Black Letter Outline on Bankruptcy and Related Law
Authors:
Nickles, Steve H. / Epstein, David G.
Edition:
2nd
Copyright Date:
2006
27 chapters
have results for bankruptcy
VI. Bankruptcy: An Overview 69 results (showing 5 best matches)
- The Bankruptcy Act of 1898 provided for “bankruptcy referees.” Originally, the judicial role of bankruptcy referees was relatively minor. The referee was primarily an administrator and supervisor of bankruptcy cases, not a judicial officer. Amendments to the Bankruptcy Act of 1898 made the bankruptcy referee more of a judicial officer. In 1973, the Bankruptcy Rules changed the title of the office from “bankruptcy referee” to “bankruptcy judge.”
- The 1898 Act used the term “courts of bankruptcy.” A court of bankruptcy could be either the court of a federal district judge or the court of a bankruptcy judge. Any federal district court could be a “court of bankruptcy.” Any judicial power conferred by the Bankruptcy Act of 1898 on the “court” could be exercised by either a federal district judge or a bankruptcy judge; any judicial power conferred by the Bankruptcy Act of 1898 on the “judge” could be exercised only by the federal district judge.
- Article I of the Constitution empowers Congress to “establish uniform laws on the subject of Bankruptcies throughout the United States.” For most of the 20th century, bankruptcy law was the Bankruptcy Act of 1898, commonly referred to as the “Bankruptcy Act.” It was replaced in 1978 by a law commonly referred to as the “Bankruptcy Reform Act of 1978” or “Bankruptcy Code.” The Bankruptcy Code has been regularly amended; the most comprehensive bankruptcy amendments were enacted in 1984 and 2005.
- Title 28 nowhere uses the term “bankruptcy referee.” Section 152 of title 28 provides for “bankruptcy judges” to be appointed by the United States courts of appeals. Section 151 of title 28 states that these bankruptcy judges “shall constitute a unit of the district court to be known as the bankruptcy court.” Under title 28, the bankruptcy court is not really a separate court; rather, it is a part of the district court.
- The allocation of judicial power and responsibility over bankruptcy matters is one of the most controversial and complex areas of bankruptcy law and practice. We believe that you will find it easier to deal with the bankruptcy jurisdiction issues after you have gained a greater understanding of the substantive law of bankruptcy. Accordingly, bankruptcy jurisdiction issues will not be dealt with until later in this book.
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IV. Creditors With Special Rights 5 results
- NOTE: The phrase “act of bankruptcy” is an anachronism. The Bankruptcy Act of 1898 provided for “acts of bankruptcy” and made the occurrence of an act of bankruptcy a condition precedent to creditors’ filing an involuntary bankruptcy petition against their debtor. While the Bankruptcy Code retains the possibility of an involuntary bankruptcy, it eliminated the concept of “acts of bankruptcy.”
- Obviously, setoff and recoupment are very similar rights and remedies for the collection of debts outside of bankruptcy. When we get inside of bankruptcy, however, we will see that bankruptcy law differently treats setoff and recoupment.
- (iii) an act of bankruptcy is committed; or
- has died and (2) no one has filed a bankruptcy petition.
- The term “default” is not specifically defined in the Code. The circumstances which constitute default are a matter of agreement between the parties. Because the secured party usually has superior bargaining power, the security agreement will usually define default as broadly as possible. Common events of default include a missed or late payment, any impairment of the collateral such as failure to insure, impairment of the personal obligation such as bankruptcy of the debtor, and any feeling of insecurity that the prospect for payment is uncertain. In the absence of any definition of “default” in the security agreement, default occurs only on a failure to pay.
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XIX. Allocation of Judicial Power Over Bankruptcy Matters 51 results (showing 5 best matches)
- (The phrase “summary jurisdiction” is somewhat misleading. First, it incorrectly implies that under the Bankruptcy Act of 1898, bankruptcy courts had a second, non-summary form of jurisdiction. Summary jurisdiction is the only form of jurisdiction that a bankruptcy judge possessed under the Bankruptcy Act of 1898. Bankruptcy courts had only summary jurisdiction; other courts had plenary jurisdiction. Second, it incorrectly implies that in resolving controversies the bankruptcy judge always conducted summary proceedings.)
- In understanding the present law allocating judicial powers over bankruptcy matters, it is necessary to understand three separate sections in title 28: (1) 151, (2) 1334 and (3) 157. By understanding these three provisions you will understand that (1) bankruptcy courts are a part of the United States District Court but bankruptcy judges are different from district court judges, (2) bankruptcy cases are different from bankruptcy proceedings, (3) bankruptcy cases can be handled by either bankruptcy judges or federal district judges (depending on withdrawal of the reference), but not by state court judges and (4) bankruptcy proceedings can be tried by bankruptcy judges or federal judges (depending on withdrawal of the reference) or even state court judges (depending on where the lawsuit was filed and removal and abstention). To understand even more, please read the following descriptions of the three key sections in title 28:
- , Congress was urged to solve the constitutional dilemma by establishing bankruptcy courts as Article III courts. Congress rejected this solution. Instead, Congress in 1984 made the bankruptcy court a part of the federal district court, conferred jurisdiction in bankruptcy on the district court, and allocated judicial power in bankruptcy matters between the federal district judge and the bankruptcy judge. In the two-year gap between the 1982 Marathon decision and the 1984 legislation, the allocation of judicial power over bankruptcy was governed by an Emergency Rule adopted by all district courts.
- Section 151 refers to a bankruptcy judge and a bankruptcy court as a “unit” of the district court. It is important to keep this reference in mind when reading other sections in title 28 dealing with the allocation of judicial power in bankruptcy matters. When the term “district court” appears in section 1334 or section 157, it could be referring to the United States district judge and/or the bankruptcy judge. After all, the bankruptcy judge is a part of the district court—a “unit” of the district court.
- The question of which court has the power to adjudicate the litigation that arises in bankruptcy can be an important one. Many attorneys that represent parties with claims against the bankrupt or parties against whom the bankrupt has claims prefer to litigate in some forum other than the bankruptcy court. Some believe that the bankruptcy judge has a pro-debtor bias; others are simply more comfortable or more familiar with state court procedures; others prefer state court for reasons of delay—a state court generally has a larger backlog of cases than a bankruptcy court so that filing in state court delays any litigation.
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Capsule Summary 139 results (showing 5 best matches)
- Article I of the Constitution empowers Congress to “establish uniform laws on the subject of Bankruptcies throughout the United States.” For most of the 20th century, bankruptcy law was the Bankruptcy Act of 1898, commonly referred to as the “Bankruptcy Act.” It was replaced in 1978 by a law commonly referred to as the “Bankruptcy Reform Act of 1978” or “Bankruptcy Code.” The Bankruptcy Code has been regularly amended; the most comprehensive bankruptcy amendments were enacted in 1984.
- The bankruptcy court may dismiss or suspend a voluntary bankruptcy case even though it was filed by an eligible debtor. And, the bankruptcy court may dismiss or suspend an involuntary bankruptcy case even though all of the requirements are satisfied. Each bankruptcy relief chapter has its own dismissal provision.
- Congress deals with the bankruptcy court system separately from the substantive law of bankruptcy. The substantive law of bankruptcy is now in title 11 of the United States Code; the law relating to bankruptcy judges is in title 28.
- A foreign debtor can start its own United States bankruptcy case by filing a voluntary bankruptcy petition. Section 304 provides an alternative to commencing a full bankruptcy case in the United States. If a bankruptcy case is pending in another foreign country, a foreign representative of the debtor in such a case may file a petition under section 304 to commence a “case ancillary to the foreign proceeding,” section 304(a).
- In the absence of bankruptcy, some transfers of a debtor’s property can be invalidated under state laws, such as state fraudulent conveyance laws. The Bankruptcy Code incorporates these state laws in section 544(b) so that a transfer of a debtor’s property that can be invalidated under state law in the absence of bankruptcy can be invalidated under section 544(b) in the event of bankruptcy.
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VII. Commencement, Conversion, and Dismissal of a Bankruptcy Case 31 results (showing 5 best matches)
- The bankruptcy court may dismiss or suspend a voluntary bankruptcy case even though it was filed by an eligible debtor. And, the bankruptcy court may dismiss or suspend an involuntary bankruptcy case even though all of the requirements are satisfied. Each bankruptcy relief chapter has its own dismissal provision.
- A foreign debtor can start its own United States bankruptcy case by filing a voluntary bankruptcy petition if it has a residence or domicile in the United States, a place of business in the United States, or assets in the United States. Section 109. Similarly, the creditors of such a foreign debtor may begin a bankruptcy case in the United States by filing an involuntary bankruptcy petition. Section 303(b). The Bankruptcy Code treats such foreign debtor filings no differently than filings by or against domestic debtors. Such foreign debtor cases will be independent of any foreign bankruptcy proceedings.
- Chapter 15 of the Bankruptcy Code provides an alternative to commencing a full bankruptcy case in the United States. If a bankruptcy case is pending in a foreign country, a “foreign representative” of the debtor in such a case may file a “petition for recognition.” Upon the issuance of an order for recognition under section 1517, the automatic stay and selected other provisions of the Bankruptcy Code become effective.
- A bankruptcy case begins with the filing of a petition with the bankruptcy court. Section 301(a). Generally, the debtor files the petition. Such debtor-initiated cases are often referred to as “voluntary.” Creditors have a limited right to initiate “involuntary” bankruptcy cases against the debtor under Chapters 7 and 11. Section 303.
- A debtor who files a bankruptcy petition must pay a filing fee. The court may dismiss the bankruptcy case for nonpayment of fees. No provision is made for bankruptcy.
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XVI. Discharge 66 results (showing 5 best matches)
- Most exceptions to discharge can be asserted after the bankruptcy case is over, in litigation in courts other than the bankruptcy court. Only exceptions to discharge based on section 523(a)(2), (4), or (6) must be asserted during the bankruptcy case in the bankruptcy court. If and only if the creditor’s exception to discharge is based on one of the three statutory grounds for exception, the creditor must timely file a motion in the bankruptcy court.
- Bankruptcy affords very little relief to the delinquent taxpayer. Most taxes are not discharged in bankruptcy. Section 523(a)(1) excepts from the bankruptcy discharge all income and excise taxes for the three tax years immediately preceding bankruptcy. Taxes that are entitled to a priority are excepted from discharge, section 523(a)(1)(A). Section 507(a) provides a priority for taxes for a taxable year ending on or before the date of the filing of the petition for which a return, if required, is last due, including extensions, after three years before the date of the filing of the petition.
- 2. Under section 523(c), discussed below, an exception to discharge based on section 523(a)(6), but not an exception to discharge based on section 523(a)(9), must be timely asserted during the bankruptcy case and adjudicated by the bankruptcy judge. See Bankruptcy Rule 4007.
- files a bankruptcy petition. receives a bankruptcy discharge. Six months later, asserts her bankruptcy discharge as a defense,
- let someone serve as a scoutmaster because he filed for bankruptcy—even straight bankruptcy. More importantly, a store could refuse to extend credit or a bank could refuse to make a loan because of a person’s bankruptcy history.
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XIII. Postpetition Transfers 49 results (showing 5 best matches)
- A government’s claim for taxes is usually secured by a statutory lien. Such a statutory lien will not always be valid in bankruptcy. For example, an unfiled federal tax lien can be avoided by the trustee under section 544(a). An unfiled federal tax lien is not valid as against a creditor with a judicial lien, IRC 6323(a). Section 544(a) gives the bankruptcy trustee the rights and powers of a creditor that obtained a judicial lien as of the date of the bankruptcy filing. Accordingly, if the federal tax lien had not been filed prior to bankruptcy, the bankruptcy trustee can invalidate the tax lien under section 544(a). Section 544(a) is considered supra.
- Some liens that are valid outside of bankruptcy can be invalidated in a bankruptcy case. Section 522(f) considered supra, empowers the debtor to invalidate certain liens on certain exempt property. Sections 544, 545, 547, 548 and 549, considered supra, empower the bankruptcy trustee to invalidate certain transfers that create liens.
- Not only does the Bankruptcy Code bar the secured creditor from recovering its collateral, the Bankruptcy Code also empowers the debtor to continue using the collateral. More specifically, section 363 provides for continued use, lease, or sale of encumbered property during bankruptcy. The lien holder is protected by section 363’s adequate protection requirements. Section 363 is considered infra.
- A bankruptcy discharge simply relieves the debtor from any further personal liability for the debts covered by the discharge. A bankruptcy discharge does not wipe out the debts: the ability of creditors to look to other parties such as guarantors and insurers is unaffected. And, a bankruptcy discharge does not wipe out liens: the ability of secured creditors to look to their collateral is unaffected.
- The Bankruptcy Code deals with “claims,” not creditors. Accordingly, under the Bankruptcy Code there will be creditors with secured claims, not secured creditors.
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III. Fraudulent Transfers 5 results
- We will consider fraudulent transfer law again in the bankruptcy part of the book. Two separate provisions of the Bankruptcy Code, sections 544(b) and 548, empower the bankruptcy trustee to avoid a transaction entered into before the bankruptcy if the transaction is a fraudulent transfer. Additionally, a prebankruptcy transaction made with the intent to hinder, delay or defraud creditors may prevent an individual from obtaining a discharge in his or her Chapter 7 bankruptcy case. Section 727(a)(2).
- E. Looking Ahead: Fraudulent Transfer Law and Bankruptcy
- E. Looking Ahead: Fraudulent Transfer Law and Bankruptcy
- If you really want to impress your teacher, try this question on her: “What is the significance of the use of the phrase ‘good faith transferee’ in UFTA section 8(b) but not UFTA section 8(a)? Does that mean that UFTA section 8(d)’s protection of ‘good faith transferee’ only applies to subsequent transferees?” And then tell her that you find this question especially troublesome because you know that UFTA section 8 is based on section 550 of the Bankruptcy Act and section 550 does not make a “good faith transferee” distinction between immediate and mediate transferees. Do that and she will never call on you again.
- , there would merely be a substitution of one preference for another. “Fraudulent conveyance law is intended to ensure only that some deserving creditor receives the debtor’s reachable assets. Allocation of assets among creditors is determined by bankruptcy statutes.” Note,
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Perspective 8 results (showing 5 best matches)
- Bankruptcy law is federal law. The Constitution in article 1, section 8, clause 4 empowers Congress to establish “uniform laws on the subject of Bankruptcies throughout the United States.” Congress has acted pursuant to this grant of power, and states are therefore preempted from enacting bankruptcy laws. Bankruptcy laws can be found in Title 11 of the United States Code.
- This book begins when a debtor–creditor relationship breaks down, not when a debtor–creditor relationship begins. More specifically, this book begins with state law and federal law other than the Bankruptcy Code. It begins with the rights of an individual debtor and the remedies of consumer or commercial creditors under state and nonbankruptcy law when the debtor is unable or unwilling to pay. The longer, second part of the book deals with federal bankruptcy law, that is, with the bankruptcy law rights of an individual debtor or a business debtor to avoid or modify payment obligations and the effect of bankruptcy law on creditors’ state-law and federal, nonbankruptcy remedies.
- The present bankruptcy statute, generally referred to as the Bankruptcy Code, was enacted in 1978. It replaced the Bankruptcy Act of 1898.
- This is a book about debtors and creditors and about loans, credit extended for the purchase of property or service, taxes, a lease, a judgment, a tort claim for damages, or any other payment obligation. This book (and your law school course in bankruptcy or debtor–creditor law) are not about how or why the obligation was created. This book (and your course) are about what a debtor or creditor can do under state law, under federal law other than the Bankruptcy Code; and under the Bankruptcy Code when a debtor is unable or unwilling to pay that obligation.
- The Bankruptcy Code has been regularly amended since 1978. The most significant amendments were enacted in 1984 and 2005. This book covers the Bankruptcy Code, as amended.
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XVIII. Chapter 11 Cases 59 results (showing 5 best matches)
- Example: Assume that D files for bankruptcy owing S $1 million secured by equipment, which is worth $800,000. S has an interest in property that is worth $800,000. The purpose of adequate protection is to assure that at the end of the bankruptcy case S has (i) collateral worth $800,000; or (ii) payments of $800,000 or (iii) a combination of collateral and payments that total $800,000. Assume further that the court concludes that the value of the equipment is declining by $10,000 a month. Under sections 361 and 363, the bankruptcy court could require the debtor to make monthly payments to S of $10,000. If the bankruptcy lasts 14 months and the court was correct about the decline in the value of the equipment, then at the close of the bankruptcy case, S who had a lien on property worth $800,000 at the start of the bankruptcy case would have a lien on property worth $660,000 and $140,000 in adequate protection payments at the end of the bankruptcy case.
- Example: D files for bankruptcy owing M $500,000 secured by a first mortgage on Greenacre which is worth $300,000. If the bankruptcy court concludes that the value of Greenacre will not decline during the course of the bankruptcy case, the bankruptcy court could conclude that Greenacre itself is adequate protection.
- The benefits of a prepackaged Chapter 11 are obvious. Prepackaged plans minimize the amount of time that debtor operates in bankruptcy because the time-consuming negotiations occur prior to any bankruptcy filing. Less disruption to the debtor’s business. Moreover, a debtor has more control over the process. A plan is finalized before the debtor submits to the bankruptcy court’s jurisdiction.
- The phrase “First Day Orders” does not appear in either the Bankruptcy Code or the Bankruptcy Rules. Nonetheless, “First Day Orders” appear in virtually every Chapter 11 case.
- Adequate protection works so long as the bankruptcy judge correctly foresees the future of the encumbered property. What if the value of the creditor’s interest in property drops more significantly than the bankruptcy judge anticipated?
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XIV. Claims 59 results (showing 5 best matches)
- D owes S $100,000. The debt is unsecured. D files Chapter 7 bankruptcy. The automatic stay stops S from taking any steps to collect the debt outside of bankruptcy, but S has a $100,000 claim in the bankruptcy case. The stay ends when the bankruptcy case ends. So, when the case ends, can S sue to collect the debt?
- Section 501(c) authorizes the debtor to file a proof of claim for a creditor who does not timely file. This provision is primarily intended to protect the debtor if the claim of the creditor is nondischargeable. When no proof of claim is filed, there will be no bankruptcy distribution to the holder of the claim. If no bankruptcy distribution is made to the holder of a claim excepted from discharge, the debtor will have to pay the claim in full after the bankruptcy case is closed. If, however, the debtor files a proof of claim, the holder of the nondischargeable claim will participate in the bankruptcy distribution and the postbankruptcy liability of the debtor to the creditor will be reduced by the amount of distribution.
- [Generally, interest stops accruing when a bankruptcy petition is filed. Only claims that are secured by collateral that has a value greater than the amount of the claim will accrue interest after the filing of a bankruptcy petition, section 506(b). Assume, for example, that D borrows $1,000 from C; the loan agreement provides for 14% interest. At the time of the bankruptcy filing, D owes $1,444. C’s allowable claim will be $1,444; that amount will not continue to draw the 14% interest after the bankruptcy filing.]
- If W’s claim for $2,000 of unpaid 2005 alimony is not fully satisfied by the bankruptcy distribution, W may attempt to collect any deficiency from H personally. Section 523(a)(5) excepts alimony claims from the bankruptcy discharge. Accordingly, H’s bankruptcy discharge will not affect W’s right to collect postpetition alimony from H personally.
- NOTE: The three-year period is measured from the last date including extensions for filing a return to the date of the bankruptcy petition. If, for example, D files a bankruptcy petition on April 15, 2005, claims for taxes for 2004, 2003, and 2002 would be entitled to a priority. If, however, D files a bankruptcy petition on December 7, 2005, only claims for taxes for 2004 and 2003 would be entitled to a priority.
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VIII. Stay of Collection Actions and Acts 37 results (showing 5 best matches)
- The automatic stay is triggered by the filing of a bankruptcy petition. It dates from the time of the filing, not from the time that a creditor receives notice of or learns of the bankruptcy. If files a bankruptcy petition on April 5, the stay becomes effective April 5. The stay dates from April 5 even if creditors do not learn of the bankruptcy until much later. If ’s bankruptcy, obtains a default judgment against
- D files a bankruptcy petition. Before the bankruptcy, D was involved in an automobile accident with V, and V had filed a tort suit against D. Does the bankruptcy filing prevent the suit from proceeding against D? Does the bankruptcy prevent V from going after D’s insurance company?
- Subparagraphs (1) and (2) of section 362(a) cover most litigation efforts of creditors directed at collecting prebankruptcy debts. Section 362(a)(1) stays creditors from filing collection suits after the bankruptcy petition is filed or from continuing collection suits that were commenced prior to bankruptcy. Section 362(a)(2) bars creditors from enforcing judgments obtained prior to bankruptcy.
- The automatic stay is sometimes automatically terminated because the debtor had earlier filed another bankruptcy case. Section 362(c)(3) provides that if the debtor had been the debtor in an earlier bankruptcy case that was dismissed within one year of this bankruptcy case filing, then the automatic stay automatically terminates 30 days after the filing unless the debtor or some other party in interest can show that the second case was filed in good faith. If the debtor had two or more bankruptcy cases dismissed within the past year, the stay does not go into effect in the third or later case. Section 362(c)(4).
- D files a bankruptcy petition. After the bankruptcy, D is involved in an automobile accident with V. Does the bankruptcy filing prevent V from proceeding against D? Against D’s insurance company?
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Appendix B. Practice Examination 13 results (showing 5 best matches)
- Three types of questions might appear on a final examination in a debtor-creditor course: (1) pure creditors’ rights questions that involve only issues of state law and non-bankruptcy federal law; (2) pure or core bankruptcy questions; and (3) questions combining creditors’ rights and bankruptcy issues. Teachers of debtor-creditor law tend to favor the third type because those kinds of questions are efficient testing tools (i.e., can kill two birds with one stone), and also because real-life bankruptcy problems typically involve mixed questions of bankruptcy and non-bankruptcy law. So be on guard: A problem set in bankruptcy may harbor important issues of state and federal creditors’ rights law. Another warning: Debtor-creditor teachers especially like bankruptcy problems dealing with the trustee’s avoiding powers, and can go absolutely nuts mixing avoiding powers with state creditors’ rights law.
- D owns and operates a pool service. D owes C $40,000. C has a timely and properly recorded security interest on D’s equipment. D is behind on her payments to C and other creditors because of an illness from which D has now completely recovered. D has indicated to C that she is going to have to file for bankruptcy unless she is able to get some concessions from her creditors. D has proposed that she will make an immediate cash payment of $10,000 to C and will also agree in writing that she will not file a bankruptcy petition for five years if C will make the following concessions:
- [Most teachers would give you three hours to take the examination, and would allow you to consult the Bankruptcy Code and other relevant federal statutes (such as the federal tax lien law). Some teachers (probably not most of them) would also allow you to consult state statutory law that was covered in the course.]
- What are the bankruptcy law issues that might be relevant to C’s decision on whether to accept D’s proposal?
- D, a long-time resident of Texas, was assaulted by T. D sues T in Texas state court. As a result of the assault, D is unable to work. While the suit is pending, D moves to Maine, to be nearer to his children who can help take care of him. Four months after moving to Maine, D files for Chapter 7 bankruptcy and the schedules accompanying D’s petition claim the “pending law suit on an assault claim” as exempt property. While D’s bankruptcy case is still pending, T wants to settle. With whom should T negotiate and to whom should T make a settlement payment?
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XI. Avoidance of Prebankruptcy Transfers 147 results (showing 5 best matches)
- In the absence of bankruptcy, some transfers of a debtor’s property can be invalidated under state laws, such as state fraudulent conveyance laws. The Bankruptcy Code incorporates these state laws in section 544(b) so that a transfer of a debtor’s property that can be invalidated under state law in the absence of bankruptcy can be invalidated under section 544(b) in the event of bankruptcy.
- later files for bankruptcy. At the time of ’s bankruptcy filing, the $12,000 paid to is not property of the estate. If the bankruptcy trustee is able to invoke one of the Bankruptcy Code’s avoidance provisions to avoid the $12,000 payment, the $12,000 will then become property of the estate, sections 541(a)(3), 550.
- What if W files a bankruptcy petition one day after the setoff? Can the bankruptcy trustee recover the $1,000 from B? If one day before the filing of a bankruptcy petition, W withdraws $1,000 from his savings account and uses that $1,000 to reduce his indebtedness to B, the trustee can recover the $1,000 under section 547. Is there any reason to treat B’s setoff differently?
- Example: On January 10, Dudley Doright, D, borrows $10,000 from Snidely Whiplash, S, and gives S a security interest in equipment. On December 29, S properly files his financing statement. On December 30, D files a bankruptcy petition. The bankruptcy trustee may not invalidate S’s security interest under section 544(a). (The bankruptcy trustee will probably be able to invalidate S’s security interest under some other provision of the Bankruptcy Code. If D was insolvent on December 29, the bankruptcy trustee may invalidate S’s security interest under section 547. The applicability of section 547 to transfers not timely perfected or recorded is considered later in this chapter.)
- 4. The seller makes a written reclamation demand within 45 days after the buyer’s receipt of the goods unless a bankruptcy petition is filed during that 45–day period. If there is a bankruptcy petition filed before the 45–day period has expired, the seller has 20 days from the buyer’s bankruptcy filing to make the seller’s written reclamation demand.
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V. Debtor’s State Law Remedies a/k/a Collective Creditor Action 16 results (showing 5 best matches)
- When the debtor has made substantial preferences or fraudulent conveyances or allowed liens, voidable in bankruptcy to attach to his property, creditors may decide that an assignment for the benefit of creditors does not adequately protect their rights. If so, the creditors may be able to force the debtor into bankruptcy. A general assignment for the benefit of creditors is a basis for ordering relief against the debtor in a creditor-commenced bankruptcy. See Bankruptcy Code section 303(h)(2). Section 543 empowers the bankruptcy court to require an assignee whose administration is superseded by bankruptcy to turn over the debtor’s estate to the bankruptcy trustee, and to make an accounting.
- There are a number of reasons that a debtor might prefer a composition to bankruptcy. By making a composition with his creditors, the debtor avoids the stigma that attaches to bankruptcy while he achieves the same result—discharge from all or a substantial portion of his debts. The composition discharge is even broader in scope than that of bankruptcy. A composition releases a surety while a discharge in bankruptcy does not. See Bankruptcy Code section 524(e). A debt discharged by a composition is not revived by a new promise to pay it unless that new promise is supported by new consideration; a promise to pay a debt discharged in bankruptcy need not be supported by consideration in order to be enforceable. Cf. section 524(c). Further a composition does not bar future bankruptcy discharge—a Chapter 7 bankruptcy discharge bars another Chapter 7 discharge for six years. See section 727(a)(8).
- An assignment for the benefit of creditors has certain advantages over bankruptcy to creditors. Its flexibility and informality save time and expense, and frequently result in better liquidation prices. Generally, the costs of administration of an assignment will be lower than those of a bankruptcy case. Thus, in the absence of fraudulent conveyances, preferences, or liens voidable in bankruptcy, the dividends to creditors from an efficiently administered assignment will probably be larger than those received from the administration of the same property in bankruptcy.
- A number of state assignment statutes authorize the assignee to set aside prior fraudulent conveyances, and some empower the assignee to void preassignment preferences by the assignor-debtor. Even in these states, however, a bankruptcy trustee has an additional bundle of important rights which are unavailable to an assignee—rights granted by sections 544–549 of the Bankruptcy Code.
- 2. Second, a workout or composition does not prevent the debtor from later seeking bankruptcy protection. Creditors are reluctant to make significant concessions knowing the debtor might later effect further reductions through a bankruptcy filing.
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II. Judicial Debt Collection 3 results
- Attachment benefits a single creditor at the expense of the debtor and other creditors. A debtor deprived by attachment of the use of important property may decide to file a bankruptcy petition. Moreover, attachment may motivate the debtor’s other creditors to initiate involuntary bankruptcy proceedings. Under section 547 of the Bankruptcy Code, an attachment lien obtained within 90 days of the filing of the bankruptcy petition is invalid if the debtor was insolvent when the lien was obtained.
- 3) Bankruptcy of the Debtor
- The flexibility of equitable procedure allows the creditor’s bill to be used in a variety of ways. A creditor’s bill can be used as a liquidation device, i.e., a substitute for bankruptcy. A judgment creditor can file a bill not only for himself but also on behalf of such other judgment creditors as may choose to join the action. Under this general creditors’ bill, the petitioning creditor does not obtain priority over other participating creditors; rather the court makes a
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XVII. Chapter 13 Cases 24 results (showing 5 best matches)
- It’s not the Bankruptcy Code that uses the phrase “cram down.” Neither cram down nor cramdown appears anywhere in the Bankruptcy Code. Rather it is the bankruptcy lawyers, judges and law professors who have come to use the term cram down to describe court approval of a plan provision that effects changes in the payment of a claim that the claim holder objects to.
- The 2005 amendments to the Bankruptcy Code significantly limit a Chapter 13 debtor’s ability to strip down secured loans. No strip down is allowed on any debt incurred within one year prior to the bankruptcy filing. And, no strip down is allowed on a purchase money loan incurred within 910 days before the bankruptcy filing if it is secured by a motor vehicle acquired by the debtor for her personal use.
- Chapter 13 of the Bankruptcy Code replaced Chapter XIII of the Bankruptcy Act of 1898. Chapter XIII was limited to a “wage earner,” i.e., “an individual whose principal income is derived from wages, salary, or commissions.”
- Prior to the 2005 amendments to the Bankruptcy Code, the most common form of secured debt modification was a “strip down,” i.e., reducing the amount that was to be paid to the holder of the secured debt to the value of the collateral. And, prior to the 2005 amendments, in applying section 1325(a)(5)(B) to a “strip down,” the bankruptcy court would make the following two determinations:
- Chapter 13 is similar to Chapter 7 and Chapter 11 in that the case begins with the filing of a bankruptcy petition, section 301. Chapter 13 is different from
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XV. Leases and Executory Contracts 43 results (showing 5 best matches)
- An understanding of the bankruptcy law of leases and executory contracts requires an understanding not only of rejection, assumption and assignment, the three different elections available to the debtor under the Bankruptcy Code, but also an understanding of the election that is not available to the debtor under the Bankruptcy Code. A debtor does not have a legal right to modify or change the terms of an unexpired lease or an executory contract.
- The previous statement in the text is both correct and misleading. There are only the three elections under the Bankruptcy Code. A debtor does not have a right under the Bankruptcy Code to change the terms of an unexpired lease or executory contract. Nonetheless, a debtor is often able to use its bargaining power and other legal rights under the Bankruptcy Code to “persuade” the other party to the lease or contract to “agree” to modifications in the lease or contract. For example, files for bankruptcy. ’s bankruptcy case or
- Similarly, the Bankruptcy Code does not define the phrase “executory contract.” The most frequently cited and most thorough discussion of executory contracts in bankruptcy is a two-part, 142–page article written prior to the enactment of the Bankruptcy Code by Professor Vern Countryman. Professor Countryman concludes that an executory contract for purposes of bankruptcy is one that is so far unperformed on both sides that the failure of either party to complete her performance would be a material breach excusing further performance from the other party. See Countryman,
- Generally, the Bankruptcy Code’s provisions dealing with the debtor’s assets are separate from the Bankruptcy Code’s provisions dealing with the debtor’s obligations and the estate’s obligations: property of the estate in section 541, allowable claims and administrative expenses in sections 502 and 503. A lease or executory contract involves potentially both property of the estate and a claim against the debtor or the estate.
- For almost 70 years, American bankruptcy statutes have had special sections for leases and executory contracts. In 1938, the Chandler Act Amendments added sections 70b and 63c. In 1978, the Bankruptcy Code replaced these provisions with sections 365 and 1110. And, later, section 1113. And, still later, section 1114. While there are now a few pages of bankruptcy statutes on leases and executory contracts instead of a couple of paragraphs, the core concepts from the Chandler Act have been retained.
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IX. Property of the Estate 24 results (showing 5 best matches)
- “Property of the estate” is one of the most important, most basic bankruptcy concepts. The filing of any bankruptcy petition automatically creates an “estate” that includes the assets of the debtor as of the time of the bankruptcy filing. Section 541(a).
- In a Chapter 7 case, “property of the estate” is collected by the bankruptcy trustee and sold; the proceeds from the sale of the property of the estate are then distributed to creditors. Sections 704, 726. In other words, the loss of property of the estate is the primary cost of Chapter 7 bankruptcy to the debtor; the receipt of the proceeds from the sale of property of the estate is the primary benefit creditors derive from a Chapter 7 bankruptcy.
- Similarly, if Trump Realty Co. files for bankruptcy, both the buildings it owns as of the bankruptcy petition and the postpetition rents from the buildings would be property of the estate. And, if Trump Hotel and Casino Resorts, Inc., files for bankruptcy, property of the estate would include the corporation’s postpetition earnings
- The bankruptcy trustee (and the debtor in possession in a Chapter 11 case) is empowered by the Bankruptcy Code to recover certain payments and other transfers of the debtor’s interest in property. The trustee’s use of these avoidance powers increases the property of the estate.
- Is property that a debtor can exempt from the claims of creditors in bankruptcy part of the bankruptcy estate?
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X. Exemptions 33 results (showing 5 best matches)
- Under the Bankruptcy Code, all of the interests in property that a debtor has when she files her bankruptcy petition is property of the estate. An individual debtor, however, is permitted to exempt certain property from property of the estate. In most respect, the law governing exempt property in bankruptcy is derived from nonbankruptcy law, usually state law.
- Such “bankruptcy estate planning” raises other bankruptcy issues. There are reported cases that have withheld a discharge from a Chapter 7 debtor under section 727(a)(2) because of an eve-of-bankruptcy conversion of nonexempt property into exempt property, or worse, incurrence of a debt to purchase exempt property.
- C loaned D money under a contract that included this clause: “In consideration herewith and therefore, D agrees to and hereby does waive any and all claims to exemptions of any kind under any law against efforts by C to collect this loan whether in bankruptcy or outside of bankruptcy.” D files bankruptcy. Is the exemption waiver effective?
- A law student or lawyer need to be able to answer two general questions about exempt property in bankruptcy. First, what property is exempt? Second, what is the bankruptcy significance of property being exempt?
- Generally, an individual debtor is able to retain his or her exempt property. Exempt property is not distributed to creditors in the bankruptcy case and is protected from the claims of prepetition creditors after the bankruptcy case. (If the debtor chooses the set of exemptions set out in section 522(d), postpetition creditors will be able to reach items not exempted under relevant state law.)
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XII. Postpetition Transfers 22 results (showing 5 best matches)
- The first of the three situations in which a transferee is entitled to retain property of the estate transferred by the debtor after the bankruptcy filing is the easiest to understand and apply. Obviously, a postbankruptcy transfer will be effective against the bankruptcy trustee if the transfer was authorized by the Bankruptcy Code or the bankruptcy court. See section 549(a)(2)(B). Most of the postbankruptcy transfers by a Chapter 11 debtor will be authorized under section 363.
- The prior chapter dealt with avoidance of transfers that occurred prior to the time that the bankruptcy petition was filed. Sections 544, 545, 547 and 548 apply only to prebankruptcy transfers. None of these provisions can be used to avoid an unauthorized transfer of property of the estate that occurs after the bankruptcy petition is filed. Section 549 applies to postbankruptcy transfers.
- For most purposes, the date of the filing of the bankruptcy petition is the critical date in a Chapter 7 case. Subject to limited exceptions, only the property of the debtor as of the date of the filing of the petition becomes property of the estate. Generally, property acquired by the debtor after the bankruptcy petition has been filed remains property of the debtor.
- During the hiatus between the filing of the bankruptcy petition and the bankruptcy trustee’s taking possession of the property of the estate, the debtor will usually have possession and control of the property of the estate. At times, the debtor will, after the filing of the petition, transfer property of the estate to some third party.
- 1. The transfer was authorized by the Bankruptcy Code or by the bankruptcy court; or
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Summary of Contents 29 results (showing 5 best matches)
Table of Contents 40 results (showing 5 best matches)
Appendix A. Answers to Review Questions 25 results (showing 5 best matches)
- No. Bankruptcy honors the principle of derivative title and, in theory, generally does not substantively affect liens or other interests of third parties. Therefore, liens survive the debtor’s bankruptcy and are unaffected with a few exceptions such as: (1) the automatic stay will delay enforcing the liens, and (2) the trustee, under exceptional rules, can sometimes avoid liens.
- The Chapter 7 bankruptcy only affects pre-petition claims. C is free to proceed against D outside of bankruptcy.
- 180 days after the date of the bankruptcy petition BUT this time can be reduced by the court or can be increased to as long as 20 months after the date of the bankruptcy petition.
- CHAPTER VI. BANKRUPTCY: AN OVERVIEW
- Courts applying federal bankruptcy law look to state law to answer questions such as what are the property rights of debtors and what are the claims of creditors against the debtor and property of the debtor.
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Appendix C. Glossary 19 results (showing 5 best matches)
- Undefined term in bankruptcy law describing transactions subject to section 365. In bankruptcy, an executory contract can be assumed or rejected, but not modified.
- A special type of chapter 11 case in which there is no creditors’ committee (or the creditors’ committee is deemed inactive by the court) and in which the debtor is subject to more oversight by the U.S. trustee than other chapter 11 debtors. The Bankruptcy Code contains certain provisions designed to reduce the time a small business debtor is in bankruptcy.
- Phrase that describes the jurisdiction of bankruptcy courts under the Bankruptcy Act of 1898.
- Federal government official that preforms appointing and other administrative tasks that a bankruptcy judge would otherwise have to perform. Chapter 15 of the Bankruptcy Code details the duties and powers of the United States Trustee.
- Conduct of a debtor that results in the loss of the homestead exemption and that usually involves moving away from the place with the present or subsequently formed intention never to occupy it again as a home. Also, a bankruptcy term that describes a trustee’s release of property of the estate to the debtor.
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- Publication Date: August 14th, 2006
- ISBN: 9780314065797
- Subject: Bankruptcy/Creditors' Rights
- Series: Black Letter Outlines
- Type: Outlines
- Description: Nickles and Epstein’s Black Letter Outline on Bankruptcy and Related Law helps law students recognize and understand the basic principles and issues of law covered in law school courses. This Black Letter outline can be used both as a study aid when preparing for classes and as a review of the subject matter when studying for an examination. Coverage includes: Extrajudicial collection devices Judicial debt collection Fraudulent transfers Creditors with special rights Debtor's state law remedies and the Collective Creditor Act Commencement, conversion, and dismissal of a bankruptcy case Stay of collection actions Property of the estate Exemptions A Text Correlation Chart outline is cross-referenced to the leading casebooks on creditors’ rights and bankruptcy.
