US-CN Companies & Securities Law Assignment

Corporate Liquidations and Reorganizations 1. What is the distinction between equity insolvency and bankruptcy insolvency? Equity insolvency occurs when a debtor is unable to pay its debts as they come due. Bankruptcy insolvency occurs when a debtor’s liabilities exceed the fair value of all assets. 2. Bankruptcy proceedings may be designated as voluntary or involuntary. Distinguish between the two types, including the requirements for filing of an involuntary petition. A bankruptcy proceeding is designated voluntary if the debtor corporation files the petition to place itself under the protection of the bankruptcy court and involuntary if creditors file the petition to bring the debtor into bankruptcy court. An involuntary petition may be filed by a single creditor with an unsecured claim of $14,425 or more if there are fewer than twelve unsecured creditors. Otherwise, three or more entities with unsecured claims totaling at least $14,425 must file in order to commence an ...