Which One of the Following Statements Related to Chapter 7

question 57

Multiple Choice

Which one of the following statements related to Chapter 7 bankruptcy is correct?

• A)A firm in Chapter 7 bankruptcy is reorganizing its operations such that it can return to being a viable concern.
• B)Under a Chapter 7 bankruptcy, a trustee will assume control of the firm's assets until those assets can be liquidated.
• C)Chapter 7 bankruptcies are always involuntary on the part of the firm.
• D)Under a Chapter 7 bankruptcy, the claims of creditors are paid prior to the administrative costs of the bankruptcy.
• E)Chapter 7 bankruptcy allows a firm to restructure its equity such that new shares of stock are generally issued prior to the firm coming out of bankruptcy.

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Definitions:

Implicit Marginal Tax Rate

The rate at which additional income is taxed, including the loss of government benefits or subsidies as income rises.

Food Stamp Benefits

Government-provided assistance to individuals and families with low income to help them afford groceries, officially known as the Supplemental Nutrition Assistance Program (SNAP).

Medicaid Benefits

The range of healthcare services covered by Medicaid, a government program that assists with medical costs for individuals with limited income and resources.

Poverty Incidence

The frequency or rate at which individuals or households fall below the poverty line, measuring the spread of poverty in a population.