Bankruptcy

Question 1

Subject: Bankruptcy

What are the requirements for Involuntary Bankruptcy in situations where there are less than 12 creditors?

Answer 1

Subject: Bankruptcy
Involuntary Bankruptcy in situations where there are less than 12 creditors
- Single Creditor may file petition as long as his/ her claim aggregates $15,325 in excess of any security s/he may hold. More than one creditor may join in the petition in order to get to the required amount.

Question 2

Subject: Bankruptcy

What are the requirements for Involuntary Bankruptcy in situations where there are 12 or more creditors?

Answer 2

Subject: Bankruptcy
Involuntary Bankruptcy in situations where there are 12 or more creditors
- At least 3 must sign the petition and they must have claims that aggregate $15,325 in excess of any security held by them.

Question 3

Subject: Bankruptcy

In bankruptcy, list the order of distribution for the priority of claims.

Answer 3

Subject: Bankruptcy
Order of Distribution (Priority of Claims)
1. Secured Creditors
2. Unsecured Creditors
     a.  Domestic Support
     b.  Administration costs
     c.  Wages/ salaries
     d.  Consumer Deposits
     e.  Taxes
     f.  General (unsecured) creditors that filed timely proof of claims.

Question 4

Subject: Bankruptcy

True or False- An enabling loan can be set aside by a trustee in a bankruptcy proceeding.

Answer 4

Subject: Bankruptcy
False
An enabling loan CANNOT be set aside by a trustee in a bankruptcy proceeding.

Question 5

Subject: Bankruptcy

Define an Enabling Loan

Answer 5

Subject: Bankruptcy
Enabling Loan- Security Interest given by the debtor to acquire property that is perfected within 10 days after such security attaches.
An Enabling Loan CANNOT be set aside by a trustee in a bankruptcy proceeding.

Question 6

Subject: Bankruptcy

Define a Preferential Transfer

Answer 6

Subject: Bankruptcy
Preferential Transfer- Includes transfers made within the previous 90 days while insolvent and include those made for ANTECEDENT debts including a SECURITY INTEREST given by a debtor to secure ANTECEDENT debts.

Question 7

Subject: Bankruptcy

Define a Preferential Transfer for related parties (insiders)

Answer 7

Subject: Bankruptcy
Preferential Transfer for RELATED PARTIES (INSIDERS)- Includes transfers made within the previous 1 YEAR while insolvent and include those made for ANTECEDENT debts including a SECURITY INTEREST given by a debtor to secure ANTECEDENT debts.