Bankruptcy 2 of 3 (48)

Question 1

Avoiding Powers

Answer 1

The ability of the trustee in bankruptcy to retrieve property that has been transferred to creditors or other third parties to maximize the assets available to creditors if they result from (FLAP):

• Fraudulent transfers,
• Statutory Liens,
• Post-petition transfers (After the filing), or
• Preferential transfers of property.

Question 2

Preferential Transfers

Answer 2

Transfers made by the debtor in anticipation of bankruptcy that resulted in giving a creditor a more favorable settlement than would have been achieved through bankruptcy, characterized as (I-WAIT):

• Debtor was Insolvent when the transfer was made;
• Occurring Within 90 days of the filing of the petition;
• In settlement of an Antecedent debt (preexisting — existed as of the date of the filing);
• Improves the creditor’s relative position; and
• Time increased from 90 days to 1 year if the transfer was made to an insider (relative or close relative of debtor).

Question 3

Nonpreferential Transfers

Answer 3

Transfers that are not voidable by the trustee, including (C-CONAC):

• Payments to Charities;
• Consumer debt that is minimal in amount;
• Bills, such as utilities, that are incurred in the Ordinary course of business or with the passage of time;
• Transfers made in exchange for New value;
• Payments for Alimony and child support; and
• Continuing payments on installment obligations.