QUESTION 1 When a company files for bankruptcy protection managers will typicall

Question

QUESTION 1 When a company files for bankruptcy protection managers will typically arrange for Debtor in Possession Financing (DIP financing). DIP financing is always subordinate to claims of unsecured creditors who financed the company prior to its bankruptcy filing. True False

QUESTION 2 Every risk cluster must be linked to the profit margin of a company.

QUESTION 3 An important part of using risk clusters in ERM is that they eliminate the need to assign an ownership of risks. True False

QUESTION 4 Risk clusters are more than simply visual maps of risks they are sources of information that give feedback when quantitative and qualitative data are input into the models behind each cluster. True False

QUESTION 5 The role of the SEC in a chapter 11 bankruptcy is to assure that banks are treated fairly. True False

Explanation / Answer

Answer:

    DIP financing is always subordinate to claims of unsecured creditors who financed the company prior to its bankruptcy filing - True

    Debtor-in-possession financing is typically during restructuring under corporate bankruptcy law. It may be used to keep a business operating until it can be sold as a going concern and it also give a troubled company a new start, albeit under strict conditions. In this case, debtor in possession financing refers to debt incurred while in bankruptcy and exit financing is debt incurred upon emerging from reorganisation under bankruptcy law.

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