Which of the following statements is false? A) In bankruptcy, management is given the opportunity to reorganize the firm and renegotiate with debt holders. B) Because a corporation is a separate legal entity, when it fails to repay its debts, the people who lent to the firm, the debt holders are entitled to seize the assets of the corporation in compensation for the default. C) As long as the corporation can satisfy the claims of the debt holders, ownership remains in the hands of the equity holders. D) If the corporation fails to satisfy debt holders' claims, debt holders may lose control of the firm.

Business/Professional Ethics Directors/Executives/Acct
8th Edition
ISBN:9781337485913
Author:BROOKS
Publisher:BROOKS
Chapter5: Corporate Ethical Governance & Accountabililty
Section: Chapter Questions
Problem 20.1EC
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Which of the following statements is false?

A) In bankruptcy, management is given the opportunity to reorganize the firm and renegotiate with debt holders.

B) Because a corporation is a separate legal entity, when it fails to repay its debts, the people who lent to the firm, the debt holders are entitled to seize the assets of the corporation in compensation for the default.

C) As long as the corporation can satisfy the claims of the debt holders, ownership remains in the hands of the equity holders.

D) If the corporation fails to satisfy debt holders' claims, debt holders may lose control of the firm.

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