Which of the Following Statements Is FALSE

question 8

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:

Driving Forces

Factors that motivate and influence the direction of change or progress within an organization or individual.

Urgency

Describes a situation or condition that requires immediate action or attention, often associated with a sense of pressing need or priority.

Saving Face

The desire or action to avoid embarrassment or preserve reputation and dignity in social contexts, often influencing decision-making and behavior in organizational settings.

Resistance To Change

Resistance to change is the opposition or pushback from individuals or groups within an organization when they perceive that a change might threaten their status, job security, or work habits.