Question 11

From the statements below, which one is the most CORRECT?

Municipal and personal bankruptcy law is governed only by the states and corporate bankruptcy laws are governed by the federal government.

All bankruptcy requests are filed by creditors looking to guard their claims against companies that are in financial distress. Thus, all bankruptcy requests are involuntary as viewed from the perspective of the companys management.

Chapters 7 and 11 are the most important bankruptcy chapters from a financial management determination. A company can or will be liquidated under a Chapter 7, if a reorganization plan cannot be worked out under Chapter 11.

If a "Restructuring" plan is to be done, this means that a companys debt can include the forgiveness of certain portions of the debt, but it cannot ask for the change in the debt's prescribed interest rate or the debts maturity date.

The United States bankruptcy laws were established in the 1800s, these laws were revised in the 1930s, and since then, they have remained unchanged.

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Question 12

Loki Corporation and his band of thieves are having financial difficulties. On a scale of 1 to 5, with 1 being the first/highest claim and 5 being the last/lowest claim. From the list of items below:

What would be the order of priority that each entity would claim for a distribution of Lokis assets in a Chapter 7 Bankruptcy?

(1)	The costs incurred by a Trustee to administer and operate Lokis company.
(2)	The Common Shareholders/Stockholders of Lokis company.
(3)	Lokis common, or Unsecured, Creditors.
(4)	Creditors, who have a claim to the profits on the sale of Lokis secured loans, where the assets have been guaranteed against the loan.
(5)	Taxes that are due payable by Loki, to the state and federal governments.

5, 4, 1, 3, 2

4, 1, 5, 3, 2

5, 1, 4, 2, 3

1, 5, 4, 3, 2

1, 4, 3, 5, 2