Preview Questions Insolvency Specialist | Role Specific Skill

Question 1: How does the "proof of claim" process function during liquidation?

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The proof of claim is only required for secured creditors

Creditors can make claims verbally in court

Creditors must submit evidence of their claims to the trustee or liquidator for validation and payment

Creditors are automatically included in the distribution process without submitting claims

Question 2: How does "cross-border insolvency" affect debt recovery for international creditors?

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Cross-border insolvency applies only to corporate debtors and does not involve personal debts

Cross-border insolvency involves coordinating between jurisdictions, allowing international creditors to claim against assets in multiple countries

Cross-border insolvency only applies to creditors from countries outside the debtor's jurisdiction, with no impact on domestic creditors

Cross-border insolvency automatically protects all international creditors and ensures full repayment of debts

Question 3: How does "distressed debt trading" affect a distressed company and its creditors?

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Distressed debt trading prevents creditors from taking legal action

Distressed debt trading eliminates the need for formal bankruptcy proceedings

Distressed debt trading helps the company raise capital during financial distress

Distressed debt trading allows creditors to sell their claims at a discount, potentially impacting the company's ability to negotiate a restructuring

Question 4: Under the "Preference" provisions of the Bankruptcy Code, what defines a preferential transfer in insolvency law?

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A preferential transfer is a transaction completed after filing for bankruptcy

A preferential transfer is a payment made to a creditor within 90 days before the bankruptcy filing that favors one creditor over others

A preferential transfer refers to any payment made to a creditor before the bankruptcy filing

A preferential transfer is a transfer made with the consent of all creditors

Question 5: When advising a client on Chapter 11 bankruptcy, what is the role of an Insolvency Specialist in confirming the reorganization plan?

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The plan is automatically approved if the debtor submits it

The lawyer must ensure the plan is feasible, complies with bankruptcy law, and gains approval from creditors and the court

The lawyer can submit the plan without creditor approval

The lawyer only needs to address creditor objections, not the overall feasibility

Question 6: How does an Insolvency Specialist assess the legal risk of continuing operations for a company in severe financial distress?

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The lawyer does not need to assess legal risk if there is a potential for new financing

Continuing operations is always viable if the company has market share

The lawyer must review outstanding obligations, potential lawsuits, and the ability to meet future debt obligations while advising on ongoing operations

The lawyer should recommend closure regardless of the company's current operations