CFE – Law — Question 75
A business files for bankruptcy with the goal of obtaining relief from creditors so that it can rearrange its financial affairs and continue as a going concern. Which of the following describes this type of bankruptcy proceeding?
Answer options
- A. Debt dismissal bankruptcy
- B. Liquidation bankruptcy
- C. Reorganization bankruptcy
- D. Debt adjustment bankruptcy
Correct answer: B
Explanation
The correct answer is C. Reorganization bankruptcy, as it allows a business to restructure its debts and continue operations. Option A, Debt dismissal bankruptcy, is not a recognized type, while B, Liquidation bankruptcy, involves selling off assets rather than restructuring. Option D, Debt adjustment bankruptcy, is also not a standard term used in bankruptcy proceedings.