast food French restaurants. Frog Inc. is heading toward bankruptcy. This time Frog Inc. wants to surrender (hey, they are French!) and just give up and quit. This time what type of bankruptcy should Frog Inc. file?

    A. Chapter 7
    B. Chapter 9
    C. Chapter 11
    D. Chapter 12
    E. Chapter 13
  3. 3. Quart-Size is a rapper whose rap is no longer rapping. The sales of Quart-Size's CDs are now quart-size, so on August 1, 2009 Quart-Size files for bankruptcy. Quart-Size does not qualify for a Chapter 7 bankruptcy, so he files for and is granted a Chapter 13 bankruptcy. A five-year payment plan is approved by the Bankruptcy Court. Which of the following is true?

    A. Quart-Size receives a discharge on his debts on August 1, 2009
    B. Quart-Size must pay his disposable income during the five- year payment plan to a trustee, who distributes the money to Quart-Size's creditors
    C. Quart-Size receives a discharge on his debts on August 1, 2014, if all the payments from his disposable income have been paid as required by the payment plan
    D. A and B
    E. B and C
  4. 9. Securities sold pursuant to the intrastate offering exemption are "restricted" securities (cannot be sold to out-of-state purchasers) for what period of time?

    A. Six months
    B. Nine months
    C. One year
    D. Two years
    E. Three years
  5. 8. Bree, Gaby, Eddie, and Lynette form "Wisteria Lane LLC" which operates a home catering service and provides food, flower, photography, and other services for weddings. It is a member-managed LLC. Which of the following is true?

    A. Bree can bind the LLC to contracts with third parties
    B. Bree can compete with the LLC by offering her own wedding planning and production services
    C. Bree has the right to participate in the management of the LLC
    D. A and C
    E. A, B, and C
  1. a A. Chapter 7
  2. b D. Debtor in possession
  3. c D. A and C
  4. d E. B and C
  5. e B. Nine months

5 Multiple Choice Questions

  1. D. Licensing
  2. C. Price fixing
  3. A. You are not liable for violating Section 10(b)
  4. A. Executory contract
  5. C. Chanel, Prada, Louise Vuitton, and Gucci have engaged in legal conscious parallelism

5 True/False Questions

  1. 24. The "Howey test" is used to determine whether a sale of something is an "investment contract" and therefore a security that is subject to federal securities laws. Which of the following is not an element of the Howey test?

    A. Expect to make profits off the significant effort of others
    B. Investment of money
    C. Common enterprise
    D. Oil, gas, and mineral interest
    E. None of the above
    C. Chain-style


  2. 33. General Motors Corporation files for Chapter 11 bankruptcy. Which of the following may be accomplished in a Chapter 11 bankruptcy?

    A. Automatic stay of secured debt
    B. Partial discharge of unsecured debt
    C. Rejection of executory contracts and leases
    D. All of the above.
    E. A and C
    A. Executory contract


  3. 32. Which antitrust law makes price discrimination illegal?

    A. Section 1 of the Sherman Act
    B. Section 2 of the Sherman Act
    C. Section 2 of the Clayton Act
    D. Section 3 of the Clayton Act
    E. Section 7 of the Clayton Act
    D. A and C


  4. 14. In 2004, Tube bought a house on the beach in Malibu, California for $500,000 in order to be closer to the waves so he can surf more often. Tube paid $100,000 cash and borrowed $400,000 in a first loan from Wells Fargo Bank secured by his Malibu house. In 2009, Tube, because he is surfing all of the time and makes no money, defaults on the loan and files and qualifies for Chapter 7 bankruptcy. Because of the 2006-2012 Depression in California, Tube's house is only worth $200,000 at the time of default. Wells Fargo Bank receives the house in bankruptcy and sells the house for $200,000 to Patience. Which of the following is (are) true?

    A. Wells Fargo Bank properly sold the house to Patience
    B. Wells Fargo Bank becomes an unsecured creditor in the bankruptcy proceeding for $200,000
    C. Wells Fargo Bank would be able to recover a deficiency judgment for $200,000 against Tube
    D. A and B
    E. A, B, and C
    D. B and C


  5. 6. (from the book) and, the two largest online book retailers in the world, together lobby Congress to pass a new federal statute requiring online book retailers to offer a minimum of 3 million titles from their company web sites in order to remain in business. Smaller book retailers who want to sell books online sue and for allegedly violating Section 1 of the Sherman Act by engaging in an unlawful restraint of trade. What defense should the defendants raise?

    A. Unilateral refusal to deal
    B. Conscious parallelism
    C. Noerr doctrine
    D. Failing company doctrine
    E. Small company doctrine
    B. Rule 144A


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