PrepTest 156, Section 1, Question 18
Traditionally, corporate bankruptcy law placed highest priority on(440 more words not shown)
It can be inferred from(17 more words not shown)
- ABankruptcy laws should(18 more words not shown)
- BThe claims of(24 more words not shown)
- CBankruptcy law should(12 more words not shown)
- DBankruptcy laws that(16 more words not shown)
- EThe legal system(24 more words not shown)
Reading the passage
Keep Jackson's priorities separate from Korobkin's. Jackson wants a collective process for satisfying creditors' contractual claims, and he defends it as fair and efficient. He does not broaden the purpose of bankruptcy to protecting everyone who depends on the company.
What we’re looking for
That gives us a direction: favor repayment of contractual debts, even when considering employees or preserving the business would point another way.
Working the answers
- A
Keeping businesses open is not Jackson's priority. His preferred model makes assets available to satisfy creditors, even when that requires liquidation. A instead gives continued operation a goal of its own.
- B
Prioritizing creditors as a group doesn't establish priority for the creditor owed the largest dollar amount. The traditional model described at the opening gives creditors a set percentage, not first place to the biggest loan.
- CCorrect
This captures the conflict Korobkin identifies: Jackson prioritizes the company's contractual debts, while employees' broader interests aren't represented by those debts. Favoring promises to creditors over employees' well-being follows from that restricted purpose.
- D
Jackson explicitly values efficiency. Nothing indicates that he would abandon an efficient approach in favor of Korobkin's broader conception of fairness.
- E
This adds a condition: debt collection would occur only when corporations cannot earn enough to remain in business. Jackson doesn't make his account depend on that test. He defines bankruptcy's purpose around creditors' claims rather than first determining whether continued operation could be profitable.
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