Which of the Following Statements Is False

question 98

Multiple Choice

Which of the following statements is false?

• A) The direct costs of bankruptcy are likely to be higher for firms with more complicated business operations and for firms with larger numbers of creditors, because it may be more difficult to reach agreement among many creditors regarding the final disposition of the firm's assets.
• B) In a prepackaged bankruptcy (or "prepack") a firm will first develop a reorganization plan with the agreement of its main creditors, and then file Chapter 7 to implement the plan and pressure any creditors who attempt to hold out for better terms.
• C) A study of Chapter 7 liquidations of small businesses found that the average direct costs of bankruptcy were 12% of the value of the firm's assets.
• D) Studies typically report that the average direct costs of bankruptcy are approximately 3% to 4% of the pre-bankruptcy market value of total assets.

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Definitions:

Enabling Legislation

Statutory laws that provide the necessary authority for a government body or agency to implement or enforce specific laws or regulations.

Animal Protection Commission

A governmental or regulatory body responsible for enforcing laws and regulations that ensure the welfare and protection of animals.

Congressional Powers

The specific legal authorities granted to the United States Congress by the Constitution, including taxation, regulation of commerce, and the declaration of war.

Customs Service

A government agency responsible for regulating the importation and exportation of goods, including the collection of tariffs and the enforcement of trade laws.