Ch 7: Bankruptcy Flashcards Preview

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Flashcards in Ch 7: Bankruptcy Deck (13):
1

Under the federal Bankruptcy Code, is a trustee required for Ch 7, 11, and 13?

A trustee is required for Ch 7 and 13.

A trustee is not required for Ch 11.

2

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

  1. Farmers
  2. Nonprofit chartiable organizations

3

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

  • If the debtor has 12 or more creditors?
  • If the debtor has fewer than 12 creditors?

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

4

What is the automatic stay?

Automatic stay:

  • when bankruptcy proceedings commence, a creditor may not pursue remedies against the debtor or his assets
  • the automatic stay goes into effect the moment a bankruptchy petition is filed

5

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

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 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)
  • made while the debtor was insolvent, and
  • results in the creditor receiving more than the creditor would have received under the Bankruptcy Code

6

Certain debts of an individual are not discharged under Chapter 7 and 11. Give Examples

WAFTED

  1. Willful and malicious injury
  2. Alimony, Maintenance, Support and Settlement from Marital Separation
  3. Debts incurred by Fraud
  4. Fines and Penalties
  5. Taxes due within 3 years of filing
  6. Embezzlement, Larceny, and Fiduciary's Fraud
  7. Educational Loans
  8. Debts undisclosed in the bankruptcy petition

7

What is the hierarchy for paying unsecured priority claims in a bankruptcy proceeding?

SAG WEG CTI

  1. Support obligations to spouse and children
  2. Admin fees
  3. Gap creditors
  4. Wages up to $12,475 if earned within 180 days
  5. Employee benefit plan payments up to $12,475 (reduced by wage claims) if earned within 180 days
  6. Grain farmers' and fishermen's claims against storage/processing facilities up to $6,150
  7. Consumer deposits up to $2,775
  8. Taxes
  9. Injuries caused by intoxicated driving

8

What is Chapter 7 Bankruptcy?

Liquidation

9

What is Chapter 11 Bankruptcy?

Reorganization

10

What is Chapter 13 Bankruptcy?

Adjustment of Debts of Individuals with Regular Income

11

In a Chapter 11 reorganization, is a trustee usually appointed?

No, the debtor usually remains in possession of the estate's assets.

12

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

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

13

List at least six grounds for denial of discharge.

  1. debtor not individual
  2. fraudulent transfers or 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