Bankruptcy Types
What bankruptcy is liquidation bankruptcy?
CHapter 7
Why are accountants important during bankruptcy?
Ensure fairness and transparency
What is an LIT?
Licensed Insolvency Trustee
Who has responsibilities under bankruptcy?
Debtors and courts
Whta bankruptcy allows for reorganization individuals and married couples?
Chapter 13
Is disclosing important liabilities an unethical concern?
No
What 3 documents need to be signed by the company?
Assessment certifcate, form 69, and form 79
What are the most common types of bankruptcies declared by corporations?
Chapter 11 or Chapter 7
Chapter 13 restructures what type of payments?
Debt payments?
When would the creditor cancel or reduce a portion of debt?
Debt forgiveness
What is the difference between form 69 and 79
Form 69 produces monthly income and expenses, form 79 produces assets and liabilities
Low-risk creditors
When is debt consolidation usually formualized?
Chapter 13
What are the 3 principles that we learned in class that relate to bankruptcy?
Business Entity, Cost, and Materiality Principles
What score will fall dramatically when bankruptcy is decalred?
Credit score
It no longer exists
3-5 years
What are the 4 requirements needed to avoid bankruptcy?
Good credit, low interest loans, comfortable mortagage agreement, and manage debt without losing assets
Why is an LIT important?
Reduces legal trouble and potential fines
How does a limited and general partner differ in bankruptcy?
Limited partners have limited liability whilst general partners have unlimited liability