Question

Regarding a Chapter 7 bankruptcy filing, which of the following statements are accurate?

I. Results in the liquidation of an insolvent firm.
II. Allows corporations to discharge debts.
III. Usually wipes out equity holders.

A) I and II
B) II and III
C) I and III
D) All of the above

Answer 1

Chapter 7 bankruptcy results in the liquidation of an insolvent firm and usually wipes out equity holders.

Step-by-step explanation:

Regarding a Chapter 7 bankruptcy filing, the accurate statements are:

1. I. Results in the liquidation of an insolvent firm.
2. III. Usually wipes out equity holders.

Chapter 7 bankruptcy is a type of bankruptcy that is available to both individuals and businesses. When a firm files for Chapter 7 bankruptcy, it typically means that the firm is unable to pay its debts and its assets are sold to repay creditors. This process often leads to the complete shutdown of the firm and the elimination of equity holders' interests.