R7 Bankruptcy Flashcards
What are the different bankruptcy codes?
Ch. 7 - Liquidation (I, P, C)
Ch. 9 - Municipal and adjustments
Ch. 11 - Reorganization (P or C)
Ch. 12 - Family farmers with regular income
Ch. 13 - Adjustment of debt for individuals with regular income (voluntary only)
Ch. 15 - Ancillary and Other Cross border cases
Under the federal Bankruptcy code, is a trustee required for Chapter 7, Chapter 11 and Chapter 13?
Only required for Chapter 7 and Chapter 13
Trustee is no required for Chapter 11 but may be appointed if owner commits fraud, mismanagement or gross incompetence
What two groups may file voluntary bankruptcy, but may not be subject to involuntary bankruptcy?
Farmers and nonprofit charitable organizations
How many creditors must join in filing a petition to commence an involuntary bankruptcy case?
Debtor has 12 or more creditors: 3 creditors must file and with aggregate unsecured claims of least $14,425
Debtor has less than 12 creditors: only 1 creditor must fileand with aggregate unsecured claim of least $14,425
What is the automatic stay?
- When bankruptcy proceedings commence, a creditor may no pursue remedies against the debtor or his assets
- The automatic stay goes into effect the moment a bankruptcy petition is filed
Under the federal bankruptcy code, what elements are necessary to establish a preferential payment?
A preferential payment is:
- 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 the filing (one year if the creditor is an insider like an officer of the debtor organization or a close relative of the debtor)
- Made while the debtor is insolvent (assumed 90 days before filing)
- Results in the creditor receiving more than the creditor would have received under the Bankruptcy code
Paying a credit card bill under $600 does not count
List at least six grounds of denial of discharge
- Debtor not an individual
- Fraudulent transfers or concealment of property
- Commission of bankruptcy crime
- Failure to explain loss of assets
- Refusal to obey orders or answer questions
- Improper conduct in an insider’s case
- Prior discharge within eight years
- Individual debtor’s failure to complete financial management course
- Waiver
List at least 6 exceptions to discharge
WAFTED (willful or malicious, alimony or support, fraud, taxes, education loans and debts not disclosed during bankruptcy petition)
- Taxes due within 3 years of filing
- Debts incurred by fraud
- Debts related to luxury goods
- Open-ended credit debts to consumers
- Debts undisclosed in bankruptcy petition
- Debts from embezzlement, larceny and fiduciary’s fraud
- Alimony, maintenance and support
- Debts from willful and malicious injury
- Debts from DWI
- Debts that are government fines and penalties
- Debts form education loans
- Debts denied discharge in a prior bankruptcy
- Debts incurred to pay taxes
14 Debts incurred due to violations of securities laws
What is the hierarchy for paying unsecured priority claims in a bankruptcy proceeding?
Secured Creditors then SAG WEG CTI
S - Support obligations to spouse and child
A - Administration expenses during bankruptcy
G - Gap creditors
W - Wages up to $11,725 if earned within 180 days
E - Employee benefit plan payments up to $11,725 (reduced by wage claims) if earned within 180 days
G - Grain farmers and fisherman claims against storage/processing facilities up to $5,775
C - Consumer deposits
T - Taxes
I - Injuries caused by intoxicating driving
Unsecured creditors who timely filed
In Chapter 11 reorganization is a trustee usually appointed?
No, the debtor usually remains in possession of the estate’s assets in order to run their business
The order for preliminary relief is the principal door to bankruptcy proceedings for a foreign debtor. True or False?
False, the main door is a petition of recognition which is files by the foreign representative under Ch. 15 and after filing under Ch. 15 they can also file under the other bankruptcy courts Ch. 7 and Ch. 11
Ch. 15 prohibits discrimination against foreign creditors
Which companies cannot file under Ch. 7?
R - Railroads I - Investment companies I - Insurance companies B - Banks S - Savings and loans institutions
Which companies cannot file under Ch. 11?
B - Brokers I - Investment companies I - Insurance companies B - Banks S - Savings and loan institutions
Railroads and individuals can file
