Question

Exchanging stock or something else for existing debt under Chapter 11 bankruptcy is called: substitution. amendment. composition settlement. extension.

Answer 1

The correct answer to the following question is Substitution.

Equity can be defined as the shares or stock that a company issues to the public to get the financing and these stocks represent ownership interest in the company.

Debt can be termed as the amount of money that one party borrows from other party and that has to be paid in future. Almost all companies borrow money from public, or another company or banks to expand their company.

When stocks or anything valuable are exchanged or replaced for one's existing debt , then we call this process Substitution .