Question

What are steps in a typical bankruptcy liquidation?

Check all that apply:

1.The proceeds from selling the assets are distributed to the creditors.

2.Bondholders swap their bonds for new shares.

3.If any money remains, it is distributed to shareholders.

4.Creditors elect a trustee-in-bankruptcy to sell the remaining assets.

5.A petition for bankruptcy is filed in court.

Answer 1

Bankruptcy is all strated with finding the attorney then filing a petition for bankruptcy in court. Then liquidation of assets and distribution among the creditors. Finally if there is anything left then it will be sold to the shareholders.

Option 1 is correct it is the one of the steps in typical bankruptcy liquidation.

Option 2 is incorrect.

Option 3 is correct remaining money is shared with all shareholders.

Option 4 is incorrect.

Option 5 is correct because it is the one of the initial steps in filing bankruptcy.