Question
A business corporation is insolvent, i.e., from a balance sheet perspective its debts exceed its assets, and it files a Petition in Bankruptcy Court requesting
A business corporation is insolvent, i.e., from a balance sheet perspective its debts exceed its assets, and it files a Petition in Bankruptcy Court requesting a Chapter 7 bankruptcy and (as a part of the Chapter 7 bankruptcy) a discharge of of all its debts.However, the Bankruptcy Trustee determines (and the Judge hearing the case agrees) that the Petitioner owns (relative to its debts or liabilities) fairly substantial assets and it appears clear that the corporation still has the potential (and for the foreseeable future will continue to have the potential) to earn significant gross and net income.(i)Will the Trustee (and/or the Judge) allow the company to go through a Chapter 7 bankruptcy?(ii)If the Trustee (and/or the Judge) do not allow a Chapter 7 bankruptcy proceeding, what type of bankruptcy (if any) may be allowed?(iii)What is a debt/equity swap and how may such a transaction come into play in a bankruptcy proceeding?
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