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41 Cards in this Set

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Property of the Estate
1.Exempt property
2.Community Property including the community property interests of a non-filing spouse.
3.Property recovered by Trustee through Avoiding Powers.
4.Property debtor becomes entitled to receive by inheritance, property, property settlement agreement w/ former spouse or life insurance (POD) w/in 180 days of bankruptcy filing.
5.Proceeds of estate property
FRAUD
1. Misrepresentation
2. known to be false
3. intended to deceive
4. upon which the creditior relies justifiable or reasonable.
5. Damages proximately caused.
“preponderance of evidence” 51% probability
Two Limitations on the avoiding powers of Trustee
1. Time: w/in one year of filing or 2 years after order for relief. (whichever comes first)
2. State Law
AVOIDABLE PREFERENCES
1.Transfer of the interest of a debtor in property.
2.To or for the benefit of a creditor.
3.At a time when debtor is insolvent *presumption of insolvency for 90 days prior to filing.
4.On account of antecedent debt.
5.Within 90 Days of filing (up to 1 year insider)
6.Transfer that allows creditor to receive more than it would have in a Chapter 7 distribution.
FLOATING LIEN
A line of credit from a bank or other financial institution secured by the inventory equipment or proceeds of the debtor’s business.
AVOIDING POWERS
The ability of a trustee to set aside certain pre- or post- filing transactions that might otherwise be valid under non-bankruptcy law.
Property of the Estate
1.Exempt property
2.Community Property including the community property interests of a non-filing spouse.
3.Property recovered by Trustee through Avoiding Powers.
4.Property debtor becomes entitled to receive by inheritance, property, property settlement agreement w/ former spouse or life insurance (POD) w/in 180 days of bankruptcy filing.
5.Proceeds of estate property
The Most Common Avoiding Powers
1.Strong Arm Clause
2.Preferences
3.Fraudulent transfers
4.Unauthorized post petition transfers.
Four (4) Defenses of Avoidable Preference
1.Ordinary course of business (short or long term payments)
2.Contemporaneous exchange for value (business debtor) FLOATING LIEN (they float on top of the inventory)
3.Transfer less than $600
4.Transfer less than $5000 (for business)
AVOIDING POWERS
The ability of a trustee to set aside certain pre- or post- filing transactions that might otherwise be valid under non-bankruptcy law. Preferences, fraudulent transfers, and the ability to set aside unauthorized post petition transfers are the most common of the trustee’s ...
Feasibility requirement
Finding that the Bankruptcy Court must make to permit confirmation of a Chapter 11 reorganization plan.
Insolvent
Debt outweighs assets. “Liabilities exceed assets. Section 101(31) of the BC defines insolvency.
Sales free and clear of liens (one(1) of five(5) conditions must be met)
1.Non bankruptcy law permits sale (homestead)
2.Creditor consents
3.Sale sufficient to pay all liens.
4.Security interest subject to dispute.
5.Creditor could be compelled to accept payment in place of lien.
Exemptions
Property of estate
1.Debtor power that he/she exercises of another person
a.power of attorney
b.debtor has title/but no equity (possession not title)
2.ERISA Retirement Plan by case law or statute excluded.
Abandonment
Burdensome or inconsequential value (property comes out of estate and automatic stay no longer applies.)
Allowed Claim
Claim entitled to receive dividend
Pro-Rata
Each of claims in a particular class will be paid the same.
“a distribution to creditors within a given class on a proportional basis.”
Two(2) kinds of objections to claim:
1.Procedural
2.Substantive
Procedural objection to claim
1.lack of proof
2.late, duplicate claim
Method of Distribution
1.Administrative
2.Priority
3.secured
4.subordinated
5.interest
(where does Unsecured fit in priority of distribution?)
6.(in solvent estate) Debtor
Dischargeable and non-priority

Non- priority tax debt
1.older than 3 years
2.tax returns filed (timely)
3.no assessments (240 days prior to BK)
4.No fraud
AVOIDABLE PREFERENCES
1.Transfer of the interest of a debtor in property.
2.To or for the benefit of a creditor.
3.At a time when debtor is insolvent *presumption of insolvency for 90 days prior to filing.
4.On account of antecedent debt.
5.Within 90 Days of filing (up to 1 year insider)
6.Transfer that allows creditor to receive more than it would have in a Chapter 7 distribution.
Limitations to the exercise of the trustee’s avoiding powers
1.Actions must be commenced within one year of the Trustee’s Appointment. Or two years after the order for relief. “statute of limitations” on the Trustee’s exercise of Avoiding Powers.
2.Limited rights of certain creditors to perfect or to continue to perfect a security interest.
3.Concerns rights of creditors to reclaim goods either under common law or UCC
Floating Lien
A line of credit from a bank or other financial institution secured by the inventory, equipment or proceeds of the debtor’s business.
Abandon
The act of a trustee to remove from property of the estate assets that are burdensome or of inconsequential value to the estate. An asset with no equity or a merit less personal injury claim are common examples. Abandonment is governed by Sec 554 of the BC.
Insolvent
When liabilities exceed assets.
Ipso facto clause
A clause in a contract defining insolvency or a bankruptcy filing as an act of default. These clauses generally are not enforceable in bankruptcy proceedings.
Strip down
ability to avoid the unsecured portion of an otherwise secured debt in some circumstances in Chapter 13 cases.
Pro rata
A distribution to creditors within a given class on a proportional basis.
Cram Down
The act of obtaining confirmation of a reorganization plan over the objection of creditors. Different tests or procedures may be utilized to effectuate a cramdown on either secured or unsecured creditors.
Four (4) Defenses of Avoidable Preference
1.Ordinary course of business (short or long term payments)
2.Contemporaneous exchange for value (business debtor) FLOATING LIEN (they float on top of the inventory)
3.Transfer less than $600
4.Transfer less than $5000 (for business)
Strong Arm Clause
Trustee is in full command of all debtors assets
What is the difference between a claim and a debt
A claim is the creditors right to payment or performance

A debt is the debtors obligation to pay or perform
What are the three thing a debtor must inform the trustee if they become entitles 180 days before filing bankruptcy
Inheritence, property from an marital settlement, and Life Insurance
3 options to executory Contracts
1. Surrender property
2. Reafirm debt
3. Redemption
4. Retain and keep current
3 element must be satisfied for assumption
1. Cure
2. Compensate
3. Assure
What are two ways of abandoment
A) By formal notice
B) At close of bankruptcy case
A Case may be dissmised for the following
1. Failure to pay filing fees
2. failure to file plan
3. failure to get plan confirmed
4. failure to pay plan payments
5. Revocation of confirmation
failure to pay post-confirmation domestic support payments
Chapter 13 debtors must do the following
a. Make adequate protection payments
b.Provide proof of insurance on secured property
c. File tax returns for 4 yrs prior to bankruptcy filing
Feasability is when disposable income is sufficient to pay all of the following things:
1. Administration expenses (trustee fees)
2. Priority Debts
3. Cure defaults on secured debts
4. unsecured creditors at least as much as ch. 7 or more.
When is a plan in best interest of creditors
when creditors recieve atleast as much as ch. 7 or more.