Luxy Corp. has been suffering large losses for the past 2 years.  Because of its inability to meet current obligations, Luxy has filed a petition for reorganization under Chapter 11 of the Bankruptcy Code.  The reorganization provisions under the Bankruptcy Code
　　A. Require that the court appoint a trustee in all cases.
　　B. Permit Lux to remain in possession of its assets.
　　C. Apply only to involuntary bankruptcy.
　　D. Will apply to Lux only if Lux is required to register pursuant to the federal securities laws.
　　Answer:B
　　B is corrent. Under a Chapter 11 reorganization normally a debtor is allowed to remain in possession of its assets. The purpose of a Chapter 11 reorganization is to keep the financially troubled firm in business.
　　A is incorrect. The courts aren’t required to appoint a trustee. The court will only appoint a trustee if one is requested by a party in interest to take over the debtor’s business. The court will approve such a request when there is evidence of fraudulent actions by the debtor, gross mismanagement of the business, or it appears that the takeover by the trustee would be in the best interest of the debtor’s estate.
　　C is incorrect. Chapter 11 business reorganizations permits both voluntary and involuntary proceedings.
　　D is incorrect. There is no such relationship between the provisions of the Bankruptcy Code and the registration requirements of the federal securities laws.