R8 - Business Law: Part 2 Flashcards
(38 cards)
What are the common things on Bankruptcy Ch 7?
- IPC: Indivs, partners, corps.
- Trustee is appointed.
- Trustee collects assets, and sells them to pay creditors.
- Indivs discharged, entities dissolved.
- No RIBS allowed. (Railroads, Insurance, Banks, Small Biz).
- May be voluntary or involuntary. No charities or farmers on involuntary cases.
What are the common things on Bankruptcy Ch 13?
- Indivs only.
- Trustee is appointed.
- Repay all debts between 3 to 5 years.
- Voluntary only.
What are the common things on Bankruptcy Ch 11?
- IPC: Indivs, partners, corps.
- Trustee not required, but court might appoint one.
- There is hope to keep the business. No liquidation.
- A reorg plan is submitted.
- No BIBS allowed. (Brokers, Insurance, Banks, Small Biz).
- May be voluntary or involuntary. No charities or farmers on involuntary cases.
What is an automatic stay?
Stops collection attempts because now the government is in charge. They figure out who gets paid first, and how.
Who must join an involuntary petition (Ch 11)?
Creditors who are owed $16,750 total in unsecured debt.
* If I owe <12 creditors, then only one or more need to file.
If I owe >12 creditors, then three or more need to file.
What is the property included in the bankruptcy estate?
- Real and personal property.
- Income generated from estate property within 180 days.
- Divorce, inheritance, insurance, or income generated from estate property. (DIII).
What are the objections to discharge (indivs) a debt under Ch 7?
- Partnershipt or corp.
- Fraudulent transfers or concealment of prop.
- Failed to keep books and records.
- PY discharge within 8 yrs.
What are the three basic categories of claimants and their order of payment for Ch 7?
- Secured claimants.
- Priority claimants.
- Gral unsecured creditors who filed their claims on time.
What are the 9 priority claimants and their order or priority for Ch 7?
- Support obligations (Child support, alimony).
- Admin fees for the bankruptcy process (lawyer, cpa, court fees).
- GAP - only for involuntary petitions fees arising after petition is filed, but before order of relief (rent, inventory purchases, etc).
- Wages owed limited to $13,650.
- Employee benefits owed limited to $13,650.
- Grain farmers.
- Consumer deposits.
- Tax claims.
- Injury claims from drunk driving (DWI).
What is the creditors committee?
A committee of unsecured creditors that is appointed after the order of releif is effective. It consists of willing creditors holding the 7 largest unsecured claims.
What is the equity security holders committee?
Exists when debtor is a corporation. It consists of the 7 largest holders of equity securities.
What is the role of the committees?
Consult with debtor, investigate debtor’s finances, and participate in the reorg plan.
Who can file a reorg plan?
The debtor. Debtor has 120 days to file, if not, creditors may file under certain conditions.
When can the creditors file a reorg plan?
- If a trustee has been appointed.
- If debtor missed the 120 day deadline.
- If debtor filed a plan, but was not accepted by 2/3 of creditors and/or stockholders.
What is a cram down?
When the court confirms a plan and is accepted by at at least one impaired class, and is fair to everyone.
What decisions require approval of all the partners?
- Admitting new partners.
- Admitting a liability.
- Claim to arbitration.
- Making a material change in the partnership.
What are the characteristics of a GP?
- Doesn’t need formal filing.
- All partners are personally and invidually liable for entire partnership obligations.
- All partners have equal rights to share profits, unless agreed otherwise.
- Losses will keep profit share agreement, unless silent. If silent, then losses are distributed equally.
What is a dissociation?
Change in partners. It is not necessarily a dissolution, and partner remains personally liable for partnership obligations incurred before he leaves and up to 2 years after he leaves, unless creditor releases him or gives notice of leave.
When does a partnership dissolve?
When:
- One partner gives notice of withdrawal
- Partners agree to dissolution.
- Court orders dissolution.
What is final accounting on a GP dissolution?
Distribution of assets. Who gets paid 1st.
- Creditors.
- Return of investment to partners.
- Divide profit or loss among partners.
What are the characteristics of an LLP?
- Needs formal SOS filing: certificate of LLP .
- Partners are not personally and invidually liable for entire partnership obligations.
- All partners have equal rights to share profits, unless agreed otherwise.
- Losses will keep profit share agreement, unless silent. If silent, then losses are distributed equally.
- Partners are personally liable for own negligence and subordinates.
- Partners are not personally liable for acts of other partners, employees, or agents.
What are the characteristics of an LP?
- Needs formal SOS filing: certificate of LP .
- GPs are personally liabile, but LPs are not personally and invidually liable for entire partnership obligations.
- One GP and one LP at least!
What can Limited Partners do?
- LPs are not agents, so no fiduciary duty.
- No right to participate on management, but not liable if they do.
- Can vote on extraordinary matters.
- Can assign equity to whoever I want.
- Profits & Losses are allocated per agreement. If no agreement, then prorata of contributions.
What are the methods of dissolution of an LP?
- Time as stated in the Partnership agreement.
- Written unanimous consent.
- WD or death of GP.
- Judicial decree.
