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abhasjha
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- Posts: 379
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In many Western societies, modern bankruptcy
laws have undergone a shift away from a focus on
punishment and toward a focus on bankruptcy as a
remedy for individuals and corporations in financial
(5) trouble—and, perhaps unexpectedly, for their
creditors. This shift has coincided with an ever
increasing reliance on declarations of bankruptcy by
individuals and corporations with excessive debt, a
trend that has drawn widespread criticism. However,
(10) any measure seeking to make bankruptcy protection
less available would run the risk of preventing
continued economic activity of financially troubled
individuals and institutions. It is for this reason that
the temptation to return to a focus on punishment of
(15) individuals or corporations that become insolvent
must be resisted. Modern bankruptcy laws, in serving
the needs of an interdependent society, serve the
varied interests of the greatest number of citizens.
The harsh punishment for insolvency in centuries
(20) past included imprisonment of individuals and
dissolution of enterprises, and reflected societies'
beliefs that the accumulation of excessive debt
resulted either from debtors' unwillingness to meet
obligations or from their negligence. Insolvent debtors
(25) were thought to be breaking sacrosanct social
contracts; placing debtors in prison was considered
necessary in order to remove from society those who
would violate such contracts and thereby defraud
creditors. But creditors derive little benefit from
(30) imprisoned debtors unable to repay even a portion of
their debt. And if the entity to be punished is a large
enterprise, for example, an auto manufacturer, its
dissolution would cause significant unemployment
and the disruption of much-needed services.
(35) Modern bankruptcy law has attempted to address
the shortcomings of the punitive approach. Two
beliefs underlie this shift: that the public good ought
to be paramount in considering the financial
insolvency of individuals and corporations; and that
(40) the public good is better served by allowing
debt-heavy corporations to continue to operate, and
indebted individuals to continue to earn wages,
than by disabling insolvent economic entities. The
mechanism for executing these goals is usually a
(45) court-directed reorganization of debtors' obligations to
creditors. Such reorganizations typically comprise
debt relief and plans for court-directed transfers of
certain assets from debtor to creditor. Certain
strictures connected to bankruptcy—such as the fact
(50) that bankruptcies become matters of public record
and are reported to credit bureaus for a number of
years—may still serve a punitive function, but not by
denying absolution of debts or financial
reorganization. Through these mechanisms, today's
(55) bankruptcy laws are designed primarily to assure
continued engagement in productive economic
activity, with the ultimate goal of restoring businesses
and individuals to a degree of economic health and
providing creditors with the best hope of collecting.
6. Which one of the following most accurately expresses
the main point of the passage?
(A) The modern trend in bankruptcy law away from
punishment and toward the maintenance of
economic activity serves the best interests of
society and should not be abandoned.
(B) Bankruptcy laws have evolved in order to meet
the needs of creditors, who depend on the
continued productive activity of private citizens
and profit-making enterprises.
(C) Modern bankruptcy laws are justified on
humanitarian grounds, even though the earlier
punitive approach was more economically
efficient.
(D) Punishment for debt no longer holds deterrent
value for debtors and is therefore a concept that
has been largely abandoned as ineffective.
(E) Greater economic interdependence has triggered
the formation of bankruptcy laws that reflect
a convergence of the interests of debtors and
creditors.
7 . In stating that bankruptcy laws have evolved "perhaps
unexpectedly" (line 5) as a remedy for creditors, the
author implies that creditors
(A) are often surprised to receive compensation in
bankruptcy courts
(B) have unintentionally become the chief
beneficiaries of bankruptcy laws
(C) were a consideration, though not a primary one,
in the formulation of bankruptcy laws
(D) are better served than is immediately apparent by
laws designed in the first instance to provide a
remedy for debtors
(E) were themselves active in the formulation of
modern bankruptcy laws
8. The author's attitude toward the evolution of bankruptcy
law can most accurately be described as
(A) approval of changes that have been made to
inefficient laws
(B) confidence that further changes to today's laws
will be unnecessary
(C) neutrality toward laws that, while helpful to
many, remain open to abuse
(D) skepticism regarding the possibility of solutions
to the problem of insolvency
(E) concern that inefficient laws may have been
replaced by legislation too lenient to debtors
9. The primary purpose of the passage is to
(A) offer a critique of both past and present
approaches to insolvency
(B) compare the practices of bankruptcy courts of
the past with those of bankruptcy courts of the
present
(C) criticize those who would change the bankruptcy
laws of today
(D) reexamine today's bankruptcy laws in an effort to
point to further improvements
(E) explain and defend contemporary bankruptcy
Laws
10. Which one of the following claims would a defender of
the punitive theory of bankruptcy legislation be most
likely to have made?
(A) Debt that has become so great that repayment
is impossible is ultimately a moral failing and
thus a matter for which the law should provide
punitive sanctions.
(B) Because insolvency ultimately harms the entire
economy, the law should provide a punitive
deterrent to insolvency.
(C) The insolvency of companies or individuals is
tolerable if the debt is the result of risk-taking,
profit-seeking ventures that might create
considerable economic growth in the long run.
(D) The dissolution of a large enterprise is costly
to the economy as a whole and should not be
allowed, even when that enterprise's insolvency
is the result of its own fiscal irresponsibility.
(E) The employees of a large bankrupt enterprise
should be considered just as negligent as the
owner of a bankrupt sole proprietorship.
11. Which one of the following sentences could most
logically be appended to the end of the last paragraph of
the passage?
(A) Only when today's bankruptcy laws are
ultimately seen as inadequate on a large scale
will bankruptcy legislation return to its original
intent.
(B) Punishment is no longer the primary goal of
bankruptcy law, even if some of its side effects
still function punitively.
(C) Since leniency serves the public interest in
bankruptcy law, it is likely to do so in criminal
law as well.
(D) Future bankruptcy legislation could include
punitive measures, but only if such measures
ultimately benefit creditors.
(E) Today's bankruptcy laws place the burden
of insolvency squarely on the shoulders of
creditors, in marked contrast to the antiquated
laws that weighed heavily on debtors
12. The information in the passage most strongly suggests
which one of the following about changes in bankruptcy
laws?
(A) Bankruptcy laws always result from gradual
changes in philosophy followed by sudden
shifts in policy.
(B) Changes in bankruptcy law were initiated by
the courts and only grudgingly adopted by
legislators.
(C) The adjustment of bankruptcy laws away from
a punitive focus was at first bitterly opposed by
creditors.
(D) Bankruptcy laws underwent change because the
traditional approach proved inadequate and
contrary to the needs of society.
(E) The shift away from a punitive approach to
insolvency was part of a more general trend in
society toward rehabilitation and away from
retribution
13. Which one of the following, if true, would most weaken
the author's argument against harsh punishment for
debtors?
(A) Extensive study of the economic and legal
history of many countries has shown that
most individuals who served prison time for
bankruptcy subsequently exhibited greater
economic responsibility.
(B) The bankruptcy of a certain large company
has had a significant negative impact on the
local economy even though virtually all of the
affected employees were able to obtain similar
jobs within the community.
(C) Once imprisonment was no longer a consequence
of insolvency, bankruptcy filings increased
dramatically, then leveled off before increasing
again during the 1930s.
(D) The court-ordered liquidation of a large and
insolvent company's assets threw hundreds
of people out of work, but the local economy
nevertheless demonstrated robust growth in the
immediate aftermath.
(E) Countries that continue to imprison debtors enjoy
greater economic health than do comparable
countries that have ceased to do so.
laws have undergone a shift away from a focus on
punishment and toward a focus on bankruptcy as a
remedy for individuals and corporations in financial
(5) trouble—and, perhaps unexpectedly, for their
creditors. This shift has coincided with an ever
increasing reliance on declarations of bankruptcy by
individuals and corporations with excessive debt, a
trend that has drawn widespread criticism. However,
(10) any measure seeking to make bankruptcy protection
less available would run the risk of preventing
continued economic activity of financially troubled
individuals and institutions. It is for this reason that
the temptation to return to a focus on punishment of
(15) individuals or corporations that become insolvent
must be resisted. Modern bankruptcy laws, in serving
the needs of an interdependent society, serve the
varied interests of the greatest number of citizens.
The harsh punishment for insolvency in centuries
(20) past included imprisonment of individuals and
dissolution of enterprises, and reflected societies'
beliefs that the accumulation of excessive debt
resulted either from debtors' unwillingness to meet
obligations or from their negligence. Insolvent debtors
(25) were thought to be breaking sacrosanct social
contracts; placing debtors in prison was considered
necessary in order to remove from society those who
would violate such contracts and thereby defraud
creditors. But creditors derive little benefit from
(30) imprisoned debtors unable to repay even a portion of
their debt. And if the entity to be punished is a large
enterprise, for example, an auto manufacturer, its
dissolution would cause significant unemployment
and the disruption of much-needed services.
(35) Modern bankruptcy law has attempted to address
the shortcomings of the punitive approach. Two
beliefs underlie this shift: that the public good ought
to be paramount in considering the financial
insolvency of individuals and corporations; and that
(40) the public good is better served by allowing
debt-heavy corporations to continue to operate, and
indebted individuals to continue to earn wages,
than by disabling insolvent economic entities. The
mechanism for executing these goals is usually a
(45) court-directed reorganization of debtors' obligations to
creditors. Such reorganizations typically comprise
debt relief and plans for court-directed transfers of
certain assets from debtor to creditor. Certain
strictures connected to bankruptcy—such as the fact
(50) that bankruptcies become matters of public record
and are reported to credit bureaus for a number of
years—may still serve a punitive function, but not by
denying absolution of debts or financial
reorganization. Through these mechanisms, today's
(55) bankruptcy laws are designed primarily to assure
continued engagement in productive economic
activity, with the ultimate goal of restoring businesses
and individuals to a degree of economic health and
providing creditors with the best hope of collecting.
6. Which one of the following most accurately expresses
the main point of the passage?
(A) The modern trend in bankruptcy law away from
punishment and toward the maintenance of
economic activity serves the best interests of
society and should not be abandoned.
(B) Bankruptcy laws have evolved in order to meet
the needs of creditors, who depend on the
continued productive activity of private citizens
and profit-making enterprises.
(C) Modern bankruptcy laws are justified on
humanitarian grounds, even though the earlier
punitive approach was more economically
efficient.
(D) Punishment for debt no longer holds deterrent
value for debtors and is therefore a concept that
has been largely abandoned as ineffective.
(E) Greater economic interdependence has triggered
the formation of bankruptcy laws that reflect
a convergence of the interests of debtors and
creditors.
7 . In stating that bankruptcy laws have evolved "perhaps
unexpectedly" (line 5) as a remedy for creditors, the
author implies that creditors
(A) are often surprised to receive compensation in
bankruptcy courts
(B) have unintentionally become the chief
beneficiaries of bankruptcy laws
(C) were a consideration, though not a primary one,
in the formulation of bankruptcy laws
(D) are better served than is immediately apparent by
laws designed in the first instance to provide a
remedy for debtors
(E) were themselves active in the formulation of
modern bankruptcy laws
8. The author's attitude toward the evolution of bankruptcy
law can most accurately be described as
(A) approval of changes that have been made to
inefficient laws
(B) confidence that further changes to today's laws
will be unnecessary
(C) neutrality toward laws that, while helpful to
many, remain open to abuse
(D) skepticism regarding the possibility of solutions
to the problem of insolvency
(E) concern that inefficient laws may have been
replaced by legislation too lenient to debtors
9. The primary purpose of the passage is to
(A) offer a critique of both past and present
approaches to insolvency
(B) compare the practices of bankruptcy courts of
the past with those of bankruptcy courts of the
present
(C) criticize those who would change the bankruptcy
laws of today
(D) reexamine today's bankruptcy laws in an effort to
point to further improvements
(E) explain and defend contemporary bankruptcy
Laws
10. Which one of the following claims would a defender of
the punitive theory of bankruptcy legislation be most
likely to have made?
(A) Debt that has become so great that repayment
is impossible is ultimately a moral failing and
thus a matter for which the law should provide
punitive sanctions.
(B) Because insolvency ultimately harms the entire
economy, the law should provide a punitive
deterrent to insolvency.
(C) The insolvency of companies or individuals is
tolerable if the debt is the result of risk-taking,
profit-seeking ventures that might create
considerable economic growth in the long run.
(D) The dissolution of a large enterprise is costly
to the economy as a whole and should not be
allowed, even when that enterprise's insolvency
is the result of its own fiscal irresponsibility.
(E) The employees of a large bankrupt enterprise
should be considered just as negligent as the
owner of a bankrupt sole proprietorship.
11. Which one of the following sentences could most
logically be appended to the end of the last paragraph of
the passage?
(A) Only when today's bankruptcy laws are
ultimately seen as inadequate on a large scale
will bankruptcy legislation return to its original
intent.
(B) Punishment is no longer the primary goal of
bankruptcy law, even if some of its side effects
still function punitively.
(C) Since leniency serves the public interest in
bankruptcy law, it is likely to do so in criminal
law as well.
(D) Future bankruptcy legislation could include
punitive measures, but only if such measures
ultimately benefit creditors.
(E) Today's bankruptcy laws place the burden
of insolvency squarely on the shoulders of
creditors, in marked contrast to the antiquated
laws that weighed heavily on debtors
12. The information in the passage most strongly suggests
which one of the following about changes in bankruptcy
laws?
(A) Bankruptcy laws always result from gradual
changes in philosophy followed by sudden
shifts in policy.
(B) Changes in bankruptcy law were initiated by
the courts and only grudgingly adopted by
legislators.
(C) The adjustment of bankruptcy laws away from
a punitive focus was at first bitterly opposed by
creditors.
(D) Bankruptcy laws underwent change because the
traditional approach proved inadequate and
contrary to the needs of society.
(E) The shift away from a punitive approach to
insolvency was part of a more general trend in
society toward rehabilitation and away from
retribution
13. Which one of the following, if true, would most weaken
the author's argument against harsh punishment for
debtors?
(A) Extensive study of the economic and legal
history of many countries has shown that
most individuals who served prison time for
bankruptcy subsequently exhibited greater
economic responsibility.
(B) The bankruptcy of a certain large company
has had a significant negative impact on the
local economy even though virtually all of the
affected employees were able to obtain similar
jobs within the community.
(C) Once imprisonment was no longer a consequence
of insolvency, bankruptcy filings increased
dramatically, then leveled off before increasing
again during the 1930s.
(D) The court-ordered liquidation of a large and
insolvent company's assets threw hundreds
of people out of work, but the local economy
nevertheless demonstrated robust growth in the
immediate aftermath.
(E) Countries that continue to imprison debtors enjoy
greater economic health than do comparable
countries that have ceased to do so.
