Pick the correct statement from below.

• Bankruptcy occurs when total equity is negative.

• Bankruptcy is a legal proceeding.

• Bankruptcy occurs when a company cannot meet its financial obligations.

• Bankruptcy refers to a loss of value for debt holders.

• Bankruptcy is an inexpensive means of reorganizing a company.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 _______________________.

• permits creditors to file a prepack immediately after a firm files for bankruptcy protection

• prevents creditors from submitting any reorganization plans

• prevents companies from filing for bankruptcy protection more than once

• permits key employee retention plans only if the affected employee(s) has another job offer

• allows the payment of bonuses to all key employees to entice those employees to remain in the company's employ

Pick the correct statement from below.

• A company is technically insolvent when it has a negative book value.

• A company is technically insolvent when its total debt exceeds its total equity.

• A company is technically insolvent when it is unable to meet its financial obligations.

• A company is technically insolvent when it files for bankruptcy protection.

• A company is technically insolvent when the market value of its stock is less than its book value.