Preview Questions Debt Restructuring Lawyer | Role Specific Skill

Question 1: What is the significance of "bankruptcy court approval" in debt restructuring, and how can a lawyer ensure that all necessary steps are taken to secure approval?

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Bankruptcy court approval only applies to consumer bankruptcies, not corporate cases

Bankruptcy court approval is irrelevant if the restructuring is privately negotiated

Bankruptcy court approval is required for many aspects of debt restructuring, and the lawyer should ensure that all motions are properly filed and supported by evidence

Bankruptcy court approval is only needed for liquidation plans, not restructurings

Question 2: How does a "reorganization plan" affect creditors in corporate insolvency?

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It outlines how the debtor will repay creditors and manage the company's operations during restructuring

It determines which creditors will receive a payout based on the available assets

It dictates the liquidation of the debtor's assets to settle debts

It outlines the terms under which creditors will be forced to settle their claims

Question 3: How should a lawyer manage "subordination agreements" during debt restructuring, and what factors should be considered when negotiating such agreements between creditors?

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Subordination agreements should prioritize senior creditors regardless of circumstances

Subordination agreements should be ignored if the debtor has positive equity

Subordination agreements determine the order in which creditors are paid; the lawyer should ensure that these agreements reflect the financial reality of the debtor

Subordination agreements are only relevant if the debtor is in default

Question 4: What are the key considerations when negotiating "debt forgiveness" or "debt reduction" during a restructuring, and how can these terms be balanced with creditor interests?

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Debt forgiveness is unnecessary if the debtor is capable of repaying the full amount

Debt reduction should prioritize creditor repayment over debtor relief

The lawyer should negotiate debt reduction terms that are fair to all parties, taking into account the debtor's ability to pay and the creditor's legal rights

Debt forgiveness should only apply to unsecured creditors

Question 5: How does the "absolute priority rule" apply in a Chapter 11 bankruptcy proceeding?

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It gives equity holders priority over creditors in certain circumstances

It allows equity holders to retain ownership if the company can pay all creditors in full

It dictates that senior creditors must be paid in full before any junior creditors or equity holders receive payment

It ensures creditors are treated equally, regardless of the seniority of their claims

Question 6: How should you handle creditor objections during the negotiation of a "prepackaged bankruptcy" plan?

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Use the threat of liquidation to pressure creditors into agreeing

Focus on explaining the benefits of a quick resolution for all parties

Avoid negotiating with opposing creditors to speed up the process

Encourage creditors to agree without revising their terms