Which of the Following Statements Is FALSE

question 42

Multiple Choice

Which of the following statements is FALSE?

• A)According to the provisions of the 1978 Bankruptcy Reform Act,U.S.firms can file for two forms of bankruptcy protection: Chapter 11 or Chapter 13.
• B)The Chapter 11 reorganization plan specifies the treatment of each creditor of the firm.In addition to cash payment,creditors may receive new debt or equity securities of the firm.The value of cash and securities is generally less than the amount each creditor is owed,but more than the creditors would receive if the firm were shut down immediately and liquidated.
• C)In the more common form of bankruptcy for large corporations,Chapter 11 reorganization,all pending collection attempts are automatically suspended,and the firm's existing management is given the opportunity to propose a reorganization plan.
• D)While developing a Chapter 11 reorganization plan,management continues to operate the business.

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Definitions:

Ownership Interest

A legal or beneficial right of possession or control over property, giving the holder certain enforceable rights.

Corporate Stock

Shares representing ownership in a corporation, with holders often entitled to receive dividends and vote on corporate matters.

Shareholder

A person or entity that owns part of a company through the possession of one or more shares of its stock.

Director

A person elected by the shareholders to direct corporate affairs.