Chapter I. Introductory Material 11 results (showing 5 best matches)
- This nutshell considers both bankruptcy and nonbankruptcy debtor-creditor law. 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 so states are preempted from enacting bankruptcy laws. Bankruptcy laws can be found in Title 11 of the United States Code.
- This is a book about debtors and creditors. A debtor is a person who owes money to another person (the creditor) because of a loan, 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) is about how or why the obligation was created. This book is 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.
- Westlaw of course provides comprehensive coverage of the Bankruptcy Code, cases applying the Bankruptcy Code and books and articles explaining the Bankruptcy Code in FBKR-ALL. And, there are numerous web sites with bankruptcy law information. Consider, for example, American Bankruptcy Institute: and National Bankruptcy Conference:
- Most often, the attorney involved will be a “bankruptcy attorney” (or at least will call herself that). So, most of your law school course and most of this book will be about bankruptcy law.
- This book covers both individuals and businesses—both consumer debt and business debt. And, both bankruptcy law and nonbankruptcy law treat individual debtors different from business debtors.
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Preface 6 results (showing 5 best matches)
- I hope this book will help you review or learn bankruptcy law. Bankruptcy law is not always easy, and this is not always an easy book. However, doing bankruptcy law is—or at least should be—challenging, interesting and even enjoyable. Writing this nutshell has been all of these things. I hope that, to at least some extent, reading it is.
- Like the prior editions, this book attempts to summarize bankruptcy and state debtor-creditor law. It sets out the rules, the problems, and the answers to those problems that I can answer. It does not attempt to develop the history of the law, to evaluate the law critically or to propose reform of the law. In short, I have attempted to follow West’s statement that a nutshell is “a succinct exposition of the law to which a student or lawyer can turn for reliable guidance.”
- This is a new version of a student text that I first wrote more than 45 years ago in Chapel Hill when I was a “baby” professor of law in the “Southern part of heaven.” Since then I have taught bankruptcy or creditors rights at sixteen other law schools and worked as a lawyer on the bankruptcy team of King and Spalding and then Haynes and Boone.
- More important, since the last edition there have been changes in what happens in law school classrooms and what happens in lawyer offices and courts. There have been changes in how bankruptcy cases are done; there have been changes in how bankruptcy affects how deals are done.
- This new edition reflects the helpful suggestions of law students, bankruptcy judge clerks, and lawyers who have used prior editions of this book.
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Chapter III. Bankruptcy: An Overview 61 results (showing 5 best matches)
- The vast majority of bankruptcy cases are Chapter 7 cases. The term “bankruptcy” is often used to describe liquidation proceedings under the bankruptcy laws. References to “bankruptcy” in this nutshell should generally be regarded as references to liquidation cases.
- 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.
- The allocation of judicial power and responsibility over bankruptcy matters is one of the most controversial and complex areas of bankruptcy law and practice. I 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.
- 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.
- The Bankruptcy Code provides for these two forms of relief in five separate kinds of bankruptcy cases: (1) Chapter 7 cases, (2) Chapter 9 cases, (3) Chapter 11 cases, (4) Chapter 12 cases, and (5) Chapter 13 cases. This book does not deal with Chapters 9 and 12. Chapter 9 cases involve governmental entities as debtors, and it is infrequently used. Chapter 12 is limited to family farmer bankruptcy. This nutshell will deal with the three basic forms of bankruptcy relief: Chapter 7, Chapter 11 and Chapter 13.
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Chapter XII. Leases and Executory Contracts 75 results (showing 5 best matches)
- Section 365(h) limits the effect of rejection of a lease of real property when the debtor is the landlord. A trustee for a debtor who owns rental real property may not use section 365 to evict tenants. Even, if the trustee decides to reject the debtor/lessor’s leases, the tenant has a right to remain in possession. Assume, for example, that Epstein uses some of his nutshell royalties to build an office building; your law firm rents an office in Epstein’s building. If Epstein later files for bankruptcy and rejects the lease, your firm can still remain in possession of the leasehold.
- Contracts that are not assignable under “applicable law” are not assignable in bankruptcy, section 365(c)(1). “Applicable law” can be the common law of contracts. Under such law, for example, personal services contracts cannot be assigned and delegated. Batman contracts to patrol the streets of Gotham City. Batman later files a bankruptcy petition, Batman cannot assign this personal services contract to Madonna.
- 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.
- “Applicable law” for purposes of section 365(c) can also be a statute so long as it is a statute other than the Bankruptcy Code. Assume, for example, that state law prohibits the assignment of a car dealer franchise contract without the approval of the franchisor. Ford dealer could not file for bankruptcy and then assign his franchise without the approval of the franchisor because of “applicable law.”
- ) leases space in a mall from for $20,000 a year. owes $600,000 to unsecured trade creditors and files a Chapter 11 petition. wants to continue operating in the mall, wants to retain the leasehold. will have to assume the lease, will have to assume the lease payment as is: $20,000 a year, no change. In its Chapter 11 plan, will be able to alter its payment obligations to lenders and trade creditors, secured and unsecured. cannot, however, use bankruptcy to effect a modification in its obligations under its leases or executory contracts. Rejection, assumption or assignment. Not modification. [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...
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Chapter VIII. Avoidance of Prebankruptcy Transfers 289 results (showing 5 best matches)
- In working with these avoidance provisions, law students and lawyers are called on to answer two basic questions: (1) what are the consequences of avoiding a transfer and (2) which transfers can be avoided. Law students are called on to answer these questions both in class and on exams. Lawyers are called upon to answer these questions not only in negotiating and litigating in bankruptcy cases but also in structuring transactions outside of bankruptcy.
- 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.
- Section 545(2) invalidates statutory liens that are not perfected or enforceable on the date of the petition against a hypothetical bona fide purchaser. Section 546(b) recognizes any applicable state law “grace period.” If under state law, the statutory lien may still be perfected and that perfection relates back to a prebankruptcy petition date, then the bankruptcy trustee will not be able to invalidate the lien.
- The second question relating to where the suit can be brought is answered in Chapter XVI of this book dealing with allocation of judicial power over bankruptcy and bankruptcy-related litigation. Section 546 deals with the question of when an avoidance action must be brought—within two years after the order for relief except that if a trustee is appointed more than one year after the order for relief but within two years after the order for relief, then the trustee shall have one year. Section 550 and the next part of this book cover the questions of who can be sued and what recovery can be had.
- Chapter 5 of the Bankruptcy Code also contains several other “avoidance” provisions that are unique to bankruptcy. Accordingly, some payments, sales, exchanges, judicial liens, security interests and other transfers that are valid under state law can be avoided in bankruptcy.
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Chapter II. An Overview of State Collection Law 22 results (showing 5 best matches)
- (3) The most important reason for the diminished role of state collection law in practice and in law school is the increased role of bankruptcy in practice and in the classroom. Businesses and individuals are more willing to file for bankruptcy. And, as we will see, the filing of a bankruptcy petition not only bars a creditor from continuing its efforts to collect its debt using state law collection remedies but also can require a creditor who has successfully collected its debt using state collection remedies to return what it has collected.
- Lawyers doing bankruptcy or state collection law work and law students taking bankruptcy law courses need to know a lot about consensual liens. For now, you need to understand that (1) by contract, a creditor can obtain consensual liens in the form of mortgages on real property and security interests in personal property; (2) these consensual liens create rights against the debtor in addition to the rights available to a creditor under creditors’ remedies law, and (3) these consensual liens also create rights against other creditors—have the effect of limiting the rights of other creditors under creditors’ remedies law.
- To reach tangible property of a debtor held by third persons, and to collect debts owed to the debtor, there is a special proceeding at law in the nature of an adversary suit against the person who holds the debtor’s property or owes the debtor money: garnishment. Garnishment is in essence a special form of execution-designed for reaching property of the debtor held by a third party.
- Let’s consider the law of creditors’ remedies first. At the broadest level, the law of creditors’ remedies involves only three questions: (1) when and how does a creditor gets a lien on property of the debtor, (2) how does a creditor with a lien enforce the lien so as to collect its debt and (3) what is the lien’s priority in. relation to third parties’ rights to the property, including other creditors’ liens and the claims of transferees. These three issues are common to every kind of creditors’ remedy.
- There is not much that debtor can do outside of bankruptcy to fix its debt problems. At least not much that a debtor can do without the help and support of its creditors.
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Chapter XIII. Discharge 134 results (showing 5 best matches)
- Law students and lawyers need to be able to answer three questions about reaffirmation agreements: (1) what is a reaffirmation agreement, (2) why would a debtor enter into a reaffirmation agreement and (3) what are the bankruptcy law issues related to reaffirmation agreements?
- Most of the bankruptcy law issues relating to reaffirmation relate to concern that a creditor might pressure a debtor into reaffirming its debt. Can a creditor ever contact a debtor about reaffirming its debt without violating section 362(a)(6)? Isn’t that contact “an act to collect a claim”?
- More specifically, a reaffirmation agreement is an agreement between a debtor and one of her creditors that the debtor will pay a debt she incurred before her bankruptcy filing that, but for the reaffirmation agreement, would have been dischargeable in the bankruptcy case. Under contract law, such an agreement is legally enforceable even though there is no bargained-for exchange, i.e., no consideration.
- 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 these three statutory exceptions, the creditor must timely file a motion in the bankruptcy court. When a creditor is relying on any other part of section 523(a), there is no requirement that the exception to discharge be asserted in the bankruptcy court during the bankruptcy case.
- 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. And, taxes more than three years old are nondischargeable if (a) a return was not filed, or (b) a return was filed within two years of the filing of the bankruptcy petition, or (c) a “fraudulent return” was filed.
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Chapter XVI. Allocation of Judicial Power over Bankruptcy Matters 65 results (showing 5 best matches)
- In the main, the substantive law of bankruptcy is in title 11 of the United States Code. Questions of judicial power over bankruptcy-related matters are, in the main, answered in title 28 of the United States Code.
- 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 district 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:
- In applying this provision, most courts disregard the “plain language” quoted above. The plain language of section 157(d) indicates that withdrawal of the reference is mandatory only if both the Bankruptcy Code and another federal statute must be construed to resolve the proceeding. Under the statute’s “plain language,” a district court would be required to withdraw the reference only in actions involving both bankruptcy and nonbankruptcy law—not in matters involving nonbankruptcy law alone. And, under the statute’s plain language, the bankruptcy court would have to abstain on all matters that involve both bankruptcy law and a nonfederal statute regulating interstate commerce, regardless of how simple and straight forward the application of the other statute.
- Abstention under section 1334(c) moves litigation from bankruptcy court to a state court. In considering and applying the abstention provisions of section 1334(c), it is important to recall the jurisdictional provisions of section 1334(b). As you learned from your readings in constitutional law and/or federal courts, a federal court with jurisdiction over a matter or controversy must exercise that jurisdiction except under unusual circumstances. And, as you learned from reading this book, Congress provided for broad, pervasive bankruptcy jurisdiction in section 1334(b) to eliminate the costly litigation over jurisdiction that occurred under the Bankruptcy Act of 1898. As a result, some of the matters covered by the jurisdictional grant in section 1334(b) are not really bankruptcy matters, are matters that would be better left to other courts. Section 1334(c) empowers the bankruptcy judge to leave such matters to other courts by abstaining.
- The bankruptcy judge is empowered to determine whether a matter is a core proceeding or a noncore proceeding, section 157(b)(3). Remember that a determination that a proceeding is noncore does not mean that the matter is withdrawn from the bankruptcy judge. Remember that a bankruptcy judge can hear noncore proceedings and prepare findings of facts and law.
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Chapter XV. Chapter 11 266 results (showing 5 best matches)
- In sum, the typical single asset real estate case is a dispute between a debtor and one creditor over one asset. For some law professors and judges, such single asset real estate cases raise a bankruptcy policy question: should bankruptcy be used to resolve a dispute between a debtor and only one of its creditors?
- In the equipment example, 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 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, 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.
- Bankruptcy law professors, lawyers and judges regularly use the words “cram down” with the word “cram-down” or the word “cramdown.” Neither “cram down” nor “cram-down” nor “cramdown” appears in the Bankruptcy Code.
- A prepackaged plan is a bankruptcy plan of reorganization which has been negotiated and accepted by the requisite number of creditors prior to the commencement of the bankruptcy case. A prepackaged Chapter 11 involves the same legal requirements as any other Chapter 11 case; a prepackaged differs only in the sequence in which the requirements are satisfied.
- To state the obvious, a creditors’ committee acts on behalf of all the unsecured creditors. Case law has consistently held that members of a committee have a fiduciary duty to other holders of unsecured claims. With a limited exception for a “small business debtor” *(as that term is defined in section 101), the Bankruptcy Code contemplates that there will be an active creditors’ committee in all Chapter 11 cases. There is a difference between what Congress contemplated in 1978 and what happens in the 21st century. Most Chapter 11 cases do not have an active creditors’ committee.
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Chapter XIV. Chapter 13 119 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 without claim holder approval.
- Section 1325(a)(1) requires that the plan satisfy the provisions of Chapter 13 and other applicable bankruptcy law requirements. Section 1325(a)(2) conditions confirmation on payment of the filing fee. Section 1325(a)(3) sets out a “good faith” standard.
- Dicta in appellate court cases on section 1325(a)(3) (good faith) tend to list numerous factors. Holdings in bankruptcy court cases on section 1325(a)(3) tend to focus on the debtor’s financial condition and the amount of payments proposed by the plan. Section 1325(a)(4) and section 1325(b) more directly address the adequacy of the plan payments.
- Section 1307(d) gives a bankruptcy court the power to convert from Chapter 13 to Chapter 11 before confirmation of the plan on request of a party in interest and after notice and hearing. There is no statutory standard to guide the court in deciding whether to convert from 13 to 11.
- end in a discharge. Most bankruptcy cases filed as Chapter 13 cases are either dismissed or converted to Chapter 7 cases. A debtor who files a Chapter 13 petition may at any time request the bankruptcy court to dismiss the case or convert it to a case under Chapter 7, section 1307(a), (b).
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Chapter X. Effect of Bankruptcy on Secured Claims 105 results (showing 5 best matches)
- While the Bankruptcy Code provides that the secured claim in bankruptcy includes postpetition proceeds, the Bankruptcy Code does not provide a definition of the term “proceeds.” Obviously, the term “proceeds” in section 552(b) is a term in a federal statute and so its definition is a matter of federal law. Nonetheless, courts have generally looked to state law, more specifically to
- In some situations, the holder of the secured claim consents to these modifications. In other situations, the holder of the secured claim objects to the Chapter 11 plan’s modifications of its rights. Notwithstanding such an objection, the court can still approve the plan. Lawyers, judges and law professors commonly call such court approval of a plan that changes a creditor’s rights over that creditor’s objection a “cram down” or a “cramdown.” And, so cramdown (or cram down) needs to be a part of your bankruptcy vocabulary, even though the term does not appear in the Bankruptcy Code.
- Under nonbankruptcy law, section 9–623 provides a different, more limited form of redemption. Section 9–623 only applies if (i) the debtor is not in bankruptcy and (ii) the secured party has repossessed the collateral. Section 722 is not limited to situations in which the secured party has repossessed.
- Most liens cannot be avoided under sections 522(f), 544, 545, 547, 548 or 549. What effect does bankruptcy have on a creditor that holds a valid in bankruptcy lien? [This question is particularly important in Chapter 11 cases and Chapter 13 cases for two reasons:
- Bank has a right of setoff under state law. The answers to problems #1, #2 and #3 assume that the liens are valid in bankruptcy.
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Copyright Page 6 results (showing 5 best matches)
- Nutshell Series, In a Nutshell
- The publisher is not engaged in rendering legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.
- West, West Academic Publishing, and West Academic are trademarks of West Publishing Corporation, used under license.
- Printed in the United States of America
- © West, a Thomson business, 2002, 2005
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Chapter VII. Exemptions 44 results (showing 5 best matches)
- The Bankruptcy Code does not otherwise expressly deal with the consequences of a debtor’s converting nonexempt property into exempt property on the eve of bankruptcy. What if, before filing for bankruptcy, takes funds from her bank account which is nonexempt property under relevant state law and invests the money in an annuity which is exempt under state law? A number of different reported cases have answered this question—in a number of different ways. One common judicial approach is the “pig to hog analysis” in which the court compares the amount of property converted, the total amount of debt, and the total amount of other property still available to pay that debt and concludes that “when a pig becomes a hog, it is slaughtered.”
- The most significant limitation on a debtor’s choice of exemption statutes is the two-year residency requirement for state exemption laws. The debtor can choose the exemption law of the state in which she was living at the time of the bankruptcy filing only if that was the only state in which she was domiciled for the entire two years preceding bankruptcy. If the debtor has not maintained her domicile in the same state for the 730 days (two years) before her bankruptcy filing, the governing exemption law is the exemption law of the state in which the debtor lived in the 180 days before that 730 days. In other words, what is then determinative is where that debtor lived between 2 years and 2.5 years before the filing.
- In bankruptcy, an individual debtor may assert the exemptions to which she is entitled under the laws of the state of her domicile and under federal laws other than title 11, section 522(b)(2). Alternatively, individual debtors in a few states may claim the exemptions set out in section 522(d).
- files a bankruptcy petition in January 2017. In the two years before bankruptcy, she lived in Texas, California and Iowa. Now that we know that did not maintain her domicile in a single state for the two years before her bankruptcy filing, we don’t care where she lived in that two-year period. Instead, we want to know where she lived for most of the six-month period before that two-year period. If from September through December of 2014, lived in Minnesota, then ’s exemptions in bankruptcy would be determined largely by Minnesota state law.
- A law student or lawyer needs 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 exempt property status?
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Chapter XI. Claims 138 results (showing 5 best matches)
- The ninth priority is of limited application. It applies only in bankruptcies related to insured federal depository institutions and provides a priority for claims based upon a commitment to regulatory agencies to maintain the institution’s capital.
- There are a number of statements in reported cases, law review articles, and legal texts praising the theme of equality of distribution to creditors in bankruptcy proceedings. Such statements must be using the term “equality” in the sense; in bankruptcy, some creditors are clearly “more equal” than others. Some unsecured claims must be fully satisfied before any distribution is made to other unsecured claims.
- Under the Bankruptcy Act of 1898, only claims that were both allowable and were permitted to participate in the bankruptcy distribution. The requirement of provability excluded certain tort claims and certain other contingent and unliquidated claims from sharing in the distribution of the proceeds from the liquidation of the bankrupt estate, section 63. The Bankruptcy Code eliminates the requirement of provability. Tort claims and other contingent and unliquidated claims may participate in the bankruptcy distribution, cf. sections 502(b)(1), 502(c).
- 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, files a bankruptcy petition on April 15, 2013, claims for taxes for 2012, 2011 and 2010 would be entitled to a priority. If, however, files a bankruptcy petition on December 7, 2013, only claims for taxes for 2012 and 2011 would be entitled to a priority.
- In a bankruptcy case, certain allowed unsecured claims are entitled to priority in distribution over other unsecured claims. Section 507(a) sets out the levels of priorities. In its proof of claim form, a creditor can assert a priority and state the amount and basis therefore. Most of the litigation over whether a claim is entitled to a priority involve assertions of section 507(a)(1) administrative expense status.
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Chapter XXI. Debtor’s State Law Remedies a/k/a Collective Creditor Action 34 results (showing 5 best matches)
- 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.
- The state statutes customarily require recording of the assignment, filing schedules of assets and liabilities, giving notice to the creditors and bonding of the assignee, and subject the assignee to court supervision. Virtually all state statutes prohibit the granting of a preference—all creditors except those with liens or statutorily created priorities are to be treated equally. Some statutes, however, expressly provide for the very relief sought by a preferential assignment at common law, i.e., a discharge. Such provisions are, at best, of questionable validity. Article 1, section 8, clause 4 of the Constitution empowers Congress to establish “uniform laws on the subject of Bankruptcies throughout the United States.” The exercise by Congress of this power suspends the power of states to enact bankruptcy laws. States may regulate the debtor-creditor relationship, but this regulation may not be a bankruptcy law. In determining whether a state statute is invalid as a bankruptcy law...
- 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
- An assignment for the benefit of creditors is the state law counterpart of bankruptcy law’s Chapter 7. More specifically, an assignment for the benefit of creditors is a voluntary transfer of assets by the debtor to another person in trust to liquidate the assets and distribute the proceeds to the creditors of the debt-transferred. To illustrate, makes an assignment for the benefit of creditors to
- 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
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Chapter IV. Commencement, Conversion and Dismissal of a Bankruptcy Case 63 results (showing 5 best matches)
- As this example illustrates, a single transaction outside of bankruptcy can create both a secured claim and an unsecured claim in bankruptcy. If in a single transaction with a single set of documents, will have both a secured claim and an unsecured claim if the collateral for the $800,000 loan has a value of less than $800,000.
- 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 some 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, section 1519.
- The debtor may not be a railroad, insurance company, or banking institution. Railroads are eligible for bankruptcy relief only under Subchapter IV of Chapter 11; insurance companies and banking institutions are excluded from relief under the Bankruptcy Code because their liquidations are governed by other state and federal regulatory laws.
- 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.
- In Chapter 7, 11 and 13 cases, a debtor or creditors can also base a motion to dismiss on section 305. Section 305 empowers the bankruptcy court to dismiss or suspend a case if (1) there is a foreign bankruptcy proceeding pending concerning the debtor or (2) “the interests of creditors and the debtor would be better served by such dismissal or suspension.”
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Chapter XX. Creditors with Special Rights 131 results (showing 5 best matches)
- Other sources of additional rights for certain creditors are state and federal statutes. Legislation has enlarged many of the liens recognized at common law and many of those asserted in equity. And, statutes have in many instances gone beyond the liens previously recognized in law or equity and created a number of additional liens. It is not feasible within the scope of this nutshell to do more than indicate this source of liens and mention some of the more common statutory liens: employees’ liens on the employer’s personalty to secure payment of back wages; landlord’s lien on tenant’s property (codification of a common law possessory lien); materialmen’s and mechanics’ liens on land and the improvements thereon to secure the compensation of persons who, under contract with the owner or his agent, contributed labor or materials to the improvement of said land; and tax liens.
- The phrase “act of bankruptcy” in
- Obviously, setoff and recoupment are very similar rights and remedies for the collection of debts outside of bankruptcy. When we get inside of bankruptcy, we will see that bankruptcy law treats setoff different from recoupment.
- The statute does not apply very often. Because of the limited meaning given to the word “insolvent,” the statute only applies if (1) either (a) the debtor is insolvent and has made an assignment for the benefit of creditors or (b) the debtor is insolvent and has died and (2) no one has filed a bankruptcy petition.
- There is no single uniform law governing real property security, and the rights of a mortgagee on default of the mortgagor vary considerably from state to state. There are, however, a number of similarities between Article 9 of the Uniform Commercial Code and the law of mortgages in most jurisdictions.
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Chapter VI. Property of the Estate 38 results (showing 5 best matches)
- 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.
- As we will see in Chapter XII, 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. Assume, for example, , on January 10th and then files for bankruptcy on January 15th. If the bankruptcy trustee is able use her avoidance powers under sections 547 and 550 to avoid that January 10th payment, then would have to return the $1,000,000, and that $1,000,000 would become property of the estate.
- Consider the example of Chapter 11 cases involving business debtors. Successful rehabilitation of a business generally requires continued operation of the business. Continued operation of the business generally requires continued possession and use of the business’ property. A debtor will continue to operate its business in Chapter 11 as debtor-in-possession unless a request is made by a “party in interest” for the appointment of a trustee, and the bankruptcy court, after notice and hearing, grants the request. When a trustee is appointed in a Chapter 11 case, she takes possession of property of the estate. Even if a trustee is not appointed in a Chapter 11 case, the debtor-in-possession’s use and sale of the property of the estate is subject to the supervision of the bankruptcy judge as provided in section 363. Section 363 is considered later.
- X owns a new Chevrolet Silverado. He borrowed the money to buy the truck from a bank which retained a security interest in the truck. Under Article 9 of the Uniform Commercial Code, that security interest or lien is a property interest in the Silverado truck. Outside of bankruptcy then, both X and the bank have property interests in the Silverado. Accordingly, if X files a bankruptcy petition, under
- Similarly, in Chapter 12 cases, the debtor will generally retain possession of the property and continue to operate the farm. As in Chapter 11, a “party in interest” can request that the debtor-in-possession be dispossessed and a trustee take over. And, again as in Chapter 11, if a trustee is not so installed, the Chapter 12 debtor in possession’s use and sale of the property of the estate is subject to the supervision of the bankruptcy court as provided in sections 363 and 1206.
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Chapter V. Stay of Collection Actions and Acts 65 results (showing 5 best matches)
- Most of the other exceptions are very narrowly drawn and apply in relatively few bankruptcy cases. For example, section 362(b)(21) only applies to a creditor with a mortgage or deed of trust on real property of a debtor who was not eligible to file the bankruptcy petition by reason of section 109(g) or a court order from a prior bankruptcy case.
- This uncertainty is attributable in part to the practice of negotiating rather than litigating section 362(d)(1) issues and in part to what is decided in section 362(d)(1) litigation. Section 362(d)(1) does not contemplate that the bankruptcy judge will decide what is adequate protection and mandate that it be provided. Rather, in section 362(d)(1) litigation, the bankruptcy judge merely decides whether what the bankruptcy trustee or debtor in protection has offered is adequate protection.
- 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 on April 29, the default judgment violates the automatic stay and is invalid.
- The 2005 legislation added two new grounds for automatic termination of the automatic stay based on the debtor’s recent bankruptcy filings. 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. Section 362(c)(4) deals with the even less common situation of a debtor who has had two or more bankruptcy cases dismissed within the past year.
- 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.
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PART I 3 results
- If you drew the short straw and have a prof who spent two or three WEEKS on non-bankruptcy law, then, AND ONLY THEN, after reading Part I, you need to read the relevant Units in Part III.
- WHAT YOU NEED TO KNOW ABOUT CREDITORS RIGHTS LAWS OTHER THAN BANKRUPTCY (ASSUMING YOUR PROFESSOR SPENT ONLY TWO OR THREE CLASS PERIODS ON LAWSBANKRUPTCY CODE)
- The nonbankruptcy part of debtor-creditor law is primarily state collection law. Much of the state law is codification of early English common law doctrine. To a large extent, the states’ laws share a common design. They agree on the kind of rights available to individual debtors and the kinds of remedies available to creditors, but they disagree widely on the details. This book focuses on the general design of rights and remedies that are common throughout the country and considers some of the significant state collection law questions that arise throughout the country. When, later in practice, you encounter these questions, you will find that each state has one or more “how to” texts for lawyers that fill in the needed details.
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Chapter IX. Postbankruptcy Transfers 26 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(c)(1).
- 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. Assume, for example, that files a Chapter 7 petition on January 10. On January 12, should not have made these postbankruptcy transfers. Obviously, the trustee has a cause of action against for conversion. Obviously, the trustee can claim any proceeds from the postbankruptcy transfers as property of the estate. And, obviously the claim against the debtor and the right to remaining proceeds will usually be of limited practical significance. The significant inquiry is can the trustee recover the summer house from and/or the boat from ? Should the bankruptcy laws protect transferees and/or
- the transfer occurs and is properly recorded before a copy of the bankruptcy petition is filed in the real estate records for the county where the land is located; and
- 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.
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Chapter XVIII. Judicial Debt Collection 106 results (showing 5 best matches)
- As the above chart suggests, the laws relating to judicial liens on real property are very different from the laws relating to judicial liens on personal property. Are these differences warranted? Law review writers have long argued for a single judicial lien system.
- 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—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 distribution to all such creditors. Despite equity’s preference for equality, a creditor may file a bill on his behalf alone and thus obtain priority over other creditors. Such judgment creditor’s bills are far more common than the general creditors’ bill described above. Usually the judgment creditor’s bill includes a prayer for discovery of all of the debtor’s property; the debtor and third parties holding property of the debtor are then examined in court to locate the assets. A common step after discovery is the...
- While a creditor’s bill is an independent, quasi-in-rem action, governed by equitable rules, and a supplementary proceeding is a summary, in personam action, administered by the court in which the judgment was obtained and governed by the provisions of the applicable state law, the reach of supplementary proceedings is very similar to that of the creditor’s bill. Most supplementary proceedings statutes provide for (1) discovery of assets through the right of examination of the debtor and others; (2) issuance of injunctions to prevent disposition of property; (3) discretionary power to appoint receivers; and (4) orders for the sale of property.
- The creditor’s bill has not only the advantages but also the limitations of an equitable remedy. For example, the notion that jurisdiction in equity will not be entertained where there is an adequate remedy at law requires exhaustion of legal remedies. There is some confusion as to what constitutes exhaustion of legal remedies in this context. There is uniformity of opinion that, subject to limited exceptions, a judgment must be obtained before a party is entitled to institute a suit by creditor’s bill. The difficulty arises in determining exactly how far a plaintiff must proceed after he has obtained a judgment. Most authorities indicate that a creditor must have (1) a judgment, (2) execution issued and (3) return unsatisfied before obtaining a creditor’s bill. Other courts merely require judgment and the issuance of execution. The question of which rule is preferable would seem to be academic today in federal court and in states that have adopted rules of procedure modeled after the
- At early common law, writs of execution were issued by courts of law and so were confined to those estates and interests of the debtor recognized at law. The creditor could not reach the debtor’s equitable interests such as beneficial interests in property held in trust or the debtor’s intangible property such as choses in action.
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PART III 1 result
PART II 8 results (showing 5 best matches)
- In general, a law student or practicing lawyer needs to be able to answer four questions about bankruptcy:
- I understand that the title of this part of the book is some misleading. “MORE THAN WHAT YOU NEED TO KNOW ABOUT BANKRUPTCY” is probably more accurate for law students. Many law school profs—missing class or telling “war stories” about their success in practice or . . .—will not cover all of this stuff.
- The bankruptcy law answers to these questions turn on the form of bankruptcy involved.
- How does a bankruptcy case begin?
- What happens during a bankruptcy case?
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Title Page 4 results
Outline 122 results (showing 5 best matches)
- 1.What Law Determines What Property Is Exempt in Bankruptcy?
- A.Bankruptcy Law
- PART I. WHAT YOU NEED TO KNOW ABOUT CREDITORS RIGHTS LAWS OTHER THAN BANKRUPTCY (ASSUMING YOUR PROFESSOR SPENT ONLY TWO OR THREE CLASS PERIODS ON LAWS OTHER THAN THE BANKRUPTCY CODE)
- PART III. WHAT YOU NEED TO KNOW ABOUT CREDITORS RIGHTS LAW OTHER THAN BANKRUPTCY (ASSUMING YOUR PROFESSOR SPENT MORE THAN TWO OR THREE CLASS PERIODS ON LAWS OTHER THAN THE BANKRUPTCY CODE)
- C.Bankruptcy Courts and Bankruptcy Judges
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Chapter XIX. Fraudulent Transfers 47 results (showing 5 best matches)
- The “badge of fraud rule” that is most uniformly recognized is that preferring one creditor over others is not a badge of fraud. It is not a badge of fraud for debtor, , in full and pay nothing to other creditors, and hinders and delays the other creditors. If, however, , 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.”
- When are you going to do “garnishment law” and when are you going to do “fraudulent transfer law”? Garnishment law is important to a creditor when a third party owes money to the creditor’s debtor or has property that belongs to the creditor’s debtor. is a creditor of has money in
- 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
- The law of fraudulent conveyances soon became something other than the language of the Statute. The Statute of Elizabeth says that fraudulent conveyances are “void,” but void only as to persons “hindered, delayed or defrauded.” In other words, a fraudulent conveyance is valid as between the grantor and the grantee; in other words, a fraudulent conveyance is not void but rather is voidable by certain creditors of the grantor. The language of the Statute also indicates that it is a penal statute with the remedy being the delivery of half the fraudulently transferred property to the crown and the other half to the defrauded creditor. Courts, however, since , 3 Dyer 2936 (1572), have taken the position that the judgment creditor need not rely on the remedy provided in the statute but can ignore the transfer and proceed directly on the property.
- In 2014, the National Conference of Commissioners on Uniform State Law, whose name had been changed to Uniform Law Commission, changed the name of the Uniform Fraudulent Transfer Act to the Uniform Voidable Transactions Act. The other differences between the 2014 version of the law and the 1984 version are less significant.
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Index 155 results (showing 5 best matches)
Chapter XVII. Extrajudicial Collection Devices 18 results (showing 5 best matches)
- As long as the debtor is making payments when due, debtor-creditor law is of little practical significance. The debtor, of course, does not always make the required payments. The ready availability of consumer credit often leads to over-extension in debt and, subsequently, default. The creditor can proceed to collect the debt by using either extrajudicial or judicial methods. Because of the delay and expense involved in litigation, the creditor is likely initially to employ extrajudicial tactics to obtain payment.
- Defamation is aimed at publication of false material. Truth is thus a defense—in most jurisdictions, an absolute defense. A statement truthfully disclosing that a debt is due, owing, and unpaid is not actionable. A statement that falsely imputes a general unwillingness to pay debts or unworthiness to obtain credit may be the basis of a defamation action.
- Some courts have granted recovery where the creditor has done more than inform the employer that a debt is overdue—for example, contacting the employer on numerous occasions. Additionally, there are cases finding an invasion of privacy by communications such as calls to the debtor’s neighbors, publication of the debtor’s name and amount of debt in a newspaper, and posting a notice of the indebtedness at the creditor’s place of business.
- Another defense to defamation is privilege. A communication will be privileged if it pertains to a matter in which the recipient of the communication has a legitimate interest. Informing an employer that his employee has not paid his debts is a common collection tactic to induce payment through indirect pressure on the employee. Employers want to avoid the bother and costs of wage garnishment. Courts are divided as to whether employers have a sufficient interest to cause the communication to be privileged.
- Where these communications are “extreme and outrageous” and result in emotional distress, the debtor may be able to recover on a theory of intentional infliction of mental distress. First, the court must find that the creditor intended to inflict mental distress. Second, the court must find that the creditor’s actions were extreme and outrageous—beyond all bounds of decency. Another difficulty attending this cause of action is the requirement that the emotional stress be severe. The normal strain caused by contact with a collection agency is not sufficient. The debtor has to establish serious mental stress. Most courts also have been hesitant to impose liability for mental distress alone, and have insisted on some form of physical injury.
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WEST ACADEMIC PUBLISHING’S LAW SCHOOL ADVISORY BOARD 12 results (showing 5 best matches)
- Distinguished University Professor, Frank R. Strong Chair in LawMichael E. Moritz College of Law, The Ohio State University
- Professor of Law, Chancellor and Dean Emeritus, University of California, Hastings College of the Law
- Professor of Law and Dean Emeritus,
- Robert A. Sullivan Professor of Law Emeritus,
- Professor of Law Emeritus, University of San Diego Professor of Law Emeritus, University of Michigan
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- Publication Date: April 21st, 2017
- ISBN: 9781634606493
- Subject: Bankruptcy/Creditors' Rights
- Series: Nutshells
- Type: Overviews
- Description: This classic student text, used by tens of thousands of law students for over 45 years has been revised to reflect changes in case law, changes in bankruptcy practices, and changes in bankruptcy casebooks. Today's bankruptcy courses are now much more than just the automatic stay, avoiding powers, and discharge. As bankruptcy classes have become more comprehensive, more students have found this book helpful in comprehending reading assignments, class discussions, and exam questions.