Bankruptcy and Related Law in a Nutshell
Author:
Epstein, David G.
Edition:
9th
Copyright Date:
2017
29 chapters
have results for bankruptcy
Chapter III. Bankruptcy: An Overview 47 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 does not use 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. 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.
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Chapter XVI. Allocation of Judicial Power over Bankruptcy Matters 48 results (showing 5 best matches)
- Under the Bankruptcy Act of 1898, bankruptcy courts had limited jurisdiction. This jurisdiction was commonly referred to as “summary jurisdiction.” (The phrase “summary jurisdiction” is somewhat misleading. First, it incorrectly implies that under the Bankruptcy Act of 1898, bankruptcy courts had a second, nonsummary 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 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:
- 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 a debtor in a bankruptcy case or parties against whom the debtor 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.
- , 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.
- 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.
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Chapter XIII. Discharge 43 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 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.
- ” the debtor (i) filed for bankruptcy, (ii) was insolvent prior to and/or during bankruptcy or (iii) refuses to pay debts by his, her or its bankruptcy, section 525(a). Similarly, a private employer cannot fire an employee or “discriminate with respect to employment” “ ” (i) the employee filed for bankruptcy, (ii) was insolvent prior to or during the bankruptcy or (iii) refuses to pay debts by his or her bankruptcy, section 525(b). Section 525(c) prohibits a government unit operating a student loan program and any private lender making loans guaranteed under a student loan program from denying a loan because a person (i) filed for bankruptcy, (ii) was insolvent prior to or during the bankruptcy or (iii) refuses to pay debts discharged by his or her bankruptcy.
- 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.
- Most debtors who file voluntary bankruptcy petitions expect that the bankruptcy case will wipe out all of their debts. These expectations are not always realized. Bankruptcy
- Unscheduled debts are excepted from discharge by section 523(a)(3). A creditor needs to know that its debtor is involved in a bankruptcy case. Only a creditor that timely files a proof of claim shares in the distribution of the “property of the estate.” How does a creditor learn that its debtor is in bankruptcy? Section 521 requires the debtor to file a schedule of liabilities, and the bankruptcy court sends a notice to each creditor on the list. A creditor whose debt was not scheduled will not receive any notice; a creditor that does not receive the notice will not file a proof of claim unless it knows of the bankruptcy case; a creditor that does not file a proof of claim will not be paid from the property of the estate. Accordingly, section 523(a)(3) excepts from discharge a debt not timely scheduled unless the creditor had notice or actual knowledge of the bankruptcy case.
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Chapter V. Stay of Collection Actions and Acts 22 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
- 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.
- 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.
- 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.
- 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.
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Chapter I. Introductory Material 8 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.
- 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:
- 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. 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.
- 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.
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Chapter XV. Chapter 11 62 results (showing 5 best matches)
- 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.
- files for bankruptcy owing $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 the 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.
- In some Chapter 11 cases, there are problems that need to be resolved immediately—on the first day of the case. The phrase “First Day Orders” does not appear in either the Bankruptcy Code or the Bankruptcy Rules. Nonetheless, “First Day Orders” appear in Chapter 11 cases.
- 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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- The phrase “act of bankruptcy” in 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, we will see that bankruptcy law treats setoff different from recoupment.
- (iii) an act of bankruptcy
- has died and (2) no one has filed a bankruptcy petition.
- The application of Part 6 of the Uniform Commercial Code is conditioned on default by the debtor. 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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Chapter IV. Commencement, Conversion and Dismissal of a Bankruptcy Case 28 results (showing 5 best matches)
- 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.
- 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 filing requirements are satisfied.
- A bankruptcy case begins with the filing of a petition with the bankruptcy court, section 301. 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.
- 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.
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Chapter VIII. Avoidance of Prebankruptcy Transfers 142 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.
- When the bankruptcy trustee avoids an absolute transfer of property, that property then becomes property of the estate. Assume that 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.
- 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.
- files a bankruptcy petition one day after the setoff? Can the bankruptcy trustee recover the $1,000 from ? If one day before the filing of a bankruptcy petition,
- Under section 548, the bankruptcy trustee may only reach transfers made within two years of the filing of the bankruptcy petition. To illustrate, assume that in June of 2017, Marge Simpson gave her daughter Lisa a new piano as a birthday present. Mrs. Simpson was insolvent at the time of the gift. On August 1, 2019, Mrs. Simpson files a bankruptcy petition. By the date of bankruptcy, Mrs. Simpson has repaid all of her June, 2017 creditors except Mr. Burns whom she owed $10. Mrs. Simpson’s bankruptcy trustee will not be able to recover the piano under section 548. The transfer was a fraudulent conveyance (a transfer for less than “reasonably equivalent value” while insolvent) but it was made more than two years prior to the bankruptcy petition.
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Chapter XXI. Debtor’s State Law Remedies a/k/a Collective Creditor Action 12 results (showing 5 best matches)
- 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
- 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
- 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.
- First, creditors generally are unwilling to make concessions unless all other creditors make similar concessions. In a workout, unlike bankruptcy, the majority of creditors are unable to cram down concessions on dissenting creditors. 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.
- A number of early cases make mention of “bankruptcy composition.” Until 1938, the Bankruptcy Act provided for a composition in bankruptcy with the added feature that an agreement accepted by the requisite number of creditors was binding on all creditors. The Chandler Act of 1938 repealed these composition provisions and replaced them with Chapter XI (Arrangements), Chapter XII (Real Property Arrangements by Person Other Than Corporations) and Chapter XIII (Wage Earners’ Plans). The Bankruptcy Reform Act of 1978 replaced these provisions with Chapters 11 and 13.
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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.
- 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 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.
- Article 9 of the Uniform Commercial Code and the Bankruptcy Code. Provisions in both the Bankruptcy Code and Article 9 are generally referred to as “section”; however, the different numbering schemes of the two acts should prevent your confusing the two.
- 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 VII. Exemptions 21 results (showing 5 best matches)
- Such “bankruptcy estate planning” raises various bankruptcy issues. There are reported cases that have withheld a discharge from a Chapter 7 debtor under section 727(a)(2), considered infra, because of an eve-of-bankruptcy conversion of nonexempt property into exempt property, or worse, incurrence of a debt to purchase exempt property.
- 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.
- 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?
- 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, ’s exemptions in bankruptcy would be determined largely by Minnesota state law.
- 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 creditors after the bankruptcy case.
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Chapter XI. Claims 55 results (showing 5 best matches)
- [Generally, interest stops accruing when a bankruptcy petition is filed. ; the loan agreement provides for 14% interest. At the time of the bankruptcy filing, ’s allowable claim will be $1,444; that amount will not continue to draw the 14% interest after the bankruptcy filing.]
- 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).
- ’s claim for $2,000 of unpaid 2012 alimony is not fully satisfied by the bankruptcy distribution, personally. Section 523(a)(5) excepts alimony claims from the bankruptcy discharge. Accordingly, ’s bankruptcy discharge will not affect
- 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.
- The word “claim” appears throughout the Bankruptcy Code, throughout a bankruptcy case. For example,
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Chapter IX. Postbankruptcy Transfers 16 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).
- 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.
- the transfer was authorized by the Bankruptcy Code or by the bankruptcy court; or
- bankruptcy petition and before the order for relief to the extent that the transferee gave value to the debtor after the filing of the bankruptcy petition. To illustrate,
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Chapter VI. Property of the Estate 21 results (showing 5 best matches)
- “Property of the estate” is one of the most important, basic bankruptcy concepts. The filing of any bankruptcy petition automatically creates an “estate,” and that estate 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.
- In short, in all bankruptcy cases and in all bankruptcy classes, it is necessary to be able to answer the question “what does property of the estate include?”
- 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, 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
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Chapter XII. Leases and Executory Contracts 29 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.
- 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.
- 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 over seventy years, the 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.
- 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 party to the lease or contract to “agree” to modifications in the lease or contract. For example, files for bankruptcy. ’s bankruptcy case or
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Chapter X. Effect of Bankruptcy on Secured Claims 43 results (showing 5 best matches)
- 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 363s 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.
- 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
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Chapter XIV. Chapter 13 17 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.
- 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.”
- The bankruptcy court may grant a discharge in a Chapter 13 case even though the debtor has not completed payments called for by the plan. Section 1328(b) empowers the bankruptcy court to grant a “hardship” discharge if:
- 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).
- Think about Chapter 13 in terms of amounts. First, the dollar amount of most claims. The amount owed by most Chapter 13 debtors to most of their creditors is too low for creditors to hire attorneys to represent them in the Chapter 13 case. Second, the amount of cases. The amount of cases handled by the typical bankruptcy judge is too high for her to be able to spend significant time on Chapter 13 cases.
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- (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.
- WHAT CAN CREDITORS DO OUTSIDE OF BANKRUPTCY?
- OF BANKRUPTCY?
- 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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PART III 1 result
Index 26 results (showing 5 best matches)
PART II 8 results (showing 5 best matches)
- The bankruptcy law answers to these questions turn on the form of bankruptcy involved.
- WHAT YOU NEED TO KNOW ABOUT BANKRUPTCY
- In general, a law student or practicing lawyer needs to be able to answer four questions about bankruptcy:
- How does a bankruptcy case begin?
- What happens during a bankruptcy case?
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Outline 25 results (showing 5 best matches)
- C.Bankruptcy Courts and Bankruptcy Judges
- 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)
- A.What Can Creditors Do Outside of Bankruptcy?
- B.What Can a Debtor Do Outside of Bankruptcy?
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- WHAT YOU NEED TO KNOW ABOUT CREDITORS RIGHTS LAWS OTHER THAN BANKRUPTCY (ASSUMING YOUR PROFESSOR SPENT ONLY TWO OR THREEBANKRUPTCY CODE)
- 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.
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Chapter XIX. Fraudulent Transfers 2 results
- , 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.”
- 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.
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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.