Preview Questions Debt Restructuring Lawyer | Role Specific Skill

Question 1: Under Chapter 11 of the Bankruptcy Code, what is the primary goal of a debtor-in-possession (DIP)?

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To maintain control of the company while attempting to reorganize and restructure debts

To liquidate the company's assets and pay off creditors

To transfer the company's assets to a trustee for liquidation

To dissolve the company and distribute its assets to creditors

Question 2: How does "rescheduled payment terms" impact creditor negotiations, and what should a lawyer do to ensure that these terms are acceptable to all stakeholders?

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Rescheduled payment terms should be fixed and not subject to future renegotiations

Rescheduled payment terms should prioritize the debtor's short-term cash flow without regard to creditor interests

Rescheduled payment terms should always be the same for all creditors, regardless of their priority

Rescheduled payment terms should be negotiated to reflect the debtor's ability to pay, with consideration given to creditor priorities and the debtor's future cash flow projections

Question 3: What is the significance of "preferential transfers" in bankruptcy cases?

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Transfers made to creditors within 90 days before the bankruptcy filing that benefit one creditor over others

Loans made by the debtor within one year of the filing

Payments made to insiders to reduce the total debt burden

Transfers of assets made in the normal course of business

Question 4: Under which conditions can a Chapter 11 reorganization plan be confirmed despite opposition from some creditor classes?

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If the plan is deemed to provide a better recovery for creditors than liquidation

If the plan meets all legal requirements for confirmation

If the court determines that the debtor's future financial prospects justify the plan

If the plan is accepted by the majority of creditors in each class

Question 5: What is the role of "debtor-in-possession financing" in corporate insolvency under Chapter 11 bankruptcy?

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It allows the debtor to liquidate assets to pay creditors immediately

It provides the debtor with new financing to continue operations during restructuring

It prevents any creditors from filing claims against the debtor

It guarantees that creditors are paid in full upon filing

Question 6: How should a debt restructuring lawyer handle the "valuation of assets" in a corporate restructuring, and what factors are most critical when preparing a fair valuation?

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Asset valuation is unnecessary if the debtor has substantial cash reserves

Valuation should be based solely on the book value of the assets

The lawyer should work with financial experts to conduct a detailed valuation, considering market conditions, asset depreciation, and future earning potential

Valuation should ignore market conditions and focus only on historical financial performance