Debt restructuring of a bankrupt firm is usually accomplished in which of the following ways:

a. An extension

b. A composition

c. A debt for equity swap

d. Some combination of a, b, or c

e. All of the above

Why would creditors be willing to give a portion of what they are owed by the debtor firm for equity in the reorganized firm?

a. They are legally obligated to do so under U.S. bankruptcy law.

b. Ownership in a firm is inherently more valuable than being a creditor.

c. The value of the stock may in the long run far exceed the amount of debt the creditors were willing to forgive.

d. Creditors understand that they can sue the firm at a later date for what they are owed.

e. None of the above.

All of the following are true of the bankruptcy process except for

a. The debtor firm may seek protection from its creditors by initiating bankruptcy or may be forced into bankruptcy by its creditors.

b. When creditors file for bankruptcy on behalf of the debtor firm, the action is said to be involuntary bankruptcy.

c. Once either a voluntary or involuntary petition is filed, the debtor firm is protected from any further legal action related to its debts until the bankruptcy proceedings are completed.

d. The filing of a petition triggers an automatic stay even before the court accepts the request.

e. An automatic stay suspends all judgments, collection activities, foreclosures, and repossessions of property by the creditors on any debt or claim that arose before the filing of the bankruptcy petition.