Negotiable Papers

Question 1

Not commercial papers:

Answer 1

Warehouse receipt
Bills of lading
Investment securities - stocks and bonds

Question 2

5 elements of negotiability:

Answer 2

SUMBOD:
s - signed by maker
U - unconditional . Ok: accelerated or implied 
M-money fixed
B- to bearer 
O- to order export checks are ok
D- on demand or definite time. 

Only front will determine negotiability. The endorsement side does not indicate anything

Question 3

Bearer paper- negotiation

Answer 3

Enough to just deliver the paper
Blank endorsement - no name always make it bearer
Requires only possession

Question 4

Order paper- negotiability

Answer 4

Required delivery and proper endorsement

Needs special endorsement - payee name

Question 5

HDC:

Answer 5

First holder of commercial paper
Must take the instrument in VFW
SHELTER rule: whoever takes the right of HDC gets the right.

Question 6

Real defenses that can defeat HDC:

Answer 6

IM BIFF

Question 7

Discharge from liability- to pay

Answer 7

Pay in full
Intentional description but not accidental
Certification of a check by a bank discharges all parties

Question 8

Creditors rights against debtors can be secured by attachment:

Answer 8

AVR:
A- agreement signed by debtor. Can be oral or written
V- creditor has to give up some value
R- debtor had rights in collateral

All 3 needs to occur.

Question 9

Perfection is protection against 3 parties:

Answer 9

Possession
Filling a financial statement
By attachment- PMSI ( sell on credit or let debtor borrowed funds to obtain collateral)

Question 10

Priorities among the conflicting interests in collateral:

Answer 10

Buyer in the ordinary course of bus
PMSI
Perfected creditor
Unperfected creditor

Question 11

Remedies of creditors after default:

Answer 11

Can repossess the collateral but must give notice
Must cancel all the debt
If debtor or creditor object within 21 days then creditor can not keep but has to sell
If debtor paid more than 60%, then must sell.
Can sue the debtor for debt and reduce the claim to a judgment.

Question 12

Chapter 7 - bankruptcy

Answer 12

Full liquidation
Trustee is appointed
Order of relief is the date of filling, but in voluntary: there is a gap between file and relief
Debtor need to have at least one unpaid debt
If solvent must pass income test
Farmers and charities are exempt from involuntarily chapter 7 filling

Question 13

Chapter 11- bankruptcy

Answer 13

Reorganization
No liquidation
Debtor submits plan to unsecured debtor’s committee - 120 days
Trustee is not required
Plan can be accepted by any creditor but be approved by 1 impaired class
The plan is not confirmed until all administrative costs of bankruptcy are paid in full
Chapter discharged from all debts except covered in plan, judge order, bankruptcy law.

Question 14

Debtor’s property after filling bankruptcy

Answer 14

Goes to trustee to pay creditors
Includes: any gains after filling, Exempt: SS, disability benefits, alimony, child support, other things to live
Any gains after fillings within 180 days go to trustee - inheritance, insurance, divorce

Question 15

Chapter 7 Means test

Answer 15

To see if debtors has enough money to make payments under chapter 13
Family income 12 475 can not file ch. 7 but can ch. 13
If in between depends if >25% sufficient funds can not file ch. 7

Question 16

Preferential transfers

Answer 16

Power of trustee to set aside some payments by debtor to a creditor
To avoid power of trustee: TANIM

Question 17

Discharge of the debtor. Bankruptcy. Denial if

Answer 17

Try to hide assets: failed to keep adequate books, hide assets within 1 year if filling, refusal to explain loss, making false oath.

Question 18

Bankruptcy. What debts are not discharged:

Answer 18

WAFTED

Question 19

Order to pay creditors:

Answer 19

1- secured creditors up to value of their collateral
2-SAG-WEG-CTI
If there is not sufficient funds for everyone - pay prorate share.
3- unsecured creditors who filed on time.