Ajax Corp Recently Entered Bankruptcy Proceedings During Which the Court

question 147

Multiple Choice

Ajax Corp recently entered bankruptcy proceedings during which the court decided the firm should be liquidated. Just before the bankruptcy filing, the firm's owners transferred most of its remaining assets into their own names without paying the company anything for them. Creditors are now claiming that those assets should rightfully be used to satisfy their claims. Which of the following is true?

• A)The assets can be recovered by the trustee in bankruptcy for the benefit of the creditors.
• B)The creditors are out of luck since the assets were legally transferred before the bankruptcy filing.
• C)The creditors can sue the owners for the assets in a separate court proceeding, but it will be expensive and time consuming to do so.
• D)The transfer will stand if it was done in accordance with the rules for prefilling transfers established in Chapter 11 of the bankruptcy code.

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