Which of the following statements isfalse?

1. If the corporation fails to satisfy debt holders' claims, debt holders may lose control of the firm.
2. As long as the corporation can satisfy the claims of the debt holders, ownership remains in the hands of the equity holders.
3. Because a corporation is a separate legal entity, when it fails to repay its debts, the debt holders are entitled to seize the assets of the corporation in compensation for the default.
4. In bankruptcy, management must negotiate with debt holders for the opportunity to reorganise the firm and stay in business.