R& Bankruptcy

Question 1

Under the Fed Bankruptcy Code, is a trustee required for Chapter 7, Chapter 11, and Chapter 13?

Answer 1

A trustee is required for Chapter 7 and Chapter 13.

A trustee is not required for Chapter 11.

Question 2

What 2 groups may file voluntary bankruptcy, but may not be subject of involuntary bankruptcy?

Answer 2

1. Farmers

2. Nonprofit Charitable Organizations

Question 3

How many creditors must join in filing a petition to commence an involuntary bankruptcy case:

1. If the debtor has 12 or more creditors?
2. If the debtor has fewer than 12 creditors?

Answer 3

1) If the debtor has 12 or more creditors, at least 3 creditors with aggregate unsecured claims of at least $15,325 must join in the petition.
2) If the debtor has fewer than 12 creditors any one creditor with an unsecure claim of at least $15,325 may file the petition alone.

Question 4

What is the automatic stay?

Answer 4

Automatic Stay:

1) When bankruptcy proceeding commence, a creditor may not pursue remedies against the debtor or his assets.
2) The automatic stay goes into effect the moment a bankruptcy petition is filed.

Question 5

Under the Fed Bankruptcy Code, what elements are necessary to establish a preferential payment?

Answer 5

A preferential payment is:

1) A transfer made to or for the benefit of a creditor;
2) On account of an antecedent debt of the debtor;
3) Made within 90 days prior to the filing (one year if the creditor is an insider such as an officer of the debtor organization or a close relative of the debtor);
4) Made while the debtor was insolvent, and
5) Results in the creditor receiving more than the creditor would have received under the Bankruptcy Code.

Question 6

List at least 6 grounds for denial discharge.

Answer 6

1) Debtor not individual
2) Fraudulent transfers of concealment of property
3) Failure to keep books and records
4) Commission of bankruptcy crime
5. Failure to explain loss of assets
6. Refusal to obey orders or answer questions
7. Improper conduct in an insider’s case
8. Prior discharge within 8 years.
9. Individual debtor’s failure to complete financial management course
10. Waiver

Question 7

List at lease 6 exceptions to discharge.

Answer 7

1. Taxes due within 3 years of filing
2. Debts incurred by fraud
3. Debts related to luxury goods
4. Open-ended credit debts of consumers
5. Debts undisclosed in bankruptcy petition
6. Debts from embezzlement, larceny, and fiduciary’s fruad
7. Alimony, maintenance, support
8. Debts from willful and malicious injury
9. Debts from DWI
10. Debts that are government fines and penalties
11. Debts from education loans.
12. Debts denied discharge in prior bankruptcy
13. Debts incurred to pay taxes
14. Debts incureed due to violations of securities laws
15. Condo, co-op, and homeowner’s association fees
16. Restitution for federal crimes

Question 8

What is the hierarcy for paying unsecured priority claims in bankruptcy proceedings?

Answer 8

Secured creditors then SAG-WEG-CTI

S = Support obligations to spouse and children

A = Bankruptcy Administrative Expenses

G = Gap Creditors

W = Wages up to $12,475 if earned 180 days

E = Employee benefit plan payments up to $12,475 (reduced by wages claims) if earned within 180 days

G = Grain farmers’ and fishermen’s claims against storage / processing facilities up to $6,150

C = Consumer deposits

T = Taxes

I = Injuries caused by intoxicated driving

Question 9

In a chapter 11 reorg, is a trustee usually appointed?

Answer 9

A trustee usually is not appointed in a Chapter 11 case, the debtor usually remains in possession of the estate’s assets.

Question 10

The order for preliminary relief is the principal door to bankruptcy proceedings for a foreign debtor. True or False?

Answer 10

False. The main door is a petition for recognition, which is filed by the foreign representative.