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CPA REG > R7 - Business Law 2 (Bankruptcy) > Flashcards

R7 - Business Law 2 (Bankruptcy) Flashcards

1
Q

Is a trustee required for Ch. 7 bankruptcy (liquidation)?

A

YES

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2
Q

Is a trustee required for Ch. 13 bankruptcy (adjustment of debts of individuals with regular income)?

A

YES

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3
Q

Is a trustee required for Ch. 11 bankruptcy (reorganization)?

A

NO

EXPLANATION: A court may appoint one if one is needed though.

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4
Q

What test is designed to determine whether the debtor has sufficient income to repay debts using a Ch. 13 plan?

A

Means test

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5
Q

What are four limitations in Ch. 7 liquidations (RIBS)?

A

Railroads
Insurance companies
Banks
Savings institutions and small business investment co.

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6
Q

When there is an involuntary petition, what is the minimum amount the debtor has to owe?

A

Owe at least $15,325 in unsecured, undisputed debt

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7
Q

What is a meeting of the creditors called?

A

Section 341 meeting

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8
Q

Could the following transfer by a debtor, within 90 days of filing for bankruptcy, be set aside as preferential payment?

Prepaying an installment loan on inventory

A

YES

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9
Q

What type of case is commenced by a “foreign rep” filing a petition for recognition of a “foreign proceeding”?

A

Ch. 15 ancillary case

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10
Q

In a Ch. 11 case, shortly after the order for relief is effective, a committee of __________ creditors is appointed, usually consisting of willing persons holding the ______ largest unsecured claims against the debtor.

A
  • Unsecured

- Seven

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11
Q

Ch 11 Reorganization. If the debtor is a corporation, a stockholders committee may be appointed consisting of the _____ largest stockholders to ensure the equity security holders receive adequate representation.

A

Seven

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12
Q

Is a trustee generally appointed in Ch. 11 reorganization?

A

NO

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13
Q

A _________ can be appointed in a Ch. 11 case on a showing of fraud, dishonesty, incompetence, or gross mismanagement on the part of the debtor’s estate.

A

Trustee

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14
Q

Ch. 11 Reorganization. Unless a trustee has been appointed, the debtor has an exclusive right to file a plan during the first ______ days after the order for relief is effective.

A

120 days

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15
Q

Ch. 11 Reorganization. May other interested parties file a plan if the debtor has filed a plan but has not obtained the acceptance of every impaired class w/i 180 days after entry of the order for relief?

A

YES

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16
Q

Ch. 11 Reorganization. Is unanimous acceptance of the plan required?

A

No; 2/3 in amount

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17
Q

A confirmed Ch. 11 plan is ________ on all creditors, equity security holders, and the debtor regardless of whether they accepted the plan.

A

Binding

18
Q

What is the goal of federal bankruptcy law?

A

Give an honest debtor a “fresh start” financially by discharging MOST debts

19
Q

Ch. 7 Liquidation. Trustee collects all of the debtor’s ____ property, liquidates it, and pays off all of the debtor’s creditors.

A

Nonexempt

20
Q

Ch. 7 Liquidation. A debtor is entitled to how many discharges within an 8-year period?

A

One

21
Q

Ch. 7 Liquidation. Certain debts of an individual are not discharged under Ch. 7 or 11. What is the acronym for the exceptions to discharge?

A

WAFTED

22
Q

Ch. 7 or 11. What does the W in WAFTED stand for?

A
  • Willful and malicious injury

- Operating a vehicle WHILE intoxicated

23
Q

Ch. 7 or 11. What does the A in WAFTED stand for?

A
  • Alimony
24
Q

Ch. 7 or 11. What does the F in WAFTED stand for?

A
  • Fraud

- Fines and Penalties owed to governmental unit

25
Q

Ch. 7 or 11. What does the T in WAFTED stand for?

A
  • Taxes
26
Q

Ch. 7 or 11. What does the E in WAFTED stand for?

A
  • Educational loans

- Embezzlement

27
Q

Ch. 7 or 11. What does the D in WAFTED stand for?

A
  • Debts undisclosed in bankruptcy petition
28
Q

Ch. 7 Liquidation. How does the trustee distribute the assets of the estate?

A

1) Secured claimants
2) Priority claimants (SAG WEG CTI)
3) General creditors who filed their claims on time

29
Q

Ch. 7 Liquidation Priority Claimants. What does the S in SAG WEG CTI stand for?

A
  • Support obligations to spouse and children
30
Q

Ch. 7 Liquidation Priority Claimants. What does the A in SAG WEG CTI stand for?

A
  • Administrative expenses
31
Q

Ch. 7 Liquidation Priority Claimants. What does the first G stand for in SAG WEG CTI?

A
  • involuntary case GAP claims
32
Q

Ch. 7 Liquidation Priority Claimants. What does the W in SAG WEG CTI stand for?

A
  • wage claims up to $12,475

EXPLANATION: Employees who have claims for wages earned within 180 days prior to the filing of the petition receive a fourth priority.

33
Q

Ch. 7 Liquidation Priority Claimants. What does the E in SAG WEG CTI stand for?

A
  • Employee benefit plans up to $12,475

EXPLANATION: This is reduced by the amount paid to each employee as a fourth-priority wage claim.

34
Q

Ch. 7 Liquidation Priority Claimants. What does the second G in SAG WEG CTI stand for?

A
  • Grain farmers and fisherman up to $6,150
35
Q

Ch. 7 Liquidation Priority Claimants. What does the C in SAG WEG CTI stand for?

A
  • Consumer deposits up to $2,775
36
Q

Ch. 7 Liquidation Priority Claimants. What does the T in SAG WEG CTI stand for?

A
  • Tax claims
37
Q

Ch. 7 Liquidation Priority Claimants. What does the I in SAG WEG CTI stand for?

A
  • personal INJURY claims arising from INTOXICATED driving
38
Q

If the debtor’s average monthly income multiplied by 12 plus that of the debtor’s spouse (even if MFS) is at or less than the median income for similar sized families in the debtor’s state, the debtor can file for _______ relief.

A

Ch. 7

39
Q

If the debtor’s average monthly income less allowable expenses multiplied by 60 is less than _______ the debtor may file for Ch. 7 relief.

A

$7,475

40
Q

If the product is ______ or more, a presumption of abuse occurs and the debtor may not file for Ch. 7 but may file for Ch. 13.

A

$12,475

41
Q

Under Ch. 7 of the federal Bankruptcy Code, what effect does a bankruptcy discharge have on a judgement creditor when there is NO bankruptcy estate?

A

Debtor is relieved of any personal liability to the judgment creditor

EXPLANATION: Under Ch. 7, a discharge discharges most debts of a debtor, whether or not there is a bankruptcy estate from which to pay the debts.

CPA REG (17 decks)

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