Chapter Fourteen
Bankruptcy
A financially distressed company that cannot pay its obligations on time faces a limited and unappealing set of options. If the company has indulgent creditors and legitimate prospects for generating cash, it may be able to negotiate a workout plan. It may retain a turnaround adviser to boost the viability of the business. Or the company may file for bankruptcy.
You will definitely get several questions on bankruptcy. However, this is still a FINRA exam, not the bar exam. Investment bankers aren’t normally required to possess in-depth knowledge of the intricacies of bankruptcy law. Rather, they need a general understanding of certain aspects of the bankruptcy process.
There are two primary types of business bankruptcies: Chapter 7 and Chapter 11. (The names refer to the applicable chapter of the Bankruptcy Code.) In a Chapter 7 bankruptcy, a co