Question

17. Understanding reorganization in bankruptcy Chapter 11 of the Bankruptcy Act has several features that can help a firm that is in financial distress. The bankruptcy court allows the debtor to submit a reorganization plan within 120 days after filing for bankruptcy protection. The debtor has an additional 60 days to seek approval from stakeholders for the reorganization. The court can extend these dates up to 18 months, This statement is true Filing for bankruptcy under Chapter 11 requires the debtor to submit a reorganization plan to the bankruptcy court. The court's responsibility is to scrutinize the proposed plan of reorganization. The court checks if the plan is fair and feasible. Arjen Corp. filed for bankruptcy protection under Chapter 11. The following table describes certain actions the company plans to take as a part of its reorganization plan. Arjen submitted the plan to the bankruptcy court. Determine whether the actions described comply with the bankruptcy code, and select the option identifying whether the bankruptcy court will consider or disregard the action in the plan based on the grounds of fairness and feasibility Will the Court Consider This Action? Description To avoid additional capital investment and to keep operating costs low, Arjen will continue to use old and obsolete inventories and push sales of these inventories. Arjen's reorganization plan includes reduction in payroll costs expected to come from negotiations with labor unions to accept lower wages and less restrictive work rules. Arjen's reorganization plan calls for a reduction of debb from $2.8 billion to $1.5 billion by converting 80% of the debt into equity Which of the following stakeholders have the first right, after the management's 120-day window, to file a reorganization plan? O Stockholders O Debtholders

Answer 1

QUESTION:-

THE FOLLOWING STAKEHOLDERS HAVE THE FIRST, AFTER THE MANAGEMENT 120 DAY WINDOW, TO FILE A REORGANIZATION PLAN

ANSWER

STOCKHOLDERS

COURT WILL CONSIDERING THE FOLLOWING ACTIONS TO REORGANIZATION

1. YES

2.NO

3.NO