Indicate whether each of the following is true or false. If an answer is false, explain why.
______ 1. Insolvency means that a debtor has more current liabilities than current assets.
______ 2. Voluntary bankruptcy petitions may be filed under either Chapter 7 or Chapter
11 of the Reform Act.
______ 3. If an insolvent debtor has more than 12 creditors, an involuntary petition must be signed by at least three of those creditors.
______ 4. Unsecured creditors with priority will receive full satisfaction before secured
creditors are paid.
______ 5. Either a debtor or its creditors may file a petition for reorganization under Chapter 11 of the Reform Act.
______ 6. In a reorganization involving a transfer of assets, the debtor will recognize a gain on restructuring measured by the excess of the carrying value of the payable settled over the book value of the assets transferred.
______ 7. Restructuring gains that arise from troubled debt restructurings are reported by the debtor as extraordinary gains.
______ 8. The statement of affairs is a report designed to estimate the amount expected to be earned by a debtor company during the time period needed to complete a re-organization.