Question 1

A builder's lien is available only to creditors who participate directly as workers,or who supply material for use directly in the construction work.

Accepted Answer

A) True 
 B)False

Question 2

In the context of bankruptcy proceedings,liquidating dividends are

Accepted Answer

A)  proceeds from the sale of assets over and above the security claims.
B)  funds distributed to shareholders when a corporation is in bankruptcy.
C)  the distributed funds that are over and above the stated book value.
D)  unexpected returns from assets that were unaccounted for in the books.
E)  payments made to creditors from time to time as realization of the debtor's assets permits.F) A) and E)
G) A) and D)

Question 3

Danny is thinking of bankruptcy for his business,but so far he has not made an assignment,nor is the business subject to a receiving order.Yet,because Danny meets all the requirements of bankruptcy,the Bankruptcy and Insolvency Act refers to Danny as

Accepted Answer

A)  a candidate for bankruptcy.
B)  an insolvent person.
C)  an applicant for bankruptcy.
D)  being bankrupt.
E)  a consumer debtor.F) C) and D)
G) A) and E)

Question 4

What is the difference between a bankrupt person and an insolvent person?

Accepted Answer

A bankrupt person is a person against wh...

Question 5

Under the Bankruptcy and Insolvency Act,what is a commercial proposal?

Accepted Answer

A commercial proposal is an offer made b...

Question 6

When is an undischarged bankrupt liable to a fine or imprisonment?

Accepted Answer

A bankrupt is liable to both imprisonmen...

Question 7

I.M.Construction Ltd.decided to profit from the real estate boom and build a small retail and office building on land that it owns.Before the building is complete I.M.Construction Limited becomes insolvent.The property is subject to a mortgage that is not fully advanced and to many builders' liens.There have been inquiries from a number of parties who would be interested in renting space in the building.The real estate market is still booming.What practical advice do you have for the mortgage company and the lien holders?

Accepted Answer

The lien holders should attempt to reach...

Question 8

Use the fact situation in Q2 to answer the related question that follows. Given the bankruptcy of General Widgets,the incorporation of the new company by George is

Accepted Answer

A)  a fraudulent assignment.
B)  a reviewable transaction.
C)  a fraudulent preference.
D)  a fraudulent transfer.
E)  none of the aboveF) A) and B)
G) C) and D)

Question 9

A commercial proposal made by an insolvent person is an offer made by the debtor to its creditors

Accepted Answer

A)  to not resist a receiving order.
B)  whereby the debtor agrees to file for bankruptcy.
C)  to make an assignment of all assets.
D)  for providing an orderly repayment of its debts (or some part of its debt) over a period of time.
E)  to reorganize its business and straighten out its affairs.F) D) and E)
G) B) and E)

Question 10

James had made a consumer proposal (Division II) to his creditors.He wanted a reduction and extension of time for the payment of his debts.A formal meeting was not requested by any of the creditors.Now the administrator must

Accepted Answer

A)  run a public notice in the newspaper.
B)  get approval of the proposal from the court.
C)  notify and file the document with all creditors.
D)  provide counselling to the debtor.
E)  see that all the provisions meet Division I rules.F) A) and B)
G) B) and E)

Question 11

Under the Bankruptcy and Insolvency Act,the claims of unpaid employees against the assets of a bankrupt employer rank in priority

Accepted Answer

A)  ahead of unsecured creditors.
B)  partly as preferred creditors.
C)  pro rata with secured creditors.
D)  partly ahead of secured creditors.
E)  none of the aboveF) B) and D)
G) C) and E)

Question 12

What is a fraudulent preference? Give an example of a fraudulent preference.

Accepted Answer

A fraudulent preference is a payment of ...

Question 13

In Ontario,on a sale of assets,what normal searches should the buyer conduct?

Accepted Answer

The buyer should conduct a ban...

Question 14

Where,just before declaring bankruptcy,a person transfers title of real property to his children telling them that he wants to protect the property from bankruptcy,the transfer is a fraudulent conveyance or transfer.

Accepted Answer

A) True 
 B)False

Question 15

A secured creditor does not have to prove its debt before its debt ranks as a claim against the bankrupt's estate.

Accepted Answer

A) True 
 B)False

Question 16

On a bankruptcy,preferred creditors rank in priority before secured creditors.

Accepted Answer

A) True 
 B)False

Question 17

Brianna,a framing contractor,has a duly registered builders' lien on the property owned by Bowing Development.This lien gives Brianna the right to

Accepted Answer

A)  bring an action and obtain a court order appointing a trustee.
B)  commence a legal action within 90 days against the general contractor.
C)  place a claim on the owner's business assets.
D)  obtain 15 percent of the statutory holdback.
E)  personally take possession of the property in order to realize her claim.F) None of the above
G) A) and B)

Question 18

Use the fact situation in Q2 to answer the related question that follows. Assume that the bank is a secured creditor of General Widgets and that its security is greater than the amount that the company owes to the bank,which enforces its security.In such a case,

Accepted Answer

A)  the bank cannot enforce its security,but it will share rateably with the other secured creditors.
B)  the bank cannot enforce its security during the bankruptcy of the company.
C)  the bank can retain the full amount recovered under its security.
D)  the bank must repay the trustee in bankruptcy any excess recovered over the amount of the debt owed it.
E)  none of the aboveF) All of the above
G) B) and D)

Question 19

Use this fact situation to answer the related questions that follow. General Widgets is a large provincial manufacturing company that has been in business for a number of years,but when the economic recession began in 2008,the company found itself experiencing a lack of sales,which affected its ability to pay its suppliers.George is the principal shareholder of the company and has an outstanding shareholders loan of $100 000.00.Between January 2008 and February 2008,the company was managing to pay its creditors,although slowly,and its assets were sufficient to satisfy its indebtedness,but by the end of January 2008 its assets have shrunk well below its debt load.In March 2008,George ensures that the company repays his shareholders loan.Thereafter,in December 2008,the company actively decides to pay only its major creditor,a supplier with whom George is good friends.Also in December 2008,seeing that General Widgets is sinking deeper and deeper into debt,George decides to incorporate a new company into which he transfers $300 000.00 of General Widgets' assets.On March 1,2009,General Widgets makes a voluntary assignment in bankruptcy.
In this case,the fact that between January and February 2008 the company was just managing to pay its creditors probably means that

Accepted Answer

A)  the company is bankrupt.
B)  the company is insolvent.
C)  the company is borderline insolvent.
D)  the company is solvent.
E)  none of the aboveF) A) and D)
G) A) and E)

Question 20

As far as claims against the property of a bankrupted debtor go,the trustee pays the general creditors in priority to which of the following?

Accepted Answer

A)  secured creditors
B)  preferred creditors
C)  super priority claims
D)  deferred creditorsE) A) and B)
F) None of the above

Exam 29: Creditors Rights

Correct Answer
verified

On a bankruptcy,preferred creditors rank in priority before secured creditors.

Correct Answer
verified

Under the Bankruptcy and Insolvency Act,the claims of unpaid employees against the assets of a bankrupt employer rank in priority

Correct Answer
verified

Use the fact situation in Q2 to answer the related question that follows. Assume that the bank is a secured creditor of General Widgets and that its security is greater than the amount that the company owes to the bank,which enforces its security.In such a case,

Correct Answer
verified

A commercial proposal made by an insolvent person is an offer made by the debtor to its creditors

Correct Answer
verified

When is an undischarged bankrupt liable to a fine or imprisonment?

Correct Answer
verified
A bankrupt is liable to both imprisonmen...
View Answer

Under the Bankruptcy and Insolvency Act,what is a commercial proposal?

Correct Answer
verified
A commercial proposal is an offer made b...
View Answer

A secured creditor does not have to prove its debt before its debt ranks as a claim against the bankrupt's estate.

Correct Answer
verified

What is the difference between a bankrupt person and an insolvent person?

Correct Answer
verified
A bankrupt person is a person against wh...
View Answer

As far as claims against the property of a bankrupted debtor go,the trustee pays the general creditors in priority to which of the following?

Correct Answer
verified

Correct Answer
verified
The lien holders should attempt to reach...
View Answer

Brianna,a framing contractor,has a duly registered builders' lien on the property owned by Bowing Development.This lien gives Brianna the right to

Correct Answer
verified

James had made a consumer proposal (Division II) to his creditors.He wanted a reduction and extension of time for the payment of his debts.A formal meeting was not requested by any of the creditors.Now the administrator must

Correct Answer
verified

In the context of bankruptcy proceedings,liquidating dividends are

Correct Answer
verified

A builder's lien is available only to creditors who participate directly as workers,or who supply material for use directly in the construction work.

Correct Answer
verified

Danny is thinking of bankruptcy for his business,but so far he has not made an assignment,nor is the business subject to a receiving order.Yet,because Danny meets all the requirements of bankruptcy,the Bankruptcy and Insolvency Act refers to Danny as

Correct Answer
verified

Where,just before declaring bankruptcy,a person transfers title of real property to his children telling them that he wants to protect the property from bankruptcy,the transfer is a fraudulent conveyance or transfer.

Correct Answer
verified

What is a fraudulent preference? Give an example of a fraudulent preference.

Correct Answer
verified
A fraudulent preference is a payment of ...
View Answer

Use the fact situation in Q2 to answer the related question that follows. Given the bankruptcy of General Widgets,the incorporation of the new company by George is

Correct Answer
verified

In Ontario,on a sale of assets,what normal searches should the buyer conduct?

Correct Answer
verified
The buyer should conduct a ban...
View Answer

Exam 29: Creditors Rights

Correct AnswerverifiedShow Answer

On a bankruptcy,preferred creditors rank in priority before secured creditors.

Correct AnswerverifiedShow Answer

Under the Bankruptcy and Insolvency Act,the claims of unpaid employees against the assets of a bankrupt employer rank in priority

Correct AnswerverifiedShow Answer

Use the fact situation in Q2 to answer the related question that follows. Assume that the bank is a secured creditor of General Widgets and that its security is greater than the amount that the company owes to the bank,which enforces its security.In such a case,

Correct AnswerverifiedShow Answer

A commercial proposal made by an insolvent person is an offer made by the debtor to its creditors

Correct AnswerverifiedShow Answer

When is an undischarged bankrupt liable to a fine or imprisonment?

Correct AnswerverifiedA bankrupt is liable to both imprisonmen...View AnswerShow Answer

Under the Bankruptcy and Insolvency Act,what is a commercial proposal?

Correct AnswerverifiedA commercial proposal is an offer made b...View AnswerShow Answer

A secured creditor does not have to prove its debt before its debt ranks as a claim against the bankrupt's estate.

Correct AnswerverifiedShow Answer

What is the difference between a bankrupt person and an insolvent person?

Correct AnswerverifiedA bankrupt person is a person against wh...View AnswerShow Answer

As far as claims against the property of a bankrupted debtor go,the trustee pays the general creditors in priority to which of the following?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe lien holders should attempt to reach...View AnswerShow Answer

Brianna,a framing contractor,has a duly registered builders' lien on the property owned by Bowing Development.This lien gives Brianna the right to

Correct AnswerverifiedShow Answer

James had made a consumer proposal (Division II) to his creditors.He wanted a reduction and extension of time for the payment of his debts.A formal meeting was not requested by any of the creditors.Now the administrator must

Correct AnswerverifiedShow Answer

In the context of bankruptcy proceedings,liquidating dividends are

Correct AnswerverifiedShow Answer

A builder's lien is available only to creditors who participate directly as workers,or who supply material for use directly in the construction work.

Correct AnswerverifiedShow Answer

Danny is thinking of bankruptcy for his business,but so far he has not made an assignment,nor is the business subject to a receiving order.Yet,because Danny meets all the requirements of bankruptcy,the Bankruptcy and Insolvency Act refers to Danny as

Correct AnswerverifiedShow Answer

Where,just before declaring bankruptcy,a person transfers title of real property to his children telling them that he wants to protect the property from bankruptcy,the transfer is a fraudulent conveyance or transfer.

Correct AnswerverifiedShow Answer

What is a fraudulent preference? Give an example of a fraudulent preference.

Correct AnswerverifiedA fraudulent preference is a payment of ...View AnswerShow Answer

Use the fact situation in Q2 to answer the related question that follows. Given the bankruptcy of General Widgets,the incorporation of the new company by George is

Correct AnswerverifiedShow Answer

In Ontario,on a sale of assets,what normal searches should the buyer conduct?

Correct AnswerverifiedThe buyer should conduct a ban...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A bankrupt is liable to both imprisonmen...
View Answer

Correct Answer
verified
A commercial proposal is an offer made b...
View Answer

Correct Answer
verified

Correct Answer
verified
A bankrupt person is a person against wh...
View Answer

Correct Answer
verified

Correct Answer
verified
The lien holders should attempt to reach...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A fraudulent preference is a payment of ...
View Answer

Correct Answer
verified

Correct Answer
verified
The buyer should conduct a ban...
View Answer