Question 1

In the context of bankruptcy law, 'voidable transactions' include:

Accepted Answer

A

Question 2

After a sequestration order has been made the trustee in bankruptcy does not have an obligation to:

Accepted Answer

The trustee in bankruptcy is not obligated to give priority to debts owed to the bankrupt's family; debts are prioritized according to the Bankruptcy Act 1966 (Cth) without special consideration for family members.

Question 3

To qualify to make a creditor's petition, which of the following requirements need not be satisfied?

Accepted Answer

The correct answer is D because the question is asking for a requirement that need not be satisfied. The other options are all necessary requirements for a creditor to make a petition for bankruptcy. However, being a secured creditor is not a requirement to make a creditor's petition.

Question 4

The process in which a trustee is appointed to sell an individual's assets to repay their debts is called:

Accepted Answer

Bankruptcy is a legal process where a trustee is appointed to manage the sale of an individual's assets to repay creditors.

Question 5

A 'debtor's petition' is:

Accepted Answer

A 'debtor's petition' is an application by an insolvent person to make themselves bankrupt voluntarily.

Question 6

Receivership:

Accepted Answer

Receivership occurs when a receiver is appointed to manage and sell a company's assets to repay creditors, not necessarily to wind up or liquidate the company.

Question 7

Which of the following documents need not be filed with the Official Receiver at Insolvency and Trustee Service Australia (ITSA) in order for a person to become bankrupt voluntarily?

Accepted Answer

A personal insolvency agreement is not required for voluntary bankruptcy. It is an alternative to bankruptcy, where a debtor makes an agreement with their creditors to settle debts without becoming bankrupt.

Question 8

What is the main objective of a receiver?

Accepted Answer

The main objective of a receiver is to manage a business and deal with its assets in a way that will enable it to repay a debt owed to the creditor by whom they were appointed. This may involve selling assets, but the ultimate goal is to repay the debt. Therefore, answer choice C is the correct option. A, B, and D may be tasks that a receiver performs, but they are not the main objective.

Question 9

On being made bankrupt, all the bankrupt person's assets will automatically vest in:

Accepted Answer

When a person is declared bankrupt, their assets automatically vest in the trustee in bankruptcy, who is responsible for managing and distributing the assets to satisfy the creditors.

Question 10

The Official Receiver of a bankruptcy district is not responsible for:

Accepted Answer

The answer of The Official Receiver of a bankruptcy district...

Question 11

The bankruptcy process is initiated by means of:

Accepted Answer

The bankruptcy process can be initiated by either a creditor or a debtor filing a petition in court.

Question 12

The idea that a bankruptcy is deemed to have commenced on the date of the first Act of bankruptcy within the 6 months prior to the presentation of the creditors petition is a statement of the doctrine of:

Accepted Answer

The doctrine of relation back in bankruptcy law means that the bankruptcy is considered to have commenced on the date of the first act of bankruptcy within a specified period before the filing of the petition, typically six months.

Question 13

A person who is unable to pay their debts as and when they fall due is:

Accepted Answer

Insolvency refers to the inability to pay debts as they come due, which is the situation described in the question.

Question 14

A 'bankruptcy notice' is:

Accepted Answer

A bankruptcy notice is a formal demand for repayment of a debt, and failure to comply with it can lead to a declaration of bankruptcy.

Question 15

Which of the following categories of persons is not generally entitled to appoint a receiver?

Accepted Answer

An unsecured creditor is not generally entitled to appoint a receiver. This is because unsecured creditors do not have security over any specific assets of the debtor, unlike mortgagees or secured creditors. The holder of a floating charge (choice B) and a secured creditor (choice D) are both entitled to appoint a receiver, as they have security interests over specific assets. A mortgagee (choice C) is also entitled to appoint a receiver, as they have security over the mortgaged property.

Question 16

A 'sequestration order' is an order of the Court declaring:

Accepted Answer

A sequestration order is a court order that declares an individual bankrupt, allowing for the management and distribution of their assets to creditors.

Question 17

Lodging a declaration of intention to present a debtors petition is not a good option for a debtor who wants to:

Accepted Answer

Lodging a declaration of intention to present a debtor's petition does not prevent a creditor from proving at a later stage that it is appropriate for the debtor to be made bankrupt. It only provides temporary relief from creditor actions.

Question 18

What is the role of the trustee in bankruptcy?

Accepted Answer

The trustee in bankruptcy is responsible for liquidating a debtor's assets to repay creditors, which aligns with option C.

Question 19

Which of the following is not a usual consequence of bankruptcy for the bankrupt person?

Accepted Answer

While bankruptcy can have various consequences for the bankrupt person, remaining bankrupt for a minimum of 10 years is not one of them. In fact, bankruptcies typically last for a shorter period of time, such as 1-3 years, depending on the jurisdiction and circumstances.

Question 20

Bankruptcy proceedings are heard by:

Accepted Answer

Bankruptcy proceedings in the United States are typically heard by the Federal Court, specifically in the U.S. Bankruptcy Courts, which are specialized courts under the federal judiciary.

Quiz 20: Managing a Business 7: Bankruptcy and Liquidation