A firm may file for Chapter 11 bankruptcy I.in an attempt to gain a competitive advantage.
II)using a prepack.
III)while allowing the current management to continue running the firm.
IV)even though it is not insolvent.
A)I and III only
B)I,II,and IV only
C)I and II only
D)III and IV only
E)I,II,III,and IV

Question

Quizplus · Accepted Answer

Chapter 11 bankruptcy allows a firm to reorganize its debts and operations, often with the current management remaining in control (III), and it can be filed even if the company is not insolvent (IV). A prepackaged bankruptcy (prepack) is a plan for financial reorganization that a company prepares in cooperation with its creditors that will take effect once the company enters Chapter 11 (II). While not its primary purpose, some companies might use Chapter 11 strategically to gain a competitive advantage by restructuring debts and obligations (I).

A Firm May File for Chapter 11 Bankruptcy I