Question 1

Explain the criteria that must be met before a debtor will be recognized as an insolvent under the Bankruptcy and Insolvency Act.

Accepted Answer

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Question 2

In order for a payment made by an insolvent debtor within the six-month limitation period to be declared void,the payment must be shown to favour one or more of the bankrupt's creditors to the detriment of the others.

Accepted Answer

The answer of In order for a payment made by...

Question 3

Following an act of bankruptcy,a court may issue a receiving order that will declare the debtor to be a bankrupt and transfer legal control of the bankrupt's estate to a trustee.

Accepted Answer

This is true, a receiving order is a court order declaring a debtor to be bankrupt and transferring legal control of their estate to a trustee.

Question 4

A receiving order is a statement filed by a insolvent debtor's creditors claiming that the debtor who has committed an act of bankruptcy owes at least $100 and should be declared bankrupt.

Accepted Answer

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Question 5

Bankruptcy offences are defined by the Bankruptcy and Insolvency Act and may be committed by debtors,creditors,and trustees.

Accepted Answer

Bankruptcy offences are defined by the Bankruptcy and Insolvency Act and may be committed by debtors, creditors, and trustees.

Question 6

A sale of a bankrupt's assets that can be declared void because it was not made in good faith or for valuable consideration is legally known as a reviewable transaction.

Accepted Answer

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Question 7

Martha's business accountant has suggested that because the business is unable to meet its financial obligations as they become due and has little prospect of having sufficient assets to meet those obligations in the future,her business is legally considered insolvent.

Accepted Answer

Insolvency is defined as the inability of a business to meet its financial obligations as they become due or to have sufficient assets to meet those obligations in the future. Therefore, Martha's business is considered insolvent according to her accountant's suggestion.

Question 8

The legal term "bankrupt" is used to denote the legal status of a debtor who has made an application for an assignment in bankruptcy.

Accepted Answer

The answer of The legal term "bankrupt" is used to...

Question 9

A debtor must commit one of the specified acts of bankruptcy prior to creditors being in a legal position to petition the debtor into bankruptcy.

Accepted Answer

This is correct. Creditors cannot petition a debtor into bankruptcy until the debtor commits one of the specified acts of bankruptcy, which include failure to pay debts, making fraudulent conveyances, and giving fraudulent preferences.

Question 10

A payment made with the intention of giving a related person priority over at least one other creditor within one year of a bankruptcy order is described under the Bankruptcy and Insolvency Act as a reviewable settlement.

Accepted Answer

Such payments are referred to as "preferential payments" or "preferences" under the Bankruptcy and Insolvency Act, not reviewable settlements. Preferences occur when a debtor gives an unfair advantage to one or more creditors over others shortly before declaring bankruptcy.

Question 11

A declining economy,an industry collapse,and a changing market can pose difficulties for healthy companies.

Accepted Answer

A declining economy, industry collapse, and changing market can affect companies of all sizes, including healthy ones. These factors can decrease consumer demand, increase competition, and disrupt supply chains, leading to financial difficulties for companies.

Question 12

An inspector is a person appointed by the bankruptcy court to act on its behalf and supervise the actions of the trustee.

Accepted Answer

An inspector in the context of bankruptcy is typically appointed by creditors, not the bankruptcy court, to oversee the administration of the bankruptcy estate and assist or advise the trustee, rather than to supervise the trustee on behalf of the court.

Question 13

A contractual agreement between the debtor and creditors that allows an insolvent debtor to reorganize and continue in business is legally described as an assignment in bankruptcy.

Accepted Answer

A contractual agreement between the debtor and creditors that allows for reorganization is typically described as a reorganization or restructuring plan, not an assignment in bankruptcy.

Question 14

A discharge of bankruptcy will be withheld from a corporation until all of its debts have been paid in full.

Accepted Answer

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Question 15

One of the purposes of early English bankruptcy legislation that is confirmed in Canada's version is to ensure,if possible,that potentially viable businesses are reorganized so they can continue operating for the benefit of creditors.

Accepted Answer

This statement accurately describes the purpose of early English bankruptcy legislation, and Canada's version of bankruptcy legislation also aims to prioritize restructuring and reorganization of potentially viable businesses to benefit creditors.

Question 16

Preferred creditors are generally unsecured creditors who are given priority over the other unsecured creditors under the Bankruptcy and Insolvency Act.

Accepted Answer

Preferred creditors, such as employees owed wages and certain taxes owed to the government, are given priority over other unsecured creditors in a bankruptcy or insolvency proceeding under the Bankruptcy and Insolvency Act.

Question 17

A proof of claim giving formal notice of the amount owed and the nature of the debt must be provided by a creditor to a bankrupt's trustee.

Accepted Answer

This is a requirement under bankruptcy law in order for the trustee to accurately determine which debts are eligible for payment from the bankruptcy estate.

Question 18

The provision of the bankruptcy legislation that bars graduates from being discharged from their student loans for a minimum seven years after graduation has recently been amended to reduce the period to a five-year minimum.

Accepted Answer

The provision regarding the discharge of student loans in bankruptcy has not been recently amended to reduce the period from seven years to five years. The specifics of discharging student loans in bankruptcy can vary by jurisdiction, but there has been no widespread recent amendment to universally reduce such a period.

Question 19

The debtor's voluntary assignment to the trustee in bankruptcy of legal title to the debtor's property for the benefit of creditors is legally known as a proposal.

Accepted Answer

The debtor's voluntary assignment to the trustee in bankruptcy of legal title to the debtor's property for the benefit of creditors is legally known as an assignment for the benefit of creditors (ABC), not a proposal.

Question 20

After reviewing a proof of claim,if there is inadequate evidence either of the debt itself or of its secured status,the receiver may reject the security and its priority of payment.

Accepted Answer

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Quiz 27: Bankruptcy and Insolvency