Preview Questions Insolvency Specialist | Role Specific Skill

Question 1: What is the Insolvency Specialist's role in advising a client about asset exemptions under Chapter 13 bankruptcy?

Which action should you take?

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The lawyer should advise the debtor to liquidate all assets for debt repayment

Exemptions apply only if the debtor is in good standing with creditors

Exemptions are not allowed under Chapter 13

The lawyer must explain the state and federal exemptions available to the debtor and advise on how to protect certain assets from liquidation

Question 2: What is the "plan of liquidation" under Chapter 7, and how does it affect creditors?

Which action should you take?

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The plan of liquidation guarantees full repayment to all creditors, including unsecured creditors

The plan of liquidation outlines the process by which a debtor's assets will be sold and the proceeds distributed to creditors in order of priority

The plan of liquidation is a voluntary process and does not involve a court-appointed trustee

The plan of liquidation applies only to business bankruptcies and not to individuals

Question 3: What happens to the debtor's business operations during liquidation under insolvency law?

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The debtor is required to continue business for the purpose of satisfying creditor obligations

The debtor's business operations are generally suspended, and the liquidator takes over management of the assets

The debtor operates the business until a decision to sell is made

The debtor continues business as usual, while liquidation proceeds

Question 4: What is the importance of "valuation" in the corporate restructuring process?

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Valuation determines whether to liquidate or restructure, but does not impact creditor negotiations

Valuation applies only to publicly traded companies and is not relevant for private firms undergoing restructuring

Valuation determines the worth of a company's assets and liabilities, guiding the restructuring plan and helping creditors understand repayment feasibility

Valuation is irrelevant in restructuring, as it is a purely financial decision that does not affect operational changes

Question 5: What key documentation must be prepared and filed by an Insolvency Specialist when proposing a corporate restructuring plan under Chapter 11 bankruptcy?

Which action should you take?

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The lawyer must file only creditor claims and not the restructuring plan

The lawyer only needs to file the company's most recent balance sheet

The lawyer must file a detailed restructuring plan, disclosure statement, and schedule of assets and liabilities with the bankruptcy court

Only a summary of the debt obligations needs to be filed

Question 6: How does "asset preference" affect the distribution of proceeds in a liquidation case?

Which action should you take?

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Preference is given to employees over secured creditors

Asset preference applies only to individuals, not corporations

Assets are sold without regard to creditor priority, and all creditors share equally

Assets are distributed based on priority, with secured creditors paid first, followed by unsecured creditors and equity holders