Which of the Following Statements Is FALSE

question 46

Multiple Choice

Which of the following statements is FALSE?

• A)The creditors must vote to accept the Chapter 11 reorganization plan,and the bankruptcy court must approve it.If an acceptable plan is not put forth,the court may ultimately force a Chapter 7 liquidation of the firm.
• B)In Chapter 13 liquidation,a trustee is appointed to oversee the liquidation of the firm's assets through an auction.The proceeds from the liquidation are used to pay the firm's creditors,and the firm ceases to exist.
• C)When a corporation becomes financially distressed,outside professionals,such as legal and accounting experts,consultants,appraisers,auctioneers,and others with experience selling distressed assets,are generally hired.
• D)In the case of Chapter 11 reorganization,creditors must often wait several years for a reorganization plan to be approved and to receive payment.

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Definitions:

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows additional funds.

Payments

Transactions wherein money is transferred from one party to another, typically in exchange for goods or services.

Borrowing Rate

The interest rate applied to loans and borrowings taken by a company or an individual.

Note Payable

A written promise to pay a certain amount of money, usually with interest, at a future date or over a period of time.