Questions on restructuring (5pts, pt each)

True or False

a. Bankruptcy Chapter 7 is about closing down a firm and liquidating its assets

b. In an LBO, one of the first tasks of a financial manager is to pay down debt

c. The main characteristics of leveraged restructurings are high debt, incentives to management, and private ownership.

d. Private equity partnerships have limited lives, forcing the sale of portfolio companies

e. Private equity managers compensation depends on the exit value of a company

f. Although a firm going through Chapter 11 becomes a new entity (and there is new equity for the new company), it is entitled to tax-loss carry forwards

g. In a bankruptcy, senior creditors at the top of the capital structure are incentivized to either get the company running as efficiently as possible as fast as possible or to simply liquidate itself, time being of the essence

h. Chrysler's 2009 bankruptcy is an example where senior creditors' rights were trampled

i. Financial sponsorship firms in private equity seek to raise the EBITDA of acquired firms

j. Large, multi-tech firms have a significant risk because they tend to under-invest in disruptive ideas