PrepTest 156, Section 1, Question 16

Working the answers

• A

  Allowing a business to reorganize doesn't tell us how likely it is to recover. No success rate or other assessment of that likelihood is supplied.

• B

  The traditional approach pays creditors a set percentage, but we aren't told what that percentage is on average. Knowing how payments are distributed isn't the same as knowing how much debt creditors usually recover.

• C
  Correct

  Jackson says that a compulsory collective process guarantees fair adjudication of claims and efficient collection. Those are his arguments for the approach. We can identify his reasons without agreeing that they settle the issue.

• D

  No ranking of different kinds of creditors is given. The final paragraph actually identifies the lack of a way to compare vulnerability across affected parties as a problem; it doesn't solve that problem by naming a most-vulnerable class of lender.

• E

  Korobkin identifies harms to employees, suppliers, and the community that a creditor-centered process neglects. Those are consequences of its limited priorities, not examples of inefficient debt collection. Jackson claims efficiency for the collection process, and no list of inefficiencies in that process follows.