Try the fastest way to create flashcards

CH.13 --> Bankruptcy

Get a hint

What are the objectives of the bankruptcy laws in the U.S.?

Click the card to flip 👆

1 / 39

1 / 39

Students also viewed

Ch. 13 Study Questions

27 terms

28 terms

Assignment: Case Problem Analysis 15.1: Identifying the Facts & Issues

11 terms

Unit 3 Call to discipleship

14 terms

18 terms

Jewish Halachic Works

15 terms

SIE - Unit 2 flashcards

38 terms

Customer Accounts: Margin Rules

68 terms

CRJS 181 Courts Exam

67 terms

Chapter 8 Terms

31 terms

Terms in this set (39)

What are the objectives of the bankruptcy laws in the U.S.?

Distribute assets fairly and discharge honest debtors from their obligations

A companys management has uncovered events that indicate that substantial doubt exists that the company can pay its debts as they come due over the following year. What should management do next?

Management should examine the plans created to address the concern.

A companys management has uncovered events that indicate that substantial doubt exists that the company can pay its debts as they come due over the following year. Management studies the plans created to address this risk. How can the company avoid disclosing that this substantial doubt exists?

Disclosure of the substantial doubt is required regardless of the availability of the plans.

In bankruptcy, which of the following statements is true:

a. An order for relief results only from a voluntary petition.

b. Creditors entering an involuntary petition must have debts totaling at least $21,625

c. Secured notes payable are considered liabilities with priority on a statement of affairs.

d. A liquidation is referred to as a Chapter 7 bankruptcy, and a reorganization is referred to as a Chapter 11 bankruptcy.

d. A liquidation is referred to as a Chapter 7 bankruptcy, and a reorganization is referred to as a Chapter 11 bankruptcy.

The jackson company is to be liquidated as a result of bankruptcy. Until the liquidation occurs, on what basis are its assets reported:

Net Realizable Value

An involuntary bankruptcy petition must be filed by

Unsecured creditors with total debts of at least $15,775

Order for Relief creates an automatic stay that...

Prohibits creditors from taking action to collect from an insolvent company without court approval.

On statement of financial affairs, how are liabilities classified?

Secured & Unsecured

What is Going Concern?

Basic assumption that a business will remain in business

What is an insolvent business?

Unable to pay debts - they either...

1) Cease to exist
2) file bankruptcy

Bankruptcy Reform Act of 1978 2 goals

1) Fair distribution of assets to creditors
2) Discharge of an honest debtor from debt

What is involuntary bankruptcy

Creditors file petition with the court

Can force company into liquidation under chapter 7 or chapter 11

Voluntary Bankruptcy

Company files petition w/ courts requesting bankruptcy

When facing prospect of severe losses or a difficult operating environment, companies will seek voluntary Chapter 11

Criteria for forcing involuntary bankruptcy when there are 12 or more unsecured creditors

1) at least 3 must sign

2) Those who sign must have total unsecured debt of at least $15,325

Criteria for forcing involuntary bankruptcy when there are less than 12 unsecured creditors

1) Only 1 must sign petition

2) Minimum debt limit remains 15,325