5 Written Questions
5 Matching Questions
- 11. Frog Inc., a chain of over 500 fancy and expensive French restaurants located throughout the United States, has failed to keep up with the times. Its snooty restaurants with snooty waiters serving snooty food now have financial statements that are the same color as the restaurant chain's red mahogany booths and red décor. Frog Inc. needs time to redecorate, change its menu to fast food French cuisine, and reinvent itself as a viable "going concern" that serves "American Fries." You are Frog Inc.'s attorney. What type of bankruptcy should Frog Inc. file for?
A. Chapter 7
B. Chapter 9
C. Chapter 11
D. Chapter 12
E. Chapter 13
- 20. Smork, a USC freshman majoring in chemistry, invents a new body cream that, if rubbed on the skin, sucks out the body fat from that location; it is non-surgery liposuction. With this cream a user can "spot" the area that needs a little thinning, rub some cream on that area, and the fat disappears! Smork names the cream "LIFO "("last in, first off") and names his new corporation that will produce the cream LIFO, Inc. The potential for LIFO is tremendous as the phone rings off the hook with calls from Oprah, Monica, Allie, Rosey, et al. LIFO, Inc. is planning on going public and is preparing the materials to file its registration statement with SEC. What can LIFO Inc. not do during the prefiling period?
A. Make offers to sell its securities
B. Sell its securities
C. Condition the market
D. B and C
E. A, B and C
- 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
- 23. Planet Hollywood, Inc., a chain of over 100 restaurants worldwide, has failed to keep up with the times. Its financial statements now are now in the same shape as the restaurant chain' décor. Planet Hollywood needs time to redecorate, change its menu, and reinvent itself as a viable "going concern," Planet Hollywood files for chapter 11 Bankruptcy. Planet Hollywood has $100 million in unsecured debt but wants to come out of bankruptcy with only $40 million of unsecured debt. Planet Hollywood files a plan of reorganization in which it proposes to do away with $60 million of unsecured debt. Is this possible?
A. Yes, under the automatic stay rule
B. Yes, under partial discharge
C. Yes, under executory contract
D. No, no unsecured debt can be reduced under a Chapter 11 bankruptcy
E. No, unless Planet Hollywood proves "undue hardship"
- 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
- a D. All of the above.
- b E. A, B and C
- c B. Nine months
- d C. Chapter 11
- e B. Yes, under partial discharge
5 Multiple Choice Questions
- C. Misappropriation theory
- E. None of the above
- C. Noerr doctrine
- D. Ally is not liable because she has not breached a duty of loyalty by competing with MatchmakingLA.com
- E. A and C
5 True/False Questions
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. A and B
35. Under federal securities law, the Securities and Exchange Commission (SEC) can obtain a civil penalty up to _________ times the illegal profits gained by insider trading.
E. ten → C. three
19. Chanel, Prada, Louis Vuitton, and Gucci, all snotty, high-end and expensive fashion designers of fashion designer clothes, each individually decide that they will not sell their own snotty, high-end, and expensive fashion designer clothes to Wal-Mart, Target and Costco, all discount retailers, because the proletariat Wal-Mart, Target and Costco are not the suitable outlets to sell the designers' bourgeois snotty, high-end, and expensive fashion designer clothes. Wal-Mart, Target and Costco sue Chanel, Prada, Louise Vuitton, and Gucci for violating Section 1 of the Sherman Act by engaging in an unreasonable restraint of trade. Which of the following is (are) true?
A. Chanel, Prada, Louise Vuitton, and Gucci have engaged in an illegal group boycott
B. Chanel, Prada, Louise Vuitton, and Gucci have engaged in an illegal division of markets
C. Chanel, Prada, Louise Vuitton, and Gucci have engaged in legal conscious parallelism
D. Chanel, Prada, Louise Vuitton, and Gucci have engaged in an illegal price discrimination
E. A and D → A. Chapter 7
22. In the United States, Starbucks Coffee Shops are owned by the Starbucks Corporation. However, Starbucks Corporation decides to open Starbucks Coffee Shops in China. To do so, Starbucks Corporation grants the Sino Corporation, a Chinese corporation, a franchise to select and grant local franchises to owners that Sino Corporation selects throughout China. What type of franchise arrangement exists between Starbucks Corporation and Sino Corporation?
A. Processing plant franchise
B. Distributorship franchise
C. Distributorship franchise
D. Area franchise
E. Local franchise → A. You are not liable for violating Section 10(b)
40. On August 1, 2009, Ethel qualifies for and files a voluntary petition for bankruptcy under Chapter 7. Her petition for Chapter 7 bankruptcy is accepted by the Bankruptcy Court and the Chapter 7 bankruptcy proceedings begin. On November 1, 2009, Ethel's Grandmother dies and Grandmother leaves her entire $1,000,000 fortune to Ethel. Which of the following is true?
A. Ethel can keep all of the money
B. The money becomes property of the bankruptcy estate
C. One-half of the money becomes property of the bankruptcy estate
D. One-third of the money becomes property of the bankruptcy estate
E. None of the above → C. Stewie would be able to exempt $125,000 for his house