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103 Cards in this Set
- Front
- Back
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Of Chapter 7 and Chapter 11 bankruptcy filings, which is a reorganization and which is a liquidation?
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7 - liquidation
11 - reorganization |
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What 3 groups are prohibited from filing under Chapter 7?
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1. Railroads
2. Banking institutions 3. Insurance companies |
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What 2 groups are prohibited from filing under Chapter 11?
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1. Stockbrokers
2. Commodity brokers |
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Is Chapter 7 bankruptcy proceedings voluntary or involuntary to the debtor?
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Either
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What are the 3 requirements for a voluntary Chapter 7 filing?
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1. Low monthly income
2. No presumption of abuse 3. Has debts |
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Must a debtor in a voluntary Chapter 7 filing be insolvent?
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No.
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A creditor wants to file an involuntary Chapter 7 petition alone. What are the 3 requirements?
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1. Fewer than 12 creditors
2. Claims 14,425 more than security interest 3. Claims are undisputed |
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A debtor has more than 12 creditors. What are the 3 minimum requirements to file a Chapter 7 petition?
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1. At least 3 creditors sign
2. The 3 signers have more than 14,425 unsecured interest 3. Claims are undisputed (any that are disputed don't count for 14,425, but don't bar proceedings) |
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What 4 categories are exempt from involuntary bankruptcy?
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1. Individuals/partnerships/corporations owing less than $14,425
2. Farmers 3. Charitable organizations 4. Estates (unless started before death |
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What 2 conditions must be met if the creditors' petition is contested?
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1. Generally not paying debts when due
2. During 120 days before filing, custodian appointed or took possession of substantial portion of debtor's property. |
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What are the 2 exceptions to the rule that after-acquired property is exempt from bankruptcy?
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1. Inheritance/life insurance/property settlement received within 180 days
2. Income from property owned when petition filed |
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What exemptions do debtors get in Chapter 7 bankruptcy proceedings?
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1. House
2. Car 3. Tools of the trade 4. Personal, family or home use 5. Jewelry 6. Life insurance 7. Social security 8. Unemployment/disability/veterans compensation 9. Alimony/child support |
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What is the time window for a trustee to set aside transfers made to hinder/defraud creditors?
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1 year
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What categories is a trustee allowed to set aside, and what is the relevant time frame?
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1. Hinder/defraud creditor - 1 year
2. Less than reasonable compensation and insolvent at the time - 1 year 3. Preferential transfers (to pre-existing creditors for favorable treatment) - 90 days 4. Preferential transfers to insiders - 1 year |
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Can a current purchase for an item at fair value be set aside?
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No.
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What does "set aside" mean?
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Undo the transaction (other party of the transaction may then sue)
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What is the order of bankruptcy claims?
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1. Secured
2. Child support/alimony 3. Administration expenses 4. Ordinary course of business after petition filed 5. Wages (180 days) 6. Employee benefit plans (180 days) 7. Consumer deposits 8. Taxes 9. Bank loans 10. DUI penalty 11. Perfected unsecured creditors 12. Unperfected unsecured creditors |
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How often may a discharge in bankruptcy be granted?
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8 years
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What 7 actions will prevent any discharge of debt?
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1. Making false claims
2. Concealing property 3. Any false statement (perjury) 4. Failing to explain loss of assets 5. Refusing to obey court 6. Destroying/falsifying accounting records 7. Abuse of bankruptcy system |
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What 9 debts are never discharged in bankruptcy?
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1. Taxes within 3 years of filing petition
2. Loans for repayment of taxes 3. Unrecorded debts (e.g. forgot to list) 4. Alimony/child support 5. Most penalties and fines (except unintentional torts and breaches of contract) 6. Student loans (unless undue hardship) 7. Most luxury goods 8. Pension/profit sharing debt 9. Condo fees |
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May a debtor rescind a reaffirmation agreement?
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Yes, if done within 60 days
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Who makes up the creditor's committee in a Chapter 11 reorganization?
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Unsecured creditors
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Is a trustee required for a Chapter 7 bankruptcy? Chapter 11? Chapter 13?
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Yes. No. Yes.
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What are the requirements for an approval of the reorganization plan?
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1. Acceptance by 1/2 creditors owed 2/3 of debt
2. Acceptance by 2/3 outstanding shares OR: Court override |
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What are the 3 criteria to be eligible for a Chapter 13 filing?
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1. Regular income
2. Unsecured debts of less than 360,475 3. Secured debts of less than 1,081,400 |
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Under a Chapter 13 plan, if debts to unsecured creditors are not paid in full, how long must payments continue?
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3 years, or 5 years if above median income
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Under a Chapter 11 filing, how long does a debtor have to file a reorganization plan?
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120 days
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Is a debtor required to be insolvent under a Chapter 11 filing?
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No.
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What is a composition agreement? Does it require new consideration?
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Two or more creditors make an agreement to accept less than the full amount in repayment. Yes.
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Does the homestead exemption apply to unsecured creditors? Secured creditors? The IRS?
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Yes. No. No.
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Can all of a debtor's personal property be sold to pay a tax lien?
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Yes.
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Are federal social security benefits exempt from garnishments?
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No.
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What is a writ of attachment?
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A pre-court remedy that allows a creditor to take possession of the debtor's personal property. There are limitations.
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What is the difference between a surety and a guarantor?
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A surety is primarily liable, but a guarantor is secondarily liable.
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When a surety is added after-the-fact, is new consideration required? By who?
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Yes. Anyone (usually debtor)
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At what dollar limit must a surety agreement be in writing?
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Any. Surety agreements must always be in writing.
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What is the difference between a guarantor and a guarantor of collection?
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Guarantors of collection may not be required to pay unless ALL legal remedies have been pursued against the original debtor.
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If there is a guarantor of a secured transaction, which is collected first, the property or the guarantor's money? What about a surety?
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Either for both.
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If the original debtor dies, is the surety still liable?
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Yes.
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You have just bought a house that was subject to a mortgage. Who is the debtor, who is the surety, and who is not liable?
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If expressly consented, you are the debtor, seller is surety. If not, you are not liable and the seller is the debtor
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You are a surety and you have just received notice that the debtor has a valid defense. What happens if you pay?
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You cannot be reimbursed.
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What 7 defenses may a surety use?
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1. Breach/failure to perform
2. Impossible/illegal performance 3. Creditor used fraud/duress/misrepresentation against debtor or surety (exception: used against debtor and surety aware) 4. Statute of limitations 5. Surety is a minor 6. No consideration/not written 7. Failure of creditor to disclose known material facts |
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The debtor has used fraud. Is the surety exempt?
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No.
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The debtor is a minor. Is the surety exempt?
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No.
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What does it mean when a creditor has "reserved its rights" against a surety?
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The debtor is no longer liable, but the surety still is.
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A change has been made in the original contract. What happens if the surety has been compensated? Not compensated?
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Completely released if chance affects risk to surety (or prorated if not material). Completely released.
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Two people are cosureties for 150k each of a 200k debt. The debtor defaulted. How much may each cosurety be required to pay? How much can a cosurety demand from the other?
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150k each, but not more than 200k total. Own liability would be 100k, so 50k can be demanded from other.
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How does the existence of collateral affect cosureties?
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Creditor can choose to use collateral to reduce debt, or may not.
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If one cosurety is released without the consent of the others, what is the others' maximum liability?
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Their own share. (I.e. 2 equal cosureties on a 100k debt means liability of 50k)
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A cosurety has had a bankruptcy. How does this affect the liability of the other cosureties?
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As if bankrupt cosurety had never been a cosurety
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When can an employer be held responsible for the torts of an independent contractor?
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1. If the employer was negligent in hiring
2. If the activity is inherently dangerous |
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Who is required to sign a power of attorney form? Must it be an attorney?
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Only the person being represented. (Not the agent) No.
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Does the principal have the power to terminate agency when the agent has an interest? What is an example of this kind of agreement?
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No. A mortgage when the bank may sell your house if you default.
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What are the 3 ways for a principal to be found liable under contract law for an agent's actions?
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1. Actual authority
2. Apparent authority 3. Principal ratifies |
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Under contract law, is the agent or principal liable when the principal is disclosed? Not disclosed?
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Principal if authority, agent otherwise. Agent only.
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When is an agent liable for a tort? A principal?
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Always. When in the scope of employment.
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What are the 2 requirements to form a principal-agent relationship?
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1. Meeting of the minds (verbal or written agreement)
2. Consent by both people 3. (For >1 year and real estate) Written agreement |
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Is a sensible-appearing contract made by a random person claiming to be a representative of your company binding?
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No, but the contract holder must be informed.
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What type of principal may ratify a contract?
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Any except undisclosed (because there is no way to inform the other party without disclosing)
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What 2 programs is FICA used to fund? Which ones have a cap?
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Social security yes, and Medicare no
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Are FICA taxes deductible, not deductible, or a credit for the employer? The employee? A self-employed person?
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Deductible. Not deductible. Half deductible.
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May pension plans be substituted for FICA?
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No
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Who pays FUTA? What is it for? Is it deductible by the payor?
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Employer. Unemployment. Yes.
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How is the amount of state unemployment tax calculated?
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Depending on amount of claims in prior years, may be reduced
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Are part-time workers covered under the Social Security Act?
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Yes.
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What programs are covered under the Social Security Act?
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1. Social security
2. Medicare 3. Unemployment insurance |
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What 7 things are included in wages under Social Security's definition?
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1. Money
2. Contingent fees 3. Noncash compensation 4. Base pay of soldiers (but not extras like hazard pay) 5. Bonuses and commissions 6. Tips 7. Vacation allowance |
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What 5 things are explicitly excluded from wages under Social Security's definition?
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1. Wages greater than base amount
2. Reimbursed travel expenses 3. Employee medical expenses paid by employer 4. Employee insurance premiums paid by employer 5. Payment to retirement plan paid by employer |
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For Social Security purposes, how are directors classified?
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Self-employed
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Who is the key person in deciding if work is subject to Social Security in the US (versus another country)?
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Employer, or work performed in US
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What 2 things can cause Social Security benefits to decrease?
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1. Retiring early
2. Returning to work after retirement |
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How are benefits limited for currently-insured rather than fully-insured workers?
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1. Only minors receive death benefits
2. No retirement benefits (other benefits still apply) |
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What 3 things can prevent someone from receiving unemployment benefits?
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1. Refuse to accept job in own field
2. Fired for cause 3. Quit voluntarily |
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Who regulates workers' compensation programs?
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The states
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What employers are required to purchase workers' compensation insurance?
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Those who can't prove they can self-insure
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Is an employee who received workers' compensation allowed to sue his employer? The person who caused the injury?
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No. Yes, but employer gets partially reimbursed
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An employer does not have a workers' compensation program. An employee at the company is injured. Who will pay the employee?
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The state, who then sues the employer.
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If an injured employee does not sue, and the employer paid workers' compensation, may the employer sue?
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Yes.
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Is OSHA required to get a warrant before searching a workplace?
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Only if employer demands it
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What are the 3 criteria for anti-discrimination legislation to apply to a situation?
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1. Company has 15 or more employees
2. Affects interstate commerce 3. Not a bona fide qualification |
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How old must an employee be to sue for age discrimination?
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40
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What are the 3 criteria for FMLA to apply?
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1. Employed for 1 year
2. Worked more than 1250 hours 3. Employer has more than 50 employees |
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Are the reasons to strike restricted?
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Yes, to mandatory subjects such as wage and hours
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May managers form a union?
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No
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May an employee keep health insurance after he quits? Is fired for cause?
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Yes to both, for 18 months as long as employer has more than 20 employees
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Does the EPA apply administrative penalties? Civil penalties? Criminal penalties?
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Yes to all, but criminal penalties referred to DOJ
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Does the National Environmental Policy Act affect the federal government, the state government, corporations, or individuals?
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Federal government
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Who is responsible for compliance with EPA guidelines on clean air and water?
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Generally, states
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What products must be registered with the EPA before sale?
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"-icides" such as pesticides
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Does CERCLA regulate petroleum? Other hazardous chemicals?
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No. Yes.
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What 4 people can be held responsible for contamination of a site with dangerous chemicals?
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1. Current owners and operators
2. Past owners and operators 3. Whoever transported it there 4. Whoever ordered it transported |
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What type of liability do violators of CERCLA have?
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Joint and several
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Name 3 purposes of environmental compliance audits.
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1. To voluntarily discover violations
2. To avoid civil and criminal sanctions 3. To meet disclosure requirements under the SEC |
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What person or group may seek criminal penalties under anti-trust legislation? Civil?
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Department of Justice. FTC and private parties
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What 2 rules does the Sherman Act use to determine whether a restraint of trade is permissible?
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1. Per se rule - certain restraints have no purpose other than to reduce competition
2. Rule of reason - if the pros outweigh the cons, it is permissible |
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Are vertical restraints of trade subject to the per se rule? The rule of reason?
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No. Yes.
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Are horizontal restraints of trade subject to the per se rule? The rule of reason?
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Yes. Yes.
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A manufacturer states that it will not sell to a retailer unless the retailer sells the product at a certain price. Is this a restraint of trade?
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No, because there is no agreement from the retailer.
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Is it illegal to be a monopoly? To obtain it?
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No. Yes.
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What are the 3 sanctions against monopolies under the Sherman Act?
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1. Injunctions
2. Criminal penalties 3. Treble damages |
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Several companies have an arrangement where the same director sits on each board. What is the name of this, and what are the requirements for it to be illegal?
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Interlocking directorate. None.
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What is required for a tying arrangement to be illegal?
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1. 1 product must be desirable, and 1 must not
2. There is economic power, either because product is unique or 30% market share |
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Is it legal for a company to charge different prices to two different identical customers?
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No
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