R6

Question 1

Derivative Action
Derivative Suit

Answer 1

Is used when a corp fails to enforce a right that is has against a 3rd party
The shareholder brings suit on behalf of the corporation

Question 2

A partner has no right to assign an interest in partnership property bc a partner’s rights in partnership property are limited to using the property for partnership purposes

Answer 2

A partner has a right to assign her interest in partnership distributions

Question 3

A Corporation can Dissolve by:

Answer 3

Judicial Dissolution - Court orders the corporation to dissolve

Voluntary dissolution - Directors and shareholders can decide to dissolve the corporation - Board of Directors pass a resolution to dissolve, Shareholders approve

Merger or Acquisition - Merges with another company or is acquired

Question 4

Shareholders have the right to vote to elect or remove directors

Answer 4

Shareholders also have the right to vote on whether to approve fundamental changes to the corporation - like a dissolution

Question 5

Partners are agents of the other partners of a partnership, can act both an Agent & Principal

Answer 5

All partners are subject to joint and several liabilities on partnership debts and contracts under the Revised Act

Question 6

An equity security represents an ownership interest in a corporation

Answer 6

All types of stock are considered equity securities

Question 7

Absent to an agreement in an LLC

Answer 7

Profits will divided among the members proportion to their contributions (example used CASH)

Among the choices were:

Working hours
Origination of business
And Cash

Question 8

In a General Partnership

Answer 8

Partners are jointly and severally liable for the debts and obligations of the partnership incurred within the scope of partnership business

Question 9

When a General Partner dies

Answer 9

The partner’s right to participate in management stops

Partner’s estate remains liable for the partner’s obligations to the partnership

It does NOT automatically dissolves, but rather it will dissolve only if 90 days pass and the remaining partners don’t want to keep the partnership

Question 10

Bankruptcy Estate is

Answer 10

Deemed to include money inherited within 180 days after the bankruptcy petition is filed

Question 11

LLC Owners are

Answer 11

Not required to be US Citizens or Residents

Question 12

Where there are fewer than 12 unsecured creditors,

Answer 12

Any 1 creditor who is owe at least $18,600 (as adjusted for inflation) in unsecured debt or more may file an involuntary petition in bankruptcy

Question 13

Bonds are debt securities

Answer 13

A Warrant is a contractual right to purchase stock, which constitutes a share of corporate equity

Question 14

In a Reorganization under Chapter 11

Answer 14

There is no requirement of liquidation

Question 15

Once a dividend is declared

Answer 15

A shareholder becomes an unsecured creditor of the corporation for the amount of the unpaid dividend

Question 16

If an LLC Member sells his interest in an LLC w/o notifying the other members AND Absent an agreement

Answer 16

THEN the Assignee is only entitled to received the assignor’s share of profits

Question 17

The assignee of an interest in a partnership

Answer 17

Received the assignor’s rights to profits and surplus

Question 18

While a Corp or a partnership may voluntarily or involuntarily be petitioned into a Chap 7 bankruptcy

Answer 18

A Corporation or a Partnership is “Dissolved” while an individual is Discharged

Question 19

Each Director owes the Corporation Fiduciary Duties and

Answer 19

Must act in the best interest of the Corporation

Question 20

Articles of Incorporations

Answer 20

Are for Corporations

Question 21

Bylaws are adopted by the incorporators or directors

Answer 21

AND generally will contain rules desired regarding the operation of the corporation

Question 21

Chapter 7

Answer 21

Liquidation: Liquidation of Debtor’s nonexempt assets by a trustee

Proceeds are used to pay off creditors

Available to Ind, Part, and Corps

Question 22

Chapter 9

Answer 22

Municipal Debt Adjustment: Specifically for municipalities, like cities and towns

Allows for municipalities to negotiate with creditors while continuing to operate

Question 23

Chapter 11

Answer 23

Reorganization: Used by business, must be by a court-approved plan
Debtor remains in possession of their assets and continues business operations while restructuring debts

Ind can also file for this but its more costly

Question 24

Chapter 12

Answer 24

Family Farmers & Fishermen: Allows them to propose a plan to repay or all or part of their debts over time

Question 25

Chapter 13

Answer 25

Adjustment of Debts of Individuals with Regular Income:
Ind with steady income to repay their debts over a 3-5 year period