Ch. 12 (Qs) - Bankruptcy Fraud

Front 1

A U. S. Bankruptcy court appoint an examiner to investigate allegations that the debtor in the proceedings has committed fraud. Under the bankruptcy laws, this appointment gives the examiner the power to run the debtor's business and submit a reorganization plan.

Back 1

False

Front 2

A bust-out is a planned bankruptcy. To perpetrate this type of scheme, in which order must the following steps be taken by the underlying business?

I. Close and file bankruptcy

II. Purchase large quantities of goods on credit

III. Obtain credit from vendors

IV. Sell the inventory at deep discounts

Back 2

III then II then IV then I

Front 3

A creditor in a US bankruptcy proceeding submits allegations to the court claiming the debtor is committing bankruptcy fraud. If the court appoints an examiner to investigate the allegations, which of the following responsibilities and powers does the examiner have?

A.The power to depose Witnesses

B. The responsibility to report investigation results to the court

C. The power to subpoena documents

D. All of these answers are correct

Back 3

All of these answers are correct

Front 4

A debtor in a bankruptcy proceeding took steps to hide his books and records from a creditor. What kind of scheme did the debtor commit?

A. A concealed assets scheme

B. A petition Mill scheme

C. An asset misappropriation scheme

D. A bust out scheme

Back 4

A concealed assets scheme

Front 5

All of the following are responsibilities of a US bankruptcy judge except:

A. Conduct hearings and trials

B. Awarding fees to professionals

C. Recommending reorganization plans to the US courts of appeal

D. Hearing all cases regarding debtors and creditors rights

Back 5

Recommending reorganization plans to the US Court of Appeal

Front 6

During a bankruptcy investigation in the United States, the bankruptcy trustee can request documents from third parties (such as banks and customers), but cannot compel the third parties to produce the documents.

Back 6

False

Front 7

If a debtor in the United States has 12 or more creditors, at least three creditors are needed to file involuntary bankruptcy proceeding against the debtor.

Back 7

True

Front 8

In a u.s. chapter 11 bankruptcy proceeding, the court receives allegations of fraud committed by the debtor. Which of the following is likely to occur?

A. The case will be transferred out of the bankruptcy court

B. The debtor will either hire a private examiner or abandon the fraud allegations

C. The court will dismiss the bankruptcy proceeding

D. The court will appoint an examiner to investigate the allegations

Back 8

The court will appoint an examiner to investigate the allegations

Front 9

In a US bankruptcy case, the bankruptcy trustee has the duty of administering the bankruptcy Estates assets.

Back 9

True

Front 10

In a US bankruptcy proceeding, are the creditors of the debtor allowed to conduct their own investigation into the debtor's financial affairs?

Back 10

Yes, the creditors May generally conduct such investigations

Front 11

In a bankruptcy proceeding, which of the following statements regarding secured interest is true?

A. A secured creditor holds a claim for which there is properly perfected security interest.

B. A creditor's claim is considered unsecured if the debt is secured by property that is worth less than the amount of the debt.

C. A claim is considered a secured claim if it is more than one year old.

D. If the debtor files a bankruptcy petition, an automatic stay allows the secured creditor to repossess the secured property.

Back 11

A secured creditor holds a claim for which there is a properly perfected security interest

Front 12

In a bustout scheme, which of the following types of assets does the fraudster typically purchase and then sell prior to closing the business?

A. Real estate

B. Inventory or Goods

C. Legal or accounting services

D. Business insurance policies

Back 12

Inventory or Goods

Front 13

In bankruptcy court, which of the following could be considered a debtor?

A. A partnership

B. An individual

C. A corporation

D. All of these answers are correct

Back 13

All of these answers are correct

Front 14

In the United States, a successful Chapter 7 bankruptcy case results in the liquidation of the debtor's property to pay creditors and the discharging of the debtors dischargeable debts.

Back 14

True

Front 15

In the United States, Bankruptcy cases can be filed at either the federal or state level.

Back 15

False

Front 16

Suzanne runs her own business, but it's decided to close it and file for bankruptcy. Before she does so, she orders a large quantity of inventory on credit and resells it for cash. She closes the business and leaves the suppliers with almost nothing to recover in the bankruptcy proceeding that follows. What is the name of Suzanne's scheme?

Back 16

Bustout scheme

Front 17

The office of the United States trustee is a Department of Justice agency responsible for many tasks in bankruptcy proceedings. Those tasks include which of the following?

A. Appearing in court regarding matters of interest to the estate and creditors.

B. Appointing chapter 11 committees.

C. Overseeing and monitoring trustees.

D. All of these answers are correct

Back 17

All of these answers are correct

Front 18

The office of the United States trustee is responsible for hearing all bankruptcy cases and Prosecuting individuals who commit bankruptcy fraud.

Back 18

False

Front 19

The most common type of bankruptcy fraud scheme is the concealment of assets.

Back 19

True

Front 20

Under US federal law, all of the following need to be proven if a charge for bankruptcy crime is to be sustained except:

A. The defendant had fraudulent intent to defeat the bankruptcy laws.

B. The defendant caused damages to be suffered.

C. Crimes were committed during the pendency of a bankruptcy proceeding.

D. The defendant had knowledge of the crimes during the pendency of a bankruptcy proceeding.

Back 20

The defendant caused damages to be suffered

Front 21

Under the US bankruptcy code, a Chapter 7 bankruptcy filing allows the debtor to reorganize its financial affairs and continue in business.

Back 21

False

Front 22

Which of the following is an acceptable defense against charges of concealing assets from the bankruptcy process in the United States?

A. Concealed assets were returned to the estate.

B. Creditors had actual knowledge of concealed assets.

C. Assets were not concealed from all creditors.

D. None of these answers are correct.

Back 22

None of these answers are correct

Front 23

With regard to a US bankruptcy trustees rights in powers, the trustee takes the debtors place in regard to accessing the debtors books and Records.

Back 23

True