Post on 23-Dec-2015
1
Secured TransactionsAssignment 31
Trustees vs. Secureds: Preferences
2
The Big Picture
Part Two: The Creditor Third Party Relationship
Chapter 9: Competitions for Collateral
Assignment 28: Lien Creditors vs Secureds: The Basics
Assignment 29: Lien Creditors vs Secureds: Future Advance
Assignment 31: Trustees vs Secureds: Preferences
Assignment 32: Secureds vs. Secureds: Basics
Assignment 36: Buyers vs. Secureds
Land, Fixtures, Agriculture, and Minerals
3
The policies Petition
State: the raceof diligence
Bankruptcy: equality is equity
4
The policies Petition
State: the raceof diligence
Bankruptcy: equality is equity
90 daypreference period
5
The policies Petition
State: the raceof diligence
Bankruptcy: equality is equity
90 daypreference period
6
The Statute§547(b). The trustee may avoid any transfer (§101(54)) of an
interest of the debtor in property
7
The Statute§547(b). The trustee may avoid any transfer (§101(54)) of an
interest of the debtor in property
(1) To or for the benefit of a creditor
8
The Statute§547(b). The trustee may avoid any transfer (§101(54)) of an
interest of the debtor in property
(1) To or for the benefit of a creditor
(2) For or on account of an antecedent debt . . .
9
The Statute§547(b). The trustee may avoid any transfer (§101(54)) of an
interest of the debtor in property
(1) To or for the benefit of a creditor
(2) For or on account of an antecedent debt . . .
(3) Made while the debtor is insolvent, §101(32)
10
The Statute§547(b). The trustee may avoid any transfer (§101(54)) of an
interest of the debtor in property
(1) To or for the benefit of a creditor
(2) For or on account of an antecedent debt . . .
(3) Made while the debtor is insolvent, §101(32)
(4) Made --
(A) on or within 90 days before the date of the filing . . .
11
The Statute§547(b). The trustee may avoid any transfer (§101(54)) of an
interest of the debtor in property
(1) To or for the benefit of a creditor
(2) For or on account of an antecedent debt . . .
(3) Made while the debtor is insolvent, §101(32)
(4) Made --
(A) on or within 90 days before the date of the filing . . .
(B) between 90 days and one year before the date of the filing . . . if such creditor . . . was an insider, §101(31)
12
The Statute§547(b). The trustee may avoid any transfer (§101(54)) of an
interest of the debtor in property
(1) To or for the benefit of a creditor
(2) For or on account of an antecedent debt . . .
(3) Made while the debtor is insolvent, §101(32)
(4) Made --
(A) on or within 90 days before the date of the filing . . .
(B) between 90 days and one year before the date of the filing . . . if such creditor . . . was an insider, §101(31)
(5) That enables such creditor to receive more than such creditor would receive if the case were . . . under chapter 7 . . . [and] the transfer had not been made . . .
13
The Statute§547(b). The trustee may avoid any transfer (§101(54)) of an
interest of the debtor in property
(1) To or for the benefit of a creditor
(2) For or on account of an antecedent debt . . .
(3) Made while the debtor is insolvent, §101(32)
(4) Made --
(A) on or within 90 days before the date of the filing . . .
(B) between 90 days and one year before the date of the filing . . . if such creditor . . . was an insider, §101(31)
(5) That enables such creditor to receive more than such creditor would receive if the case were . . . under chapter 7 . . . [and] the transfer had not been made . . .
14
§547(e) (2). A transfer is made –
(A) At the time such transfer takes effect between the transferor and the transferee, if such transfer is perfected at, or within 30 days after such time . . .
(B) At the time such transfer is perfected, if such transfer is perfected after such 30 days . . .
(1). For purposes of this section --
(A) A transfer of real property . . . is perfected when a bona fide purchaser . . . cannot acquire an interest that is superior . .
(B) A transfer of a fixture or property other than real property is perfected when a creditor . . . cannot acquire a judicial lien that is superior . . .
When is a security interest transfer made?
15
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
We represent the trustee in bankruptcy in a case filed under Chapter 11 on September 1 and converted to Chapter 7 on December 30.
Ch 11
16
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
We represent the trustee in bankruptcy in a case filed under Chapter 11 on September 1 and converted to Chapter 7 on December 30.
We are deciding whether to attack transactions as preferences
Ch 11
17
Problem 31.1, page 518
Ch 11
Sep 1
Convertto Ch 7
Dec 30
Now
We represent the trustee in bankruptcy in a case filed under Chapter 11 on September 1 and converted to Chapter 7 on December 30.
We are deciding whether to attack transactions as preferences
From what date does the preference period run?
18
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
NowCh 11Jun 3
19
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Aug15
SAFS
loan
a. Wooden borrows $300K secured from 1st Bank Aug 15.
Ch 11
20
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Aug15
SAFS
loan
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day.
Aug16
FSfiled Ch 11
21
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Aug15
SAFS
loan
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day. Avoidable?
Aug16
FSfiled Ch 11
22
The Statute§547(b). The trustee may avoid any transfer of an interest of
the debtor in property
(1) To or for the benefit of a creditor
(2) For or on account of an antecedent debt . . .
(3) Made while the debtor is insolvent, §101(32)
(4) Made --
(A) on or within 90 days before the date of the filing . . .
(B) between 90 days and one year before the date of the filing . . . if such creditor . . . was an insider, §101(31)
(5) That enables such creditor to receive more than such creditor would receive if the case were . . . under chapter 7 . . . [and] the transfer had not been made . . .
23
The Statute§547(b). The trustee may avoid any transfer of an interest of
the debtor in property
(1) To or for the benefit of a creditor
(2) For or on account of an antecedent debt . . .
(3) Made while the debtor is insolvent, §101(32)
(4) Made --
(A) on or within 90 days before the date of the filing . . .
(B) between 90 days and one year before the date of the filing . . . if such creditor . . . was an insider, §101(31)
(5) That enables such creditor to receive more than such creditor would receive if the case were . . . under chapter 7 . . . [and] the transfer had not been made . . .
24
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Aug15
SAFS
loan
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day. Avoidable? No, 547(e)(2).
Aug16
FSfiled Ch 11
25
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day. Avoidable? No, 547(e)(2).
b. Wooden borrows $300K from 2nd Bank unsecured Feb 7.
Feb 7
Unsecuredloan Ch 11
26
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Jul 11
SAFS filed
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day. Avoidable? No, 547(e)(2).
b. Wooden borrows $300K from 2nd Bank unsecured Feb 7. On July 11 Wooden granted a SI and Secondbank filed.
Feb 7
Unsecuredloan Ch 11
27
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Jul 11
SAFS filed
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day. Avoidable? No, 547(e)(2).
b. Wooden borrows $300K from 2nd Bank unsecured Feb 7. On July 11 Wooden granted a SI and Secondbank filed. When was transfer? §547(e)(2)(A).
Feb 7
Unsecuredloan Ch 11
28
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Jul 11
SAFS filed
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day. Avoidable? No, 547(e)(2).
b. Wooden borrows $300K from 2nd Bank unsecured Feb 7. On July 11 Wooden granted a SI and Secondbank filed. When was transfer? §547(e)(2)(A). Avoidable?
Feb 7
Unsecuredloan Ch 11
29
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Jul 11
SAFS filed
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day. Avoidable? No, 547(e)(2).
b. Wooden borrows $300K from 2nd Bank unsecured Feb 7. On July 11 Wooden granted a SI and Secondbank filed. When was transfer? §547(e)(2)(A). Avoidable? Yes.
Feb 7
Unsecuredloan Ch 11
30
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day. Avoidable? No, 547(e)(2).
b. Wooden borrows $300K from 2nd Bank unsecured Feb 7. On July 11 Wooden granted a SI and Secondbank filed. When was transfer? §547(e)(2)(A). Avoidable? Yes.
c. Wooden borrows $300K secured from 3rd Bank Feb 7.
Feb 7
SAFS
loan Ch 11
31
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Jul 11
FS filed
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day. Avoidable? No, 547(e)(2).
b. Wooden borrows $300K from 2nd Bank unsecured Feb 7. On July 11 Wooden granted a SI and Secondbank filed. When was transfer? §547(e)(2)(A). Avoidable? Yes.
c. Wooden borrows $300K secured from 3rd Bank Feb 7. FS lost in mail, filed July 11.
Feb 7
SAFS
loan Ch 11
32
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Jul 11
FS filed
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day. Avoidable? No, 547(e)(2).
b. Wooden borrows $300K from 2nd Bank unsecured Feb 7. On July 11 Wooden granted a SI and Secondbank filed. When was transfer? §547(e)(2)(A). Avoidable? Yes.
c. Wooden borrows $300K secured from 3rd Bank Feb 7. FS lost in mail, filed July 11. Avoidable?
Feb 7
SAFS
loan Ch 11
33
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Jul 11
FS filed
a. Wooden borrows $300K secured from 1st Bank Aug 15. 1st Bank files the next day. Avoidable? No, 547(e)(2).
b. Wooden borrows $300K from 2nd Bank unsecured Feb 7. On July 11 Wooden granted a SI and Secondbank filed. When was transfer? §547(e)(2)(A). Avoidable? Yes.
c. Wooden borrows $300K secured from 3rd Bank Feb 7. FS lost in mail, filed July 11. Avoidable? Yes. §547(e)(1)(B). (But see 9-516(a)!)
Feb 7
SAFS
loan Ch 11
34
§547(e) (2). A transfer is made –
(A) At the time such transfer takes effect between the transferor and the transferee, if such transfer is perfected at, or within 30 days after such time . . .
(B) At the time such transfer is perfected, if such transfer is perfected after such 30 days . . .
(1). For purposes of this section --
(A) A transfer of real property . . . is perfected when a bona fide purchaser . . . cannot acquire an interest that is superior . .
(B) A transfer of a fixture or property other than real property is perfected when a creditor . . . cannot acquire a judicial lien that is superior . . .
When is a security interest transfer made?
35
The Statute§547(b). The trustee may avoid any transfer of an interest of
the debtor in property
(1) To or for the benefit of a creditor
(2) For or on account of an antecedent debt . . .
(3) Made while the debtor is insolvent, §101(32)
(4) Made --
(A) on or within 90 days before the date of the filing . . .
(B) between 90 days and one year before the date of the filing . . . if such creditor . . . was an insider, §101(31)
(5) That enables such creditor to receive more than such creditor would receive if the case were . . . under chapter 7 . . . [and] the transfer had not been made . . .
36
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
d. Wooden borrows $30K purchase money secured from 4th Bank July 21.
Jul 21
SAFS
loan Ch 11
37
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Aug 4
FS filed
d. Wooden borrows $30K purchase money secured from 4th Bank July 21. 4th Bank files August 4.
Jul 21
SAFS
loan Ch 11
38
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Aug 4
FS filed
d. Wooden borrows $30K purchase money secured from 4th Bank July 21. 4th Bank files August 4. Avoidable?
Jul 21
SAFS
loan Ch 11
547(3) Purchase Money Exception(c) (3) [Then] The trustee may not avoid under this section a transfer . . . that creates a security interest in property acquired by the debtor—
(A) to the extent such security interest secures new value that was—
(i) given at or after the signing of a security agreement that contains a description of such property as collateral;
(ii) given by or on behalf of the secured party under such agreement;
(iii) given to enable the debtor to acquire such property; and
(iv) in fact used by the debtor to acquire such property; and
(B) that is perfected on or before 30 days after the debtor receives possession of such property;
39
40
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Aug 4
FS filed
d. Wooden borrows $30K purchase money secured from 4th Bank July 21. 4th Bank files August 4. Avoidable? No. §547(c)(3).
Jul 21
SAFS
loan Ch 11
41
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Aug 4
FS filed
d. Wooden borrows $30K purchase money secured from 4th Bank July 21. 4th Bank files August 4. Avoidable? No. §547(c)(3).
e. Different if 4th Bank disbursed to Wooden and Wooden used other funds to purchase?
Jul 21
SAFS
loan Ch 11
42
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Aug 4
FS filed
d. Wooden borrows $30K purchase money secured from 4th Bank July 21. 4th Bank files August 4. Avoidable? No. §547(c)(3).
e. Different if 4th Bank disbursed to Wooden and Wooden used other funds to purchase? Not PMSI. §547(c)(3)(A)(iv) “in fact used by the debtor to acquire such property.”
Jul 21
SAFS
loan Ch 11
43
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Aug 4
FS filed
d. Wooden borrows $30K purchase money secured from 4th Bank July 21. 4th Bank files August 4. Avoidable? No. §547(c)(3).
e. Different if 4th Bank disbursed to Wooden and Wooden used other funds to purchase? Not PMSI. §547(c)(3)(A)(iv) “in fact used by the debtor to acquire such property.” Still no different. §547(e)(2)(A).
Jul 21
SAFS
loan Ch 11
44
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
f. Elsa lends March 9.
Mar 9
Loan Ch 11
45
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Apr 12
SAFS filed
f. Elsa lends March 9. SA signed and FS filed April 12.
Mar 9
Loan Ch 11
46
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Apr 12
SAFS filed
f. Elsa lends March 9. SA signed and FS filed April 12. Avoidable?
Mar 9
Loan Ch 11
47
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Apr 12
SAFS filed
f. Elsa lends March 9. SA signed and FS filed April 12. Avoidable? Yes. §101(31)(B)(vi) and (45).
Mar 9
Loan Ch 11
48
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Apr 12
SAFS filed
f. Elsa lends March 9. SA signed and FS filed April 12. Avoidable? Yes. §101(31)(B)(vi) and (45).
When was the transfer made?
Mar 9
Loan Ch 11
49
Problem 31.1, page 518
Sep 1
Convertto Ch 7
Dec 30
Now
Apr 12
SAFS filed
f. Elsa lends March 9. SA signed and FS filed April 12. Avoidable? Yes. §101(31)(B)(vi) and (45).
When was the transfer made? April 12. §547(e)(2)(B).
Mar 9
Loan Ch 11
50
Problem 31.2, page 519
Dysan
Creditors
$1.5 millionverdict
51
Problem 31.2, page 519
Dysan
Creditors
$1.5 millionverdict
FSFSFS
52
Problem 31.2, page 519
Dysan
CreditorsFSFSFS
Judgment$1.5 millionverdict
53
Problem 31.2, page 519
Dysan
Creditors
$1.5 millionverdict Now
FSFSFS
90 days
Judgment
54
Problem 31.2, page 519
Dysan
Creditors
$1.5 millionverdict Now
FSFSFS
90 days
Judgment
The debtor is still in business. What should we do?
55
Problem 31.2, page 519
Dysan
Creditors
$1.5 millionverdict Now
FSFSFS
90 days
Judgment
The debtor is still in business. What should we do? Levy?
56
Problem 31.2, page 519
Dysan
Creditors
$1.5 millionverdict Now
FSFSFS
90 days
Judgment
The debtor is still in business. What should we do? Levy?
File an involuntary bankruptcy?
57
Problem 31.2, page 519
Dysan
Creditors
$1.5 millionverdict Now
FSFSFS
90 days
Judgment
The debtor is still in business. What should we do? Levy?
File an involuntary bankruptcy? Accept a security interest?
58
Problem 31.2, page 519
Dysan
Creditors
$1.5 millionverdict Now
FSFSFS
90 days
Judgment
The debtor is still in business. What should we do? Levy?
File an involuntary bankruptcy? Accept a security interest?
Deal: Preferred creditors assign us our prorata share of their claims.
59
Problem 31.2, page 519
Dysan
Creditors
$1.5 millionverdict Now
FSFSFS
90 days
Judgment
The debtor is still in business. What should we do? Levy?
File an involuntary bankruptcy? Accept a security interest?
Deal: Preferred creditors assign us our prorata share of their claims.
Example: Assets are $1 million. Debt is $4 million. FS debt is $2 million.
60
Problem 31.2, page 519
Dysan
Creditors
$1.5 millionverdict Now
FSFSFS
90 days
Judgment
The debtor is still in business. What should we do? Levy?
File an involuntary bankruptcy? Accept a security interest?
Deal: Preferred creditors assign us our prorata share of their claims.
Example: Assets are $1 million. Debt is $4 million. FS debt is $2 million.
Deal: We get this fraction of the assets: $1,547/$3,547
61
Problem 31.2, page 519
Dysan
Creditors
$1.5 millionverdict Now
FSFSFS
90 days
Judgment
The debtor is still in business. What should we do? Levy?
File an involuntary bankruptcy? Accept a security interest?
Deal: Preferred creditors assign us our prorata share of their claims.
Example: Assets are $1 million. Debt is $4 million. FS debt is $2 million.
Deal: We get this fraction of the assets: $1,547/$3,547
If others figure it out, we cut them in.
62
The Statute§547(b). The trustee may avoid any transfer (§101(54)) of an
interest of the debtor in property
(1) To or for the benefit of a creditor
(2) For or on account of an antecedent debt . . .
(3) Made while the debtor is insolvent, §101(32)
(4) Made --
(A) on or within 90 days before the date of the filing . . .
(B) between 90 days and one year before the date of the filing . . . if such creditor . . . was an insider, §101(31)
(5) That enables such creditor to receive more than such creditor would receive if the case were . . . under chapter 7 . . . [and] the transfer had not been made . . .
63
Problem 31.3, page 519
2.5M1.2M
90 days before
1.3M
64
Problem 31.3, page 519
2.5M1.2M
1.5M700K
90 days before Bankruptcy
800K
1.3M
65
Problem 31.3, page 519
2.5M1.2M
1.5M700K
90 days before
800K
1.3MDid Swissbank
receive an avoidable preference?
Bankruptcy
66
Problem 31.3, page 519
2.5M1.2M
1.5M700K
90 days before
800K
1.3M
The trustee may avoid any transfer1. To a creditor on account of an antecedent debt2. Made while debtor was insolvent3. Made within 90 days before the petition4. That enables the creditor to receive more than it would if
debtor didn’t make the transfer but filed chapter 7.
Did Swissbank receive an avoidable preference?
Bankruptcy
67
Problem 31.3, page 519
2.5M1.2M
1.5M700K
90 days before
800K
1.3M
The trustee may avoid any transfer. What is the “transfer?”1. To a creditor on account of an antecedent debt2. Made while debtor was insolvent3. Made within 90 days before the petition4. That enables the creditor to receive more than it would if
debtor didn’t make the transfer but filed chapter 7.
Did Swissbank receive an avoidable preference?
Bankruptcy
68
Problem 31.3, page 519
2.5M1.2M
1.5M700K
90 days before
800K
1.3M
The trustee may avoid any transfer1. To a creditor on account of an antecedent debt2. Made while debtor was insolvent3. Made within 90 days before the petition4. That enables the creditor to receive more than it would if
debtor didn’t make the transfer but filed chapter 7.
Did Swissbank receive an avoidable preference?
Payments and security interests in inventory items §547(e)(3) Bankruptcy
69
Problem 31.3, page 519
2.5M1.2M
1.5M700K
90 days before
800K
1.3M
§547(c)(5). “The trustee may not avoid . . . a transfer . . . that creates a perfected security interest in inventory or a receivable . . . except to the extent that the aggregate of all such transfers . . . caused a reduction, as of the date of filing . . . of any amount by which the debt secured . . . exceeded the value of all security interests . . . 90 days before the filing of the petition.”
Did Swissbank receive an avoidable preference?
Bankruptcy
70
Problem 31.3, page 519
2.5M1.2M
1.5M700K
90 days before
800K
1.3M
§547(c)(5). “The trustee may not avoid . . . a transfer . . . that creates a perfected security interest in inventory or a receivable . . . except to the extent that the aggregate of all such transfers . . . caused a reduction, as of the date of filing . . . of any amount by which the debt secured . . . exceeded the value of all security interests . . . 90 days before the filing of the petition.”
Did Swissbank receive an avoidable preference?
Bankruptcy
71
Problem 31.3, page 519
2.5M1.2M
1.5M700K
90 days before
800K
1.3M
§547(c)(5). “The trustee may not avoid . . . a transfer . . . that creates a perfected security interest in inventory or a receivable . . . except to the extent that the aggregate of all such transfers . . . caused a reduction, as of the date of filing . . . of any amount by which the debt secured . . . exceeded the value of all security interests . . . 90 days before the filing of the petition.”
Did Swissbank receive an avoidable preference?
Bankruptcy
72
Problem 31.3, page 519
2.5M1.2M
1.5M700K
90 days before
800K
1.3M
§547(c)(5). “The trustee may not avoid . . . a transfer . . . that creates a perfected security interest in inventory or a receivable . . . except to the extent that the aggregate of all such transfers . . . caused a reduction, as of the date of filing . . . of any amount by which the debt secured . . . exceeded the value of all security interests . . . 90 days before the filing of the petition.”
Did Swissbank receive an avoidable preference?
Bankruptcy
73
Problem 31.3, page 519
2.5M1.2M
1.5M700K
90 days before
800K
1.3M
§547(c)(5). “The trustee may not avoid . . . a transfer . . . that creates a perfected security interest in inventory or a receivable . . . except to the extent that the aggregate of all such transfers . . . caused a reduction, as of the date of filing . . . of any amount by which the debt secured . . . exceeded the value of all security interests . . . 90 days before the filing of the petition.” $500K
Did Swissbank receive an avoidable preference?
Bankruptcy
74
Problem 31.4, page 5191. Our law firm settles a class action for $247 million to the
class and $33 million to our firm.
2. The defendant pays by check.
3. We deposit the check.
4. The check clears.
Is it time to celebrate?
75
Problem 31.4, page 5191. Our law firm settles a class action for $247 million to the
class and $33 million to our firm.
2. The defendant pays by check.
3. We deposit the check.
4. The check clears.
Is it time to celebrate? No.
76
Problem 31.4, page 5191. Our law firm settles a class action for $247 million to the
class and $33 million to our firm.
2. The defendant pays by check.
3. We deposit the check.
4. The check clears.
Is it time to celebrate? No.
When will it be time to celebrate?
77
Problem 31.4, page 5191. Our law firm settles a class action for $247 million to the
class and $33 million to our firm.
2. The defendant pays by check.
3. We deposit the check.
4. The check clears.
Is it time to celebrate? No.
When will it be time to celebrate? 90 days after the check clears.
78
Problem 31.5, page 5191. Bowers story. Bowers solution: let debtors distribute
their estates
2. Modern Chapter 11 preference avoidance
a. Preferences recovered before plan confirmation go to unsecured creditors
b. Strategy: confirm plan first, then recover preferences
c. Thousands of preference actions in a single case
3. Madoff and other Ponzi schemes
4. Should preference avoidance be abolished?
5. Congress responded in 2005 with a $5,850 minimum. §547(c)(9)