Bankruptcy in a Nutshell
Author:
Epstein, David G.
Edition:
10th
Copyright Date:
2021
29 chapters
have results for Bankruptcy and Related Law in a Nutshell
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 U.S. Courts
- Most often, the attorney involved will be a “bankruptcy attorney” (or at least will call themself 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 challenging, interesting and rewarding. 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 almost 50 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 & Spalding and then Haynes and Boone.
- This new edition reflects the helpful suggestions of law students, bankruptcy judge clerks, and lawyers who have used prior editions of this book. Just as the first edition benefitted from the work of Pete Chastain, a North Carolina law student, this edition benefitted from the work of Diana Dominguez, a Richmond law student.
- More important, since the last edition there have been significant amendments to the Bankruptcy Code, major court decisions, and meaningful changes in how bankruptcy cases are done and how bankruptcy affects the way deals are done.
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Chapter III. Bankruptcy: An Overview 62 results (showing 5 best matches)
- 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 allocation of judicial power over bankruptcy 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, 2005, and 2019.
- Fourth, the vocabulary of bankruptcy law is different from the vocabulary of state collection law. The Bankruptcy Code uses technical terms such as “automatic stay” and “impairment” that are not a part of state law. And, the Bankruptcy Code uses terms such as “debtor” and “redemption” that are a part of state law differently than state law. Accordingly, it is very important that you consistently and persistently check for the statutory definitions of terms used in the Bankruptcy Code.
- 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.”
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Chapter VIII. Avoidance of Prebankruptcy Transfers 288 results (showing 5 best matches)
- The second question relating to where bankruptcy-related litigation can be brought is explained in Chapter XVI of this book dealing with allocation of judicial power over bankruptcy and bankruptcy-related litigation. Avoidance actions are brought in bankruptcy court.
- Apply paragraph (b) of section 547 first. Only if a transfer is a preference under section 547(b), is it necessary to do paragraph (c). If a transfer comes within one of section 547(c)’s nine exceptions, the bankruptcy trustee will not be able to invalidate the transfer even though the trustee can establish all of the requirements of section 547(b). While section 547(c) contains nine numbered exceptions and this nutshell will explain all nine, Section 547(c)(2)(“ordinary course”) and 547(c)(4)(“new value”) are the exceptions most frequently tested in law school and at issue in practice
- 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 544(a) empowers the bankruptcy trustee to invalidate any unrecorded transfer that under nonbankruptcy law is voidable as to a creditor who extended credit and obtained a lien on the date of the filing of the bankruptcy petition or is voidable as to a bona fide purchaser of real property whether or not such a creditor or purchaser actually exists. In applying section 544(a), it is thus necessary to determine whether:
- 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 debtor’s prebankruptcy transfer and (2) which such 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. The answers to the questions of what are the consequences of avoiding a prebankruptcy transfers and which transfers can be avoided can be found in Chapter 5 of the Bankruptcy Code and this chapter of this book.
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Chapter XII. Leases and Executory Contracts 84 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.
- More generally, 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 the common law of contracts, for example, personal services contracts cannot be assigned and delegated. And so, under section 365(c)(1), personal services contracts cannot be assigned. If Wonder Woman contracts to defend of Richmond and Wonder Woman later files a bankruptcy petition, Wonder Woman cannot use bankruptcy to assign this personal services contract to Superman.
- 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.”
- 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.
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Chapter XIII Discharge 143 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”?
- 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.
- Exceptions to discharge based on section 523(a)(10)–(13) and (16)–(19) rarely arise in a bankruptcy case and never arise in a bankruptcy class.
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Chapter II. An Overview of Judicial Collection Law 49 results (showing 5 best matches)
- The most important reason for the diminished role of judicial 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 judicial collection remedies but also can require a creditor who has successfully collected its debt using judicial collection remedies to return what it has collected.
- A big part of bankruptcy practice and a big part of law school bankruptcy courses deals with consensual liens and so a big part of this book deals with consensual liens, For now, you need to understand that: (1) by contract, a creditor can obtain property rights in addition to the rights available to a creditor under generally available state creditors’ remedies law; (2) these rights, i.e., these consensual liens, have the effect of limiting the rights of other creditors under creditors’ remedies law; and (3) these consensual liens are property rights and so enjoy the constitutional protection afforded to property rights (you know, due process, no takings, and all that Fifth Amendment stuff on your Con Law test). In essence, a creditor with a consensual lien (or any lien for that matter) really has two claims: (1) an
- State exemption laws vary significantly from state to state. In most states, the amount of property that a debtor can designate as exempt, and retain free from execution, is very limited—enough to assure only a subsistence level of living for the debtor and her dependents. And, in all states, creditors with a mortgage or other lien on property that is designated as exempt are not covered by exemption law; they are themselves “exempt” from it, and therefore can still seize and sell that property free from the exemption law claim. If, for example, Bank has a mortgage on ’s house and defaults, First Bank can seize and sell
- There is an infrequently used exception to this statement known as an “assignment for the benefits of creditors” or “ABC.” An ABC is a state law, usually statutory, procedure that allows a debtor to voluntarily liquidate its assets in order to pay creditors. Specifically, the debtor will transfer title to all of its nonexempt assets to an assignee that acts as a representative for the debtor’s creditors. While creditors will often cooperate with debtor’s seeking to use an ABC, there is no way of making them do so. Also, and perhaps most importantly, the debtor cannot obtain a general discharge of debts remaining unpaid after its assets are liquidated and distributed in an ABC, because of the “Impairment of Contracts” clause of the Constitution. In addition to ABC’s, there are a variety of both state and federal statutes that call for appointment of a “receiver” under various circumstances, including insolvency of the debtor, to take possession of the debtor’s assets with the intent...
- Let’s consider the law of creditors’ judicial remedies first. At the broadest level, the law of creditors’ judicial 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
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Chapter XVIII. Allocation of Judicial Power over Bankruptcy Matters 67 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 11 271 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 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.
- The law school exam answer begins with section 364(a) which empowers the debtor in possession to incur unsecured debt in the ordinary course of business“ that will have an administrative expense priority and section 364(b) which provides that the bankruptcy court, may authorize the debtor in possession to incur non-ordinary unsecured debt that will have an administrative expense priority.
- 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.
- Bankruptcy law professors, lawyers and judges (but not the Bankruptcy Code) use the phrase “absolute priority” to describe the standard for “fair and equitable” treatment of unsecured claims.
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Chapter XIV. Chapter 13 126 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.
- Remember that in a Chapter 7 case, a debtor’s unencumbered nonexempt property as of the time of the bankruptcy petition is sold by the Chapter 7 trustee and the proceeds are distributed to the holders of unsecured claims, What unencumbered nonexempt property do you have? Most individuals do not have much if any unencumbered nonexempt property. For most individuals, the only real costs of Chapter 7 bankruptcy are (i) the filing fee and (ii) their attorney’s fee. And most Chapter 7 debtors receive a discharge within a few months of filing for bankruptcy.
- 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.
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Chapter X. Effect of Bankruptcy on Secured Claims 114 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.
- 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:
- Section 544(a) gives the bankruptcy trustee the rights and powers of a creditor who obtains a judicial lien at the time the bankruptcy petition was filed. At the time the bankruptcy petition was filed, ’s security interest was unperfected. An unperfected security interest is ineffective as against a creditor with a judicial lien, UCC § 9–317. Accordingly, S’s unperfected security interest is ineffective as against the bankruptcy trustee.
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Copyright Page 7 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 46 results (showing 5 best matches)
- 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 they were living at the time of the bankruptcy filing only if that was the only state in which they were domiciled for the entire two years preceding bankruptcy. If the debtor has not maintained their domicile in the same state for the 730 days (two years) before their 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 they are entitled under the laws of the state of their 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 December 2021 In the two years before bankruptcy, she lived in Texas, California and Iowa. Now that we know that ’s domicile in a single state for the two years before s bankruptcy filing, we don’t care where lived in that two-year period. Instead, we want to know where lived in yet another state, 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?
- The Bankruptcy Code together with the Bankruptcy Rules also expressly deal with the situation in which the debtor claims too much property as exempt and no one makes a timely objection. Under section 522( ) and Rule 4003, an individual debtor files a list of the property they claim as exempt. In , the debtor’s list of exempt property included the proceeds from a pending employment discrimination action. This asset was not exempt under relevant exemption laws. Nonetheless, the Supreme Court held that it was exempt in bankruptcy because of the absence of a timely objection.
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Chapter XI. Claims 141 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
- 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, 2023, claims for taxes for 2022, 2021 and 2020 would be entitled to a priority. If, however, files a bankruptcy petition on December 7, 2023, only claims for taxes for 2022 and 2021 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.
- Under section 727, the bankruptcy court generally grants a Chapter 7 debtor a “discharge.” This discharge prevents a creditor from collecting its claim from the debtor after the bankruptcy case is closed. The discharge and exceptions thereto is considered in Chapter XVII.
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Chapter IV. Commencement, Conversion and Dismissal of a Bankruptcy Case 64 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 VI. Property of the Estate 40 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 of this book, 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.
- 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 and the bank have property interests in the Silverado. Accordingly, if files a bankruptcy petition, under section 541 of the Bankruptcy Code, only ’s property interest in the Silverado is property of the estate.
- When a trustee is appointed in a Chapter 11 case that is not a Subchapter V case, the trustee 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.
- In both law school classes and bankruptcy cases, the most significant exclusions from property of the estate are not based on section 541(b) or (c). Rather, the most significant exclusions are exemptions which will be considered in the next chapter.
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Chapter V. Stay of Collection Actions and Acts 68 results (showing 5 best matches)
- 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 possession 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.
- There are also two 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.
- Section 362(c)(2) provides that the automatic stay ends when the bankruptcy case is closed or dismissed or the debtor receives a discharge. The typical Chapter 7 bankruptcy can be completed in a matter of months. In Chapter 11 cases and Chapter 13 cases, however, there can be a gap of several years between the filing of the petition and discharge. Accordingly, unless some action is taken, the stay can last several years.
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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 whether the trustee can 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 XVI. Subchapter V 36 results (showing 5 best matches)
- As in every bankruptcy case, the filing of a bankruptcy petition commences the case. Subchapter V is different in that it applies only if (i) the debtor is eligible for Subchapter V and (ii) elects for Subchapter V to apply.
- A Subchapter V debtor has the same section 308 periodic reporting requirements relating to cash receipts, cash disbursement, profitability as a small business debtor. And the Subchapter V debtorin possession operating the business has the same section 362 stay protection and the same sections 363, 364 and 365 options as a debtor in possession in a standard Chapter 11 case.
- First, in Subchapter V cases, the bankruptcy court can confirm a plan under section 1129(b) even if no class of impaired claims has assented. In standard Chapter 11 cases, section 1129(b) requires at least one assenting impaired class.
- The requirements for confirmation of a consensual plan in Subchapter V are essentially the same as the requirements for confirmation of a standard Chapter 11 plan. All of the requirements of section 1129(a) must be satisfied except for section 1129(a)(15). Section 1129(a)(15) is of limited practical significance and no law school significance. It imposes a projected disposable income requirement on an individual debtor.
- In Subchapter V cases, there will be a debtor in possession of the assets and control of the business but there will also be a trustee from a panel of Subchapter V trustees appointed by the United States Trustee. While the Subchapter V trustee will have monitoring and oversight duties, Subchapter V contemplates that the debtor will be the person that runs the business, and the debtor in possession will be the person who prepares and files the plan.
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Chapter XVII. Section 363 Sales of All of the Assets 37 results (showing 5 best matches)
- Statutory interpretation problems with reading “free and clear of interests” as including claims are created by section 1141(c) which uses the phrase “free and clear of all claims and interests” and sections 1122, 1124 and others which use the phrase “claims or interests.” If the word “interests” in Bankruptcy Code section 363(f) included “claims,” then other provisions of the Bankruptcy Code would not use the phrase “claims and interests” or the phrase “claims or interests.”
- Policy arguments for a section 363 buyer’s being able to acquire assets free and clear of claims can be based on (1) bankruptcy’s providing a fresh start and (2) bankruptcy’s being a collective proceeding resolving all liabilities.
- The Bankruptcy Code does not use the term “credit bidding.” Bankruptcy lawyers and judges use the term “credit bidding” to describe the effect of the following language in section 363(k): “may offset such claim against the purchase price of such property.”
- In practice, the initial bidder is often times referred to as the “stalking horse”; the compensation is referred to as a “breakup fee”; and the argument for a breakup fee frequently includes the phrase “level playing field . . .” The Bankruptcy Code does not mention stalking horses, breakup fees or level playing fields.
- There are numerous opinions by bankruptcy judges and state court judges that address breakup fees. The promise of a breakup fee can entice someone to make a firm bid that in turn generates other bids; on the other hand, the breakup fee can have a chilling effect, discouraging others from bidding. For example, D agrees to sell its assets to P under section 363 for $10M, subject to bankruptcy court approval. The agreement provides that if someone else buys the assets at the section 363 hearing then P receives a breakup fee of $500,000. As a result of this breakup
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Part II. What You Need to Know About Bankruptcy 8 results (showing 5 best matches)
- In general, a law student or practicing lawyer needs to be able to answer four questions about bankruptcy:
- The bankruptcy law answers to these questions turn on the form of bankruptcy involved.
- I understand that the title of this part of the book is somewhat misleading. “MORE THAN WHAT YOU NEED TO KNOW ABOUT BANKRUPTCY” is probably more accurate for law students. Many law school profs will not cover all of this stuff.
- How does a bankruptcy case begin?
- What happens during a bankruptcy case?
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Center Title 2 results
Outline 102 results (showing 5 best matches)
Index 138 results (showing 5 best matches)
- What You Need to Know About Creditors Rights Laws Other than Bankruptcy
- 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. That is what you need to know for law school. 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.
- 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.
- The nonbankruptcy part of debtor-creditor law is primarily state statutes governing judicial collection law. Much of this state law is codification of early English common law doctrine.
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West Academic Publishing’s Emeritus Advisory Board 17 results (showing 5 best matches)
- Joanne and Larry Doherty Chair in Legal Ethics & Professor of Law, University of Houston Law Center
- Dean and Joseph L. Rauh, Jr. Chair of Public Interest LawUniversity of the District of Columbia David A. Clarke School of Law
- Professor of Law, Chancellor and Dean Emeritus University of California, Hastings College of the Law
- John Deaver Drinko/Baker & Hostetler Chair in LawMichael E. Moritz College of Law, The Ohio State University
- Professor of Law and Dean Emeritus
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- Publication Date: May 24th, 2021
- ISBN: 9781647082543
- Subject: Bankruptcy/Creditors' Rights
- Series: Nutshells
- Type: Overviews
- Description: This classic student text, used by tens of thousands of law students for almost 50 years, has been revised to reflect changes in the Bankruptcy Code, changes in case law, changes in bankruptcy practices, and changes in bankruptcy casebooks. For example, there is a Chapter on new Subdivision V which affects most small business cases and a new separate Chapter on Section 363 Sales which affects most large business cases. Today's bankruptcy courses are now much more than just the avoiding powers, and discharge. As bankruptcy classes have become more comprehensive, students have found this short book even more helpful in comprehending reading assignments, contributing to class discussions, and answering exam questions.