A Creditor of an Insolvent Corporation Is Unable to Seek

question 51

Multiple Choice

A creditor of an insolvent corporation is unable to seek redress for its losses from the company's shareholders.How will the law discern this outcome?

• A) as limiting the perpetual existence of a corporate entity
• B) as eminently unjust to the creditor
• C) as just if the creditor was also a shareholder of the corporation
• D) as perfectly legitimate and eminently just

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Definitions:

Financing Activity

Activities that result in changes in the size and composition of the equity capital or borrowings of a company.

Long-term Loan

A loan with a repayment period typically extending beyond one year, used for financing significant investments or acquisitions.

Office Supplies

Items and materials used in offices for daily operations, such as paper, pens, and binders.

Partnership

A certified business model where two or more co-owners share in the management and the financial gains.