Question 1

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

Accepted Answer

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

Question 2

One of the roles of the trustee will be to secure the business premises and examine the assets.

Accepted Answer

A trustee is responsible for managing and protecting the assets of a business, which includes securing the premises and examining the assets to ensure they are properly accounted for and managed.

Question 3

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 to ensure that the trustee is aware of all debts owed by the bankrupt individual.

Question 4

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 5

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 is true as one of the major purposes of early English bankruptcy legislation was to allow for the reorganization of potentially viable businesses so that they could continue operating and paying off debts owed to creditors. This principle has been carried over to Canada's bankruptcy legislation.

Question 6

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 7

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

Accepted Answer

A discharge of bankruptcy is a legal proceeding that releases a debtor from personal liability for certain debts. However, a corporation is not a person, and therefore cannot file for bankruptcy. As a result, a discharge of bankruptcy will not be withheld from a corporation until all of its debts have been paid in full.

Question 8

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

The described scenario is actually a description of a bankruptcy reorganization plan, not an assignment in bankruptcy.

Question 9

During the bankruptcy process,the debtor will usually be required to make payments to the trustee for the benefit of creditors.

Accepted Answer

In bankruptcy, the debtor may be required to make payments to a trustee, who then distributes the funds to creditors, especially in Chapter 13 bankruptcy where a repayment plan is established.

Question 10

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

If a business is unable to meet its financial obligations and has little prospect of having sufficient assets to meet those obligations in the future, it is considered insolvent under the law.

Question 11

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 12

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

In most jurisdictions, a debtor must commit one of the specified acts of bankruptcy, such as making an assignment for the benefit of creditors or failing to pay debts as they become due, before creditors can petition the debtor into bankruptcy.

Question 13

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 include employees owed wages and certain government debts (such as taxes and employment insurance). They are given priority over other unsecured creditors in the distribution of assets during a bankruptcy or insolvency proceeding.

Question 14

Once discharged,a bankrupt in personal bankruptcy is released from most but not all debts.

Accepted Answer

In personal bankruptcy, certain types of debts, such as student loans, child support, and certain taxes, are not discharged and must still be paid after bankruptcy.

Question 15

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 16

A preference is a payment that benefits one creditor over another,and these are always prohibited and always constitute a criminal offence.

Accepted Answer

Preferences are not always prohibited and do not always constitute a criminal offense. They may be allowed in certain circumstances, such as in a bankruptcy proceeding where they are made in the ordinary course of business or on a contemporaneous basis. However, they may be subject to challenge by other creditors or a bankruptcy trustee.

Question 17

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 18

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

Accepted Answer

The answer of Explain the criteria that must be met...

Question 19

Secured creditors with properly perfected security interests are entitled to take possession of their collateral and dispose of it,regardless of bankruptcy.

Accepted Answer

This is because properly perfected security interests give the secured creditor a priority interest in the collateral, which allows them to take possession and dispose of it outside of the bankruptcy process.

Question 20

Admitting to one's insolvency is considered an act of bankruptcy.

Accepted Answer

Admitting to one's insolvency is one of the acts that can lead to a declaration of bankruptcy.

Quiz 27: Bankruptcy and Insolvency