r6 Flashcards
Chapter 7
Liquidation: Trustee appointed
-debts are wiped out
Chapter 13
Adjustments of debts of individuals with regular income
-repays all or a portion of his debts over a 3 year period to a maximum of 5
Chapter 11
Organization: No liquidation, trustee not required
-debtor remains in possession of his or her assets and a plan of reorganization is adopted
when to have a trustee
chapter 7 & 13
When will they dismiss or convert chapter 7
- if income is over state medium; then
- means test or look for general abuse bc the debtor has sufficient funds to pay off debts
What is the means test?
(Avg monthly income - allowed expenses ) * 60
If the amount is less than $9075 can continue with Chapter 7
Who can not file for chapter 7? (RIBS)
Railroads
Insurance companies
Banks
Savings Institutions
Who can not file for chapter 11? (BIBS)
Brokers
Insurance companies
Banks
Savings Institutions
What is an automatic stay?
stops almost all collection efforts
-does not apply to criminal, paternity, spousal/child support
In an involuntary case who must join the petition?
Only creditors who are owed individually or in aggregate at least $18,600 in unsecured, undisputed debt
- < 12 creditors: one or more owed $18,600
- > 12 creditors: at least three owed $18,600 in aggregate must join the petition
What is the property included and DIII at the time of bankruptcy?
The property included and DIII within 180 days after filing
-Divorce property received
-Income rent, dividends, interest
-inheritance
-Insurance
a family farmer cannot seek relief under this chapter.
7
Under Chapter 7 of the federal Bankruptcy Code, what effect does a bankruptcy discharge have on a judgment creditor when there is no bankruptcy estate?
The debtor is relieved of any personal liability to the judgment creditor
A preferential payment is:
- a transfer made to or for the benefit of a creditor
-on account of an antecedent debt of the debtor - made within 90 days prior to filing of the petition
-made while the debtor was insolvent
-results in the creditor receiving more than the creditor would have received under the bankruptcy code
The two ways to prevent discharge:
-Raise objections against discharge
-Nondichargable debts WAFTED
What are the objections to discharge?
-Debtor is not an individual
-fraudulent transfers or concealment of property
-unjustifiably failed to keep books and records
-prior discharge within 8 years
What are the 6 nondischargeable debts? WAFTED
Willful and malicious injury
Alimony
Fraud
Taxes
Educational Loans
Debts undisclosed in the bankruptcy petition
What is the order you have to pay your debts?
- Secured claimants
- Priority claimants
- General creditors who filed their claims on time
Priority Claimants SAG WEG CTI
Support obligations owed to spouse and children
Expenses of bankruptcy administration, including fees
Gap claims that accrue in the ordinary course of business
Wage claims of employees
Sums owed for the employee benefits
claims of GRAIN farmers and fisherman
Consumer deposits up to $3,350
Tax claims
Personal injury claims from intoxicated driving
FICA % for employees
Gross wages
FICA % for self-employed
Net Profits
-self employed 1/2 deductible
The most important things to remember about social security for the exam are:
-the employer must pay the tax and collect the emplyees portion of the tax
-all income dervied from labor is taxed; unearned is not taxed
Unemployment compensation FUTA
payroll tax against employer
6% of first 7k
excludes the self employed
Do all employers pay FUTA?
No, only if it pays an employee for 20 weeks or paid $1,500 in a quarter
Who must use the Affordable Care Act?
Employers who have more than 50 employees are considered ALEs
Fiduciary duties owed to other partners
Loyalty
Obedience
Reasonable care
Account
A limited partnership is made up of
1 or more general partners who have personal liability for all partnership debts and 1 or more limited partners whose liability is generally limited to investment
What is a joint venture?
A joint venture is an association of persons engaged as co-owners in a single (special transaction) undertaking for profit. A joint venture is treated as a partnership for most important legal respects.
For the partnership agreement to be enforceable, it must be in writing if
A transaction which cannot be completed within a year must be in writing to be enforceable.
The Revised Uniform Partnership Act (RUPA) requires that any partnership matters not in the ordinary course of business be approved by
all the partners unless there is an agreement to the contrary in the partnership agreement.
Will bankruptcy result in a dissociation?
Yes
Is a partner in a LP personally liable for wrongful acts committed by employees?
No, A partner in an LLP is personally liable for tort liabilities arising from his own negligence and the negligence of his direct subordinates. He is NOT personally liable for the negligent actions committed by his partners.
What form must be filled out to form an LLC?
The Articles of Organization must be filed with the secretary of state.
What is the purpose clause (Ultra Vires Act)?
If a corporation has a narrow purpose clause and undertakes business outside the clause, it is said to be acting “ultra vires”
What are the 3 ways to pierce the corporate veil? IC Fraud
Inadequate capitalization
Commingling personal funds with corporate funds
Fraud committed on existing creditors
What are the fundamental changes that require shareholder approval? DAMS
Dissolution
Amendments to the articles of incorporation
Mergers
Sale
What are bylaws?
The bylaws are adopted by the incorporators or directors, are not required to be filed, and generally will contain rules desired regarding the operation of the corporation.
Shareholders have the right to
vote to elect (typically annually) or remove directors. They also have the right to vote on whether to approve fundamental changes to the corporation, such as dissolution
Stock dividends are
dividends in the corporation’s own authorized but unissued shares. No assets are distributed. The stockholder’s wealth and percentage of ownership are not increased. A stock dividend has no affect on earnings and profits for federal income tax purposes.
What is The business judgment rule?
protects corporate directors from personal liability for acts performed in good faith on behalf of the corporation is known as:
