Ontario Barrister and Solicitor Practice Exam

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What is the definition of a proposal in a bankruptcy context?

The final decree in a bankruptcy case.
Liquidation of assets to satisfy debt.
An offer made to settle debts.
A petition to declare bankruptcy.

The correct answer is: An offer made to settle debts.

A proposal in a bankruptcy context is an offer made by a debtor to their creditors to settle their debts. This option is correct because a proposal is not the final decree in a bankruptcy case (A), which is the ruling made by the court to officially close the case. It is also not the liquidation of assets (B), which is another option in bankruptcy proceedings. Lastly, a proposal is not a petition to declare bankruptcy (D), as this is the initial legal action taken by an individual or business to declare their inability to pay their debts.