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227 Cards in this Set
- Front
- Back
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Questions
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Answers
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All Ds must be a "person" and must reside or have a domicile/place of business/property in the US
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§109(a)
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All Ds must receive briefing from a nonprofit budget and credit counseling agency within 180 days of filing
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§109(h)
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Frequent Filing Limitation - individual Ds are not eligible under 7, 11, or 13 if they were a D within the last 180 days that was:
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§109(g)
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(i) dismissed by the court for failure of D to abide by orders or appear in court
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§109(g)
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(ii) dismissed on motion of D following a request for relief from the stay
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§109(g)
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D must be a "person" - def. in §101
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§109(b)
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D can't be a railroad, insurance co. or banking institution
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§109(b)
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Any D eligible for 7 is eligible for 11 with 2 exceptions:
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§109(d)
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D must be an individual
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§109(e)
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Individual must have "income sufficiently stable and regular to enable such individual to make payments under a (Ch. 13 plan)"
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§109(e)
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D must have "noncontingent, liquidated" unsecured debts < $336,900 and "noncontingent, liquidated" secured debts < $1,010,650
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§109(e)
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B petition may be filed by any "entity that may be a debtor under such chapter"
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§301
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Court determines to what extent the estate should be consolidated
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§302
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Cs may file under 7 or 11 - not 9, 12, or 13.
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§303
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Insurance cos, banking institutions, farmers and charitable corps are not subject to involuntary petitions.
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§303
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Must be filed by at least 3 Cs with unsecured claims at least $13,475 or if D has less than 12 Cs, a single C with an unsecured claim of at least $13,475.
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§303
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Filing ≠ Order for Relief
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§303
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Estate is an entity - separate and distinct from D. Not a person as defined in §101(41). PoE Analysis has 3 questions:
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§541 - PoE
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(1) Is the item "property"?
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§541
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(2) If so, what is D's interest in it?
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§541
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(3) If so, did D have the interest at the time of commencement of the B estate?
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§541
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Ch. 13 PoE = all stuff in §541 and D's post-petition income
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§1306
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Broadest injunction in law - nationwide, no notice required
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§362
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Stay enjoins:
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Scope of the Stay - §362(a)
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(1) Formal collection attempts on claims that arose or could have been brought pre-B
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§362(a)
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(2) Enforcement efforts of judgment against either D or PoE
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§362(a)
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(3) Any act to get possession of PoE
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§362(a)
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(4) Any act to enforce liens against PoE
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§362(a)
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(5) Any act re: liens of D's property for pre-commencement liens
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§362(a)
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(6) Any act to get claims against D
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§362(a)
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Stay generally will not protect 3rd parties
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§362(a)
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SCs can't seize collateral unless they get relief from the stay.
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Secured Creditors & the Stay
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Most important exception - (b)(2) for "domestic support obligations" - these claims may be collected from property that is not PoE
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Exceptions to the Scope - §362(b)
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(1) Ends as to property when the property is no longer apart of the estate
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Ending the Stay Automatically - §362(c)
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(2) When case is (a) closed (b) dismissed or (c) when an individual D gets or is denied a discharge
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§362(c)
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(3) If D had a case pending w/in 1 year of this one and meets other reqs, the stay will end after 30 days with regarding to certain property
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§362(c)
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B courts may grant relief from the stay on requests by a "party in interest"
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Relief from the Stay - §362(d)
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(d)(1) - For Cause - Is there a "lack of adequate protection"?!?!
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§362(d)
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(d)(2) - Secured Claims
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§362(d)
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(d)(3) - Applies only to "single asset real estate" cases
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§362(d)
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(d)(4) - Applies if petition was filed to delay/hinder/defraud that involved multiple filings affects real property
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§362(d)
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(a) - Dismissals "for cause"
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§707
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(b)(1) - Dismissals "for abuse" - INVOLUNTARY
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§707
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Requirements:
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§707
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#1 - Individual D
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§707
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#2 - Primarily consumer debts
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§707
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"Abstention" - court may dismiss "if the interests of creditors and the debtor would be better served by such dismissal"
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§305
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Claims = right to payment (Code def)
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§101(5) - What is a Claim
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Claims are stayed, paid in distributed and discharged
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§101(5)
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4 Tests to Determine whether there is a claim:
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§101(5)
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1) Accrued State Law Test
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§101(5)
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2) Conduct Test - Right to payment arises when the conduct giving rise to the alleged liability occurs
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§101(5)
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3) Prepetition Relationship Test - Requires some prepetition relationship, such as contact, exposure, impact or privity b/t D's preptition conduct and the claimant
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§101(5)
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4) Piper Test - Claim if: first, events occurring before confirmation create a relationship (contact/exposure/impact/privity b/t claimant and D's product) and second, the basis for liability is D's prepetition conduct
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§101(5)
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Cs file proof of claims
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§501 - Who May File Claims
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(e)(1)(B) - Contingent, Reimbursement or Contribution of Claims are disallowed
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§501
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(a) Claims are assumed to be allowed unless a party in interest objects
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§502(a) and (b) - Allowance of Claims
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(b), (d), (e) and (k) - Grounds for Objections
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§502
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(b)(1) - most common - D has defenses
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§502
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(b)(2) - objection for unmatured interest
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§502
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(b)(6) - objections for leases - limits Lessor's claims
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§502
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Court shall estimate claims for any contingent and unliquidated claims if fixing the amount would unduly delay the B
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§502(c)(1) - Estimating Claims
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Allowed/disallowed claims may be reconsidered for cause and then may be allowed/disallowed
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§502(j) - Reconsideration of Claims
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Each priority needs to be paid in full in order to move to next priority. Order:
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§507
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1st - Domestic Support Obligations
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§507(1)
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2nd - Administrative Expenses
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§507(2)
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What are Admin Expenses?
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§503
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§503(b)(2) allows for compensation awarded under §330(a) - "reasonable compensation" for services that are "actual [and] necessary to preserve the estate" performed by the T/ee and compensation to people like examiners, accountants, lawyers and other professionals
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§503
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(c) - Paying e/ees to keep them. Limitations - can't transfer anything to an insider unless:
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§503
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(A) transfer is essential to keep them b/c of a bona fide job offer from another at same or greater pay. (B) services of person are essential to D’s survival; and (C) either: (i) Amount is not > 10x given to non-management for any purpose (ii) If nothing given to non-managers, amount is not > 25% of a similar transfer to the insider
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§503
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(b)(9) - Goods received by D w/in 20 days before commencement if in the ordinary course of business are admin expenses
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§503
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3rd - Claims arising in the ordinary course of D's business after Cs file B petition but before the earlier of the order for relief or appointment of Trustee
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§507(3)
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4th - Wage Claims (includes commissions, vacation pay, severance and sick leave pay)
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§507(4)
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Claims for contribution to employee benefit plans (*payments under section go to benefit plan, not e/ee)
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§507(5)
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Claims by farmers against grain storage facilities and claims by fisherman against fish processing facilities
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§507(6)
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Consumers who made a $ deposit for property or services that were never provided
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§507(7)
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Tax Claims including:
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§507(8)
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(A) income taxes for the 3 tax years prior to B filing
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§507(8)
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(B) property taxes assessed pre-filing and last payable w/o penalty 1 year before that date
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§507(8)
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(D) If D is e/er, taxes withheld from e/ees' paychecks
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§507(8)
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Applies only to insured federal depository institutions
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§507(9)
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Claims for personal injuries or death caused by D's operation of a car, boat or airplane while under the influence
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§507(10)
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Except as in §510 (Subordination), Ch. 7 Property is distributed as follows:
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§726
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1st - Priority Claims (see §507)
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§726
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2nd - General Unsecured Claims
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§726
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No statutory blueprint - plan will tell who gets paid, how much and in what order
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N/A
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(a) - allows contractual subordination (voluntary)
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§510
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(c) - allows equitable subordination (involuntary)
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§510
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T/ees have avoiding powers - applies to voluntary & involuntary transfers and absolute (gifts/payments/sales) and security (mortgages, judgment liens) transfers
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§§541(a)(3), 502(d) and 550
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After avoidance, estate recoups that amount and it becomes PoE
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§§541(a)(3), 502(d) and 550
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Effects upon C's claim - If avoided, C's claim is increased back to the original amount (i.e. if C has a $13k claim but $12k was avoided, C's claim becomes $25k)
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§§541(a)(3), 502(d) and 550
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– if you have managed to avoid a transfer (by any means), here is what is going to happen: (a) T/ee may recover either the property transferred or the value of that property (if the court orders) From Whom: (a)(1) Initial transferee – person that took from the D - or from the entity for whose benefit such transfer was made (includes Gs) (a)(2) Mediate or Immediate transferees – but recovery from these are limited by (b) (b) Limitations on (a)(2) - T/ee can’t recover from mediate/immediate transferees if: (b)(1)They took for value (including payments/security for antecedent debts), in good faith, w/o knowledge of the transfers voidability - good-faith-purchasers-for-value Antecedent debts – arising prior to the transfer (b)(2) If value is not given, still okay if they were in good faith.
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§550
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Avoidance pre-B → (§545-548), post-B → (§549)
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Most post-petition transfer will be avoidable under §549
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§549
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T/e can avoid fraudulent transfers if avoidable under non-B law
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§544(b) - using state law
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Look back period of 2 years
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§548
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(a)(1)(A) - actual, subjective fraudulent transfers may be avoided
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§548
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(a)(1)(B) - constructive fraud
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§548
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(i) D received < reasonably equivalent value and (ii) one of these: (I) D was insolvent (§101(32) - balance sheet insolvency) at the time or wound up insolvent as a result of the transfer (II) D was a business running on unreasonably small capital (III) D was an individual “ (IV) Special case for insiders – probably don’t need to know
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§548
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Trustees may avoid preferential transfers! Preference Elements:
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§547(b)
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1. Applies to transfers of an interest in property of the D
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§547(b)
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2. Transfer (see §101) to or for the benefit of a C, and
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§547(b)
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3. Transfer made for an antecedent debt - debt owne prior (antecedent) to the transfer, and
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§547(b)
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4. D was insolvent (see §101 - balance sheet insolvent) at time of transfer, and
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§547(b)
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5. Transfer occurred within (Look Back):
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§547(b)
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(A) 90 days prior to B filing or
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§547(b)
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(B) B/t 90 days and 1 year if transfer was to an "insider" and
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§547(b)
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6. Transfer increased the amount that C would have received in a Ch. 7 case
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§547(b)
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Only move to (c) if a preferential transfer has been found under (b)
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§547(c) - Exceptions to Avoiding Preferences
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(c)(1) - Transfer for new value
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§547
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(c)(2) - Ordinary course exception.
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§547
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(c)(4) - Subsequent Advances/"New Value" Exception
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§547
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Limitations:
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(4)(A) - new value must not be secured by a SI
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§547
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(4)(B) - D didn't make another unavoidable transfer for the new value
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§547
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Recognizing and limiting setoffs:
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§553 - Avoiding Setoffs
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(a) - Debt must be mutual and both debts must have "arose before the commencement of the case"
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§553
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(a)(1) - No setoffs for claims disallowed under §502
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§553
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(a)(2) - No setoffs for claims that were sold within 90 days of B filing and when D was insolvent
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§553
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(a)(3) - Setoff precluded if amount is owed to D in a suspicious manner: within 90 days of B filing, D was insolvent (presumed to be for 90 days pre-B), and purpose of deposit was to create or increase the right of setoff
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§553
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(b) - Trustee can recover from C any setoff obtained within 90 days prior to B to the extent that “any insufficiency [not enough to settle debt] on the date of such setoff is less that the insufficiency on the later of”: (b)(1)(A) 90 days before filing (use when there is in-fact an insufficiency at 90 days before filing) and (b)(1)(B)1st date during the 90 days before filing on which there is an insufficiency
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§553
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Treats setoffs as a lien
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§506 - Treatment of Setoffs
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Stay applies to setoffs
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§362(a)(7) - Setoffs and the Stay
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Trustee has powers of hypothetical lien creditor as of date of filing
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§544
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For purposes of §547(b), the date of transfer is the date of recordation or perfection
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§547(e)(2)(B) & (C)
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(e) Grace Period - If perfection occurs within 30 days of actual transfer, the transfer for purposes of §547 will be deemed to have occurred on that initial date. If perfection occurs outside the 30 days of actual transfer, the §547 transfer date will be date of perfection
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§547(e)(2)(B) & (C)
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Trustee (or DIP for Ch.11) may require turnover of anything that is PoE
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§542(a)
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Trustee can order custodians to turn over PoE
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§543
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D may:
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§365
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Reject or
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§365
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Assume or
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§365
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Assume and Assign
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§365
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(a) T/ee decides how long D has to make the decision and who makes the choice but courts must approvae
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§365
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(e)(1) - contracts cannot terminate D's rights upon filing B or prohibit assign of rights during B
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§365
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(d) - Gap b/t Filing Petition and Making the Choice
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(d)(1) - applies only to Ch. 7 residential real estate and personal property leases (not commercial) - assumes rejection if T/ee doesn't act w/in 60 days after order for relief (or add'l time given by court for cause
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(d)(2) - applies to Ch. 11, 12, 13 residential real estate and personal property leases (not commercial) - T/ee has up until the plan confirmation to decide
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(d)(3) - applies to all chapters - T/ee must timely perform all obligations arising from and after the order for relief under any unexpired lease of non-residential real property (commercial real estate)
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(d)(4) - applies to all chapters for non-residental real estate contracts - (A) T/ee has to make up mind by the earlier of 120 days after order for relief or date of entry of confirmation order
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Requirements for assumption - only applies if there has been a default (other than breach related to B filing or insolvency) - T/ee may not assume unless he:
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§365(b)(1)
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(A) Cures or provides adequate assurance that he will cure
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(B) Compensates for any consequential damages
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(C) Provides adequate assurance of future performance under k/lease
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Can't assume if non-B law excuses the other party from giving or receiving performance from anyone other than D
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§365(c) - Prohibitions of Assumption and/or Assignments
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Standards for Assignment:
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§365(f)(2)
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(A) Must first assume (comply with §365(b) requirements if in default and (c))
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§365(f)(2)
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(B) Provide adequate assurance of future performance - regardless of default!
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§365(f)(2)
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(A) Requires similar financial condition of assignee
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§365(b)(3) - Assignment of Shopping Center Leases
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(B) Prohibits substantial %age decline in rent
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§365(b)(3)
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(C) Assignment is subject to all provisions
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§365(b)(3)
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(D) Assignment will not disrupt tenant mix
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§365(b)(3)
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(A) if T/ee rejects:
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§365(h)(1)
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(i) If rejection is a breach, Lessee may treat the lease as terminated; or
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(ii) Lessee may retain any rights remaining under lease
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(B) if L/ee retains rights - even though L/ee retains rights under (A)(ii), if D/LL had some obligations (i.e. pay heat, etc.) L/ee cannot make the D/LL do those things.
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D has to declare what they are going to do: reaffirm, redeem or surrender
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§521 - Election
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D must file schedule of assets
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§521
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(after filing schedule of assets) D then has 30 days to declare intention
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§521
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Must then perform intention within 30 days after 1st date set for meeting of Cs
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§521
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Discharges D from personal liability; C can't perform any acts against D for any $ they didn't get out of the B case (regardless of their formality).
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§524 - Effect of Discharge
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Exceptions in (a)(2), (4) and (6) must be raised or they are lost! See §523(c)(1). All others are not lost in the absence of an objection.
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§523 - Exceptions to Discharge List
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(a)(1)(A) - per §507(a)(8), taxes due pre-petition, return which was due 3 years before filing.
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§523
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Discharge
(a)(2) Fraud exception |
§523
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(a)(5) Domestic Support Obligations
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§523
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(a)(8) Educational loans are excepted
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§523
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Procedure by which D can incur a legal obligation during B to pay dischargeable debts
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§524(c) and (d) - Reaffirmation Agreements
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Only D's can reaffirm
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§524
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(c) Must be enforceable under state law
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§524
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(c)(1) Agreement must be made pre-discharge
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§524
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(c)(2) D received (k) disclosures
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§524
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Others require that D knowingly and intelligently gives up discharge rights
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§524
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(c)(4) D has right to rescind pre-discharge or w/in 60 days of filing agreement
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(a) everyone is bound by the plan
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§1141
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(d) In order to confirm a plan, a Ch.11 D doesn't get a discharge if the D would be denied a discharge under §727(a)
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§1141
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12 grounds for withholding a discharge for a Ch. 7 D:
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§727(a) - Objections to Discharge
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(a)(1) D is not an individual
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§727
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(a)(2) Fraud stuff
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§727
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(a)(3) Concealment – hiding assets and info
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§727
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(a)(4) D lies on schedules, etc.
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§727
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(a)(8) Frequent filer limitation on discharges
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§727
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(a)(10) Waiver of Discharge
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Pre-order-for-relief claims are discharged except as provided in §523
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§727(b) - Dischargeability of Certain Debts
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Gov. (a) and employers (b) cannot discriminate with respect to D's bankrupcty
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§525
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D can bargain away a stay against a particular C but cannot bargain away right to file at all - wouldn't be enforceable.
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N/A
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D can assert exemptions he is entitled to under state law and federal law
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§522 - generally
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(b) An individual debtor may exempt from PoE, the property listed in (b)(2) and (b)(3)
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§522(b)
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(b)(2) - Property specified in (d), unless the State law specifically does not authorize it.
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§522
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(b)(3) Property listed here is…exempt under federal or the state law that is applicable…
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§522
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D may not exempt any amount of interest in property acquired by D during the 1215 day period before the date of the petition that exceeds in the aggregate $125k in value for real or personal property that the D or a dependent of D uses as a residence
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§522(p)(1)(D)
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Exemptions from exemptions:
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§522(c)
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Property exempted in this §§ is not liable during or after the case for any debt or the D that arose . . . before the commencement of the case, EXCEPT:
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(1) A debt or a kind specified in (1) or (5) of § 523(a).
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(1) Taxes
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(5) Domestic claims
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(2) A debt secured by a lien that is
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(A)(i) not avoided under § (f) or (g) of this §.
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Avoiding Liens on Exempt Property
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§522(f)
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(f) applies only to property with lines on them that are exempted - and only to specific liens:
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(A) Judicial Liens
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(B) Non-possessory (possession of D), non-purchase money SI (personal property) in:
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(B)(i) Consumer goods generally - look at list
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(B)(ii) Tools of the trade
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(B)(iii) Professionally-prescribed health aids
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Stay prohibits secured Cs from seizing and selling collateral
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§362(a) - Stay
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Trustee takes all PoE and sells it - first distribution goes to secured Cs
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§726 - Distribution
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Limited to individual Ds, Ch.7 cases, tangible personal property used non-commercially
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§722 - Redemption
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Applies only to property that is either exempted under §522 or abandoned under §554
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No redemption in installments - msut pay cash
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Only D can file a plan
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§1321
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(a) Things that must be in the plan
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§1322
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(b) Things that may be in the plan
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§1325 allows stripping down of liens (secured claim becomes value of the D's interest in the property)
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§1325
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(a)(4) Best interest of Cs Test
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§1325
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Cram-Downs: If an unsecured C objects to D's plan confirmation, the plan cannot be confirmed unless it is "crammed down"
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§1325
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