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Exam CFE - Law topic 1 question 17 discussion

Actual exam question from ACFE's CFE - Law
Question #: 17
Topic #: 1
[All CFE - Law Questions]

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?

  • A. Debt dismissal bankruptcy
  • B. Liquidation bankruptcy
  • C. Reorganization bankruptcy
  • D. Debt adjustment bankruptcy
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Suggested Answer: B 🗳️
by raochavan at Sept. 3, 2024, 6:58 p.m.

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raochavan
3 months ago
C. Reorganization bankruptcy Explanation: In a reorganization bankruptcy, a business files for bankruptcy with the aim of restructuring its financial affairs and continuing operations as a going concern. This type of bankruptcy is typically filed under Chapter 11 of the U.S. Bankruptcy Code, which allows the business to propose a plan to reorganize and repay its debts over time while remaining in operation. The other options refer to different types of bankruptcy: liquidation (which is more about selling off assets to pay creditors), debt adjustment (which is not a standard bankruptcy term), and debt dismissal (which is not a recognized type of bankruptcy).
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