Preview Questions Debt Restructuring Lawyer | Role Specific Skill

Question 1: In corporate insolvency, what is the primary benefit of a "pre-packaged bankruptcy" for a company?

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It requires the company to sell off all its assets immediately

It allows for a faster restructuring process by having a plan in place before filing

It ensures that creditors are paid in full before the bankruptcy case is filed

It forces creditors to accept lower repayment terms immediately

Question 2: Under the Bankruptcy Code, how are "priority claims" treated in a corporate insolvency proceeding?

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They are given equal priority with secured claims

They are paid only after all secured claims and administrative costs are satisfied

They are treated the same as unsecured claims

They must be paid before general unsecured claims, but after secured claims

Question 3: How should a lawyer manage "subordination agreements" during debt restructuring, and what factors should be considered when negotiating such agreements between creditors?

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Subordination agreements should prioritize senior creditors regardless of circumstances

Subordination agreements should be ignored if the debtor has positive equity

Subordination agreements determine the order in which creditors are paid; the lawyer should ensure that these agreements reflect the financial reality of the debtor

Subordination agreements are only relevant if the debtor is in default

Question 4: How can a debt restructuring lawyer use "financial distress signals" to shape the negotiation strategy, especially when creditors may be unwilling to make significant concessions?

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Financial distress signals should only be discussed after reaching a restructuring agreement

Financial distress signals, such as liquidity problems or impending defaults, can help the lawyer identify critical issues early and focus negotiations on preserving value for all stakeholders

Financial distress signals only apply in consumer debt restructuring cases

Financial distress signals are irrelevant as long as the debtor maintains operations

Question 5: What is the role of "preference claims" in a corporate insolvency proceeding?

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They are claims from creditors who have provided new financing

They are claims for payments made to creditors within a certain time frame before filing bankruptcy

They are claims related to the debtor's ongoing operations

They are claims for the debtor's unpaid wages and benefits

Question 6: What happens to a creditor's claim in bankruptcy if they fail to file a proof of claim by the deadline?

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The creditor's claim may be disallowed and they may not receive any payment

The creditor's claim will be automatically reduced by the court

The creditor can continue to pursue collection efforts independently

The creditor's claim will be reassigned to another party