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REG > Business Law VI: Bankruptcy > Flashcards

Business Law VI: Bankruptcy Flashcards

1
Q

Bailee’s Lien

A

A bailee (warehouse co, common carrier, innkeeper) has right to compensation/reimbursement, so can enforce this right by lien on bailed property… can sell property to satisfy lien

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2
Q

Artisan’s Lien (worker’s lien)

A

A contract bailee who improves/repairs bailed property to increase it’s value can place possessory lien on bailed property and sell property to satisfy lien

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3
Q

Lien priority

A

Artisan’s lien takes priority over previously perfected security interest

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4
Q

Chapter 7 Bankruptcy

A

“straight bankruptcy” or liquidation

  1. Permits voluntary and involuntary petitions
  2. Permits individuals and businesses to file
  3. Trustee appointed
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5
Q

Chapter 9 Bankruptcy

A

allows adjustment of debts of a municipality (rehabilitation)

  1. Permits voluntary petitions by the municipality
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6
Q

Chapter 11 Bankruptcy

A

allows for reorganization of a debtor to pay debts - rehabilitation of debtor

  1. Permits voluntary and involuntary petitions
  2. Allows companies to restructure/be discharged from certain debts
  3. Generally, no trustee
  4. Reorganization plan approved by 1/2 of creditors with 2/3 of total claims
  5. Court must approve
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7
Q

Chapter 12 Bankruptcy

A

allows for adjustment of debts of family farmer/fisherman

  1. Permits ONLY voluntary petition
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8
Q

Chapter 13 Bankruptcy

A

allows for adjustment of debts of an individual with regular income

  1. Permits only voluntary petitions
  2. limits on secured/unsecured debt
  3. Always trustee
  4. Only individuals
  5. Debtor’s plan
  6. Court Confirmation
  7. 3 to 5 yrs for plan, discharged if payment is made
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9
Q

Requirements for creditor’s involuntary petitions of a debtor into bankruptcy

A
  1. if debtor has 12 or more unsecured creditors w/ noncontingent claims, petition must be signed by 3 or more
  2. if debtor has 12 or less unsecured creditors w/ noncontingent claims, petition requires only one signature
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10
Q

Bankruptcy: Order for Relief

A

Creditors must stop collection and all pending credit proceedings are stayed.

All debts and payments will be handled through bankruptcy court.

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11
Q

Debtor’s Obligation to Provide Information (10)

A

Must file the following under oath:

  1. list of all creditors/amounts owed
  2. schedule of assets/liabilities
  3. schedule of current income/expenses
  4. statement of financial affairs
  5. statement of intent to retain or surrender property, specify property exempt from bankruptcy
  6. certificate from approved credit-counseling agency
  7. statement of monthly income itemized to show how it is calculated
  8. copy of debtor’s federal income tax return for most recent year prior to filing
  9. proof of payments received from employers during last six months
  10. cooperate fully/respond truthfully during examinations, appear at hearings, surrender to trustee all property subject to bankruptcy
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12
Q

Bankruptcy: Trustee Duties

A
  1. collecting debtor’s property
  2. accounting for all property received/making final report for administration of debtor’s estate
  3. investigating financial affairs of debtor to determine what valid debt exists and whether debtor has
    - furnished info/reports concerning debtor’s estate
    and
    - providing notice info to domestic support creditors
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13
Q

Collection of Assets - The Debtor’s Estate

A
  1. All tangible/intangible property the debtor held when bankruptcy began
  2. Certain after-acquired property debtor acquired within 180 days after petition is filed
    - inheritance/gift
    - divorce, separation, property settlement
    - beneficiary proceeds from life insurance policy
  3. Property appreciation, income, etc. from existing property
  4. Property reacquired by trustee’s avoidable powers such as preferences, fraudulent transfers, transfer by mistake, etc.
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14
Q

Individual Exemptions from Bankrupt’s estate

A

These are subject to limits, decided by states:

  1. homestead used as residence
  2. motor vehicle
  3. some household furnishings
  4. tools of trade
  5. unmatured life insurance policies
  6. prescribed health aids
  7. government benefits such as SS
  8. alimony, child support, disability, pension
  9. damages for bodily injury
  10. jewelry for personal purposes
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15
Q

Trustee can set aside transfers for

A
  1. Usual contract defenses: duress, mistake, undue influence, failure of consideration, debtor’s incapacity
  2. fraudulent transactions
  3. transfers of property made after debtor became subject to bankruptcy
  4. any transfer that results in legal preferance
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16
Q

Legal/Voidable preferences for Creditors

A
  1. transfer of debtor’s property to creditor
  2. for antecedent or preexisting debt
  3. made within 90 days of filing of petition
  4. made while debtor was insolvent
17
Q

Legal/Voidable preferences for Insiders (relatives, partners, corporation)

A
  1. transfer of debtor’s property to an insider
  2. for antecedent/pre-existing debt
  3. made within one year from date of filing of bankruptcy petition
  4. made while debtor was insolvent
18
Q

Priority list for distribution of debtor’s estate

A
  1. Perfected secured parties
  2. Child Support/Alimony
  3. Gap Creditors
  4. Employee Wages up to $12,475
  5. Contributions to employee benefit plans up to $12,475
  6. Claims of farmers/fisherman
  7. Consumer Creditors to $2,775
  8. Claims of governmental units for various taxes
  9. Claims for death or personal injury
  10. All general unsecured creditors
  11. If anything is left, goes to debtor
19
Q

Discharge Decree

A

Granted by court after estate has been distributed.

Releases debtor from further liability of debts.

Revocable for 1 yr

20
Q

Conditions under which discharge may be denied

A
  1. Partnership/Corps cannot get discharge decree, only individuals can
  2. Debtor denied discharge if had a previous one within 8 year
  3. Denied if fraud, intentional concealment or transfer of assets, refusal to obey lawful order, failure to complete consumer education course
  4. Consumer debts incurred w/in 90 days of filing petition or cash advance w/in 70 days
21
Q

Debts not Discharged under any circumstances

A
  1. 2 years of unpaid taxes
  2. debts incurred through fraud or other false pretenses
  3. debt for DUI
  4. unscheduled debts (not listed)
  5. alimony, maintenance, child support
  6. debts from fraud as a fiduciary (embezzlement)
  7. fines/penalties payable to government unit
  8. student loan debt/benefits
  9. SOX bonuses/incentives
  10. consumer debts w/in 90 days of filing and under $575
22
Q

Tax claims discharged

A

If trustee requests tax audit and taxing authority does not notify it has commenced w/in 60 days or complete audit w/in 180 days, trustee and debtor are discharged from tax liability

23
Q

Reaffirmations

A

Agreements between debtor/creditor will not be discharged in bankruptcy

REG (26 decks)

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