Empirical Evidence Indicates That the Majority of Distressed Public Firms

question 9

Multiple Choice

Empirical evidence indicates that the majority of distressed public firms that do not remain public:

• A)file for Chapter 11 bankruptcy (reorganization).
• B)file for Chapter 7 bankruptcy (liquidation).
• C)are acquired.
• D)undergo a going-private transaction (i.e., a buyout).

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Definitions:

Authentic

Genuine, original, and not a copy or imitation; true and accurate.

Consideration

Something of value that is exchanged between parties in a contract, making the agreement legally binding.

Personal Defense

A defense that can be used to avoid payment to an ordinary holder of a negotiable instrument but not a holder in due course (HDC) or a holder with the rights of an HDC. Personal defenses are also called limited defenses.

HDC

Stands for Holder in Due Course, referring to a party that has acquired a negotiable instrument for value, in good faith, and without notice of any defects.