Under 11 U.S.C. Section 362, the filing of a bankruptcy petition automatically stays all actions against the debtor or the bankruptcy estate, including: lawsuits, enforcement of judgments, attempts to obtain possession or control of estate property, acts to create, perfect, or enforce liens, and acts to collect on a pre-petition claim. The stay is immediate, requires no court order, and applies to virtually all creditors. Answer A is incorrect because the stay applies to all creditors, not just the IRS. Answer B is incorrect because the stay halts even pre-judgment collection activities. Answer C is incorrect because the stay applies to both secured and unsecured creditors.

The distribution priority in Chapter 7 follows Sections 506 and 507. Secured creditors are paid first from the proceeds of their collateral (not through the Section 507 priority scheme). Among unsecured creditors, Section 507(a) establishes the following priority order: (1) administrative expenses; (2) certain involuntary case gap creditors; (3) domestic support obligations; (4) wages of employees up to $15,150; (5) employee benefit plan contributions; (6) grain farmer and fisherman claims; (7) consumer deposits; (8) government tax claims; (9) bank commitment claims; and (10) general unsecured creditors (last). Answer A (general unsecured) is last. Answer B (secured creditors) is paid from collateral proceeds before the priority scheme. Answer D (taxes) has lower priority than administrative expenses.

Under 11 U.S.C. Section 547(b), a preferential transfer has five elements: (1) a transfer of the debtor's property; (2) to or for the benefit of a creditor; (3) on account of an antecedent debt; (4) while the debtor was insolvent (presumed during the 90 days before filing); (5) made within 90 days before filing (or one year for insiders); and (6) enabling the creditor to receive more than in a Chapter 7 liquidation. Answer A incorrectly states that the transfer must be made MORE than 90 days before filing; it must be made WITHIN 90 days. Answer B is incorrect because preferences apply to unsecured creditors primarily (secured creditors are less commonly affected). Answer C is incorrect because the 90-day rule, not family relationship, is the default; family members are insiders with a one-year lookback.

Under Section 548, there are two types of fraudulent transfers: (1) actual fraud - a transfer made with actual intent to hinder, delay, or defraud creditors, within two years before bankruptcy; and (2) constructive fraud - a transfer within two years before bankruptcy for which the debtor received less than reasonably equivalent value while the debtor was insolvent, became insolvent as a result, had unreasonably small remaining capital, or intended to incur debts beyond their ability to pay. Answer A correctly describes constructive fraud. Answer B describes actual fraud but overstates the lookback period (it is two years in federal bankruptcy law, though state law may extend this). Answer C describes an ordinary payment that is not a fraudulent transfer. Answer D has the timing wrong for the federal bankruptcy fraudulent transfer provision.

Under 11 U.S.C. Section 362(d), a court may grant relief from the automatic stay for: (1) 'cause,' including the lack of adequate protection of the creditor's interest in the property (e.g., declining collateral value without protection payments); or (2) with respect to a stay against an act against property, if the debtor does not have equity in the property and the property is not necessary for an effective reorganization. Adequate protection mechanisms include cash payments, additional liens, or other court-ordered protections. Answer A is incorrect because relief may be sought by motion over debtor objection. Answer C is incorrect because relief is available to all secured creditors. Answer D is incorrect because the automatic stay can be lifted by court order.

Under 11 U.S.C. Section 544, the bankruptcy trustee (or DIP in Chapter 11) has the power of a hypothetical lien creditor, judicial lien creditor, and bona fide purchaser of real property. This 'strong-arm' power allows the trustee to avoid transfers that such hypothetical parties could have avoided under applicable state law. Most importantly, this allows the trustee to avoid unperfected security interests - if a secured creditor did not properly perfect their lien before bankruptcy, the trustee can avoid that lien, making the creditor an unsecured creditor. Answer A describes recovery of post-petition assets which is a different provision. Answer B is too broad; only unperfected interests are avoidable. Answer D describes Section 363(f) sales, a different provision.

An executory contract is one where material performance obligations remain on both sides (the most commonly cited definition comes from Professor Vern Countryman). Under Section 365, the bankruptcy trustee or DIP may assume (take over and be bound by) or reject (breach) executory contracts. Rejection is treated as a pre-petition breach, making the non-debtor party an unsecured creditor for damages. Assumption requires curing defaults and providing adequate assurance of future performance. Answer A is too broad; not all pre-petition contracts are executory. Answer C describes a fully performed contract, which cannot be executory. Answer D is a type of executory contract but does not define the concept.

Under Section 523(a)(2)(A), to establish that a debt is non-dischargeable due to fraud, the creditor must prove: (1) the debtor made a materially false representation; (2) the debtor knew the representation was false or acted with reckless disregard for the truth; (3) the debtor intended to deceive; (4) the creditor justifiably relied on the false representation; and (5) the creditor suffered damages proximately caused by the fraud. This is similar to a civil fraud claim and must be pursued through an adversary proceeding in the bankruptcy court. Answer A (bad faith filing) is a different concept. Answer B (insolvency at time of debt) is not required for fraud. Answer C (90 days) relates to preference payments.

Under Section 523(a)(1), certain tax debts are non-dischargeable in bankruptcy: (1) income taxes for which a return was due (including extensions) within three years before the bankruptcy petition; (2) income taxes assessed within 240 days before filing (the 240-day rule); (3) taxes that were not assessed but were assessable as of the petition date; (4) taxes for which no return was filed or for which a fraudulent return was filed; and (5) employment trust fund taxes. Older tax debts that meet all these tests (return filed on time, assessed more than 240 days ago, not fraudulent) may be dischargeable. Answer B is incorrect because older tax debts may be dischargeable. Answer C is incorrect because even older tax debts may be non-dischargeable under the listed tests. Answer D is incorrect because all types of federal taxes may be non-dischargeable.

Under 11 U.S.C. Section 1129(b), when a class of creditors rejects a Chapter 11 plan, the court may still confirm the plan over the objection (cram it down) if: (1) at least one impaired class has accepted the plan; (2) the plan does not discriminate unfairly against the dissenting class; and (3) the plan is 'fair and equitable' to the dissenting class. For secured creditors, fair and equitable requires that they retain their liens and receive at least the present value of their claims. For unsecured creditors, fair and equitable requires the absolute priority rule: senior creditors must be paid in full before junior creditors or equity holders receive anything. Answer A describes an involuntary conversion. Answer C partially describes one aspect of cram down treatment for secured creditors but does not define the full concept. Answer D overstates the equity result.