R7 Flashcards
A promissory note is a _____ party paper
Two
A party who successfully defends an involuntary bankruptcy petition is entitled to receive what
Court costs, attorneys fees, compensatory damages, and if the petition was filed in bad faith punitive damages
Describe a draft
A draft is a three party paper since it contains in order to payroll and a promise to pay
The trustee is treated as a _____ in bankruptcy
Lien creditor on all of the debtors property as of the date the bankruptcy petition is filed. The trustee is subordinate to all prior perfected security interest, including statutory liens that were effective prior to the filing of the bankruptcy petition
To qualify as a holder in due course…
They must be the holder of the instrument, the holder must also take Benjamin in good faith without notice of any claims or defenses, and must value of instrument. Finding the instrument does not constitute giving value
When there is a conflict between perfective security interests in the same collateral, priority goes to whom
Priority goes to the creditor who was first either to file or two perfect, even if perfection is not completed upon filing. Priority is not determined by the date of attachment
When a bank except a check, what happens
The bank becomes primary liable and all previous parties on the check are discharged from their liability
A security agreement need not include what
The amount of the obligation secured
A voluntary petition in bankruptcy will be denied if the debtor…
Failed to keep or preserve adequate books and records
If the claim was not timely filed, late claims are only paid if…
If there is money left over after the general unsecured creditors his claims were timely filed are paid
Describe endorsing a check “without recourse”
This is a qualified endorsement. It means there is no guarantee of payment by the endorser (no contract liability)
Personal defenses that cannot be raised against a holder in due course or their assignees
Personal defenses cannot be raised against one having the rights of an HTC. These include fraud in the inducement, failure of consideration, theft of an instrument after it was signed, breach of contract, mistake.
Article 9 of the Uniform Commercial Code specifically includes what? Excludes what?
Any sale of Accounts Receivable. It specifically excludes a landlords lien, the assignment of a claim for wages, in the sale of chattel paper as a part of the sale of business out of which it rooms
With respect to the distribution of a bankruptcy estate assets:
First all security claims are paid, then priority claims are paid, and finally the remaining assets are split proportionally among the unsecured creditors who have timely filed a claim
When an instrument is endorsed to a specific person…
It becomes order paper, but it still may be negotiated further, as long as the special payee endorses
