COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the...

1COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks used herein under license.

West’s Business Law 10th Edition

Kenneth W. Clarkson, University of MiamiRoger LeRoy Miller, Institute for University Studies, Arlington, Texas

Gaylord A. Jentz, University of Texas, Austin, EmeritusFrank B. Cross, University of Texas, Austin

CHAPTER 30CHAPTER 30Bankruptcy LawBankruptcy Law


§1: §1: Bankruptcy Proceedings Bankruptcy Proceedings

Article I, Section 8 of the U.S. Constitution. Article I, Section 8 of the U.S. Constitution. Federal jurisdiction.Federal jurisdiction.

Bankruptcy Reform Act of 1978, amended by Bankruptcy Reform Act of 1978, amended by Reform Act of 1994.Reform Act of 1994.

Federal court under U.S. district court, can Federal court under U.S. district court, can appeal to district courts.appeal to district courts.

Federally appointed judges. Federally appointed judges.

Article I, Section 8 of the U.S. Constitution. Article I, Section 8 of the U.S. Constitution. Federal jurisdiction.Federal jurisdiction.

Bankruptcy Reform Act of 1978, amended by Bankruptcy Reform Act of 1978, amended by Reform Act of 1994.Reform Act of 1994.

Federal court under U.S. district court, can Federal court under U.S. district court, can appeal to district courts.appeal to district courts.

Federally appointed judges. Federally appointed judges.


Types of Bankruptcy ReliefTypes of Bankruptcy Relief

Bankruptcy code has 8 chapters.Bankruptcy code has 8 chapters.1,3, 5 - general definitional provisions and 1,3, 5 - general definitional provisions and

provisions covering administration, creditors, provisions covering administration, creditors, debtor and estate.debtor and estate.

Chapter 7 - liquidation proceedings.Chapter 7 - liquidation proceedings.Chapter 9 - adjustment of debts of a Chapter 9 - adjustment of debts of a

municipality.municipality.

Bankruptcy code has 8 chapters.Bankruptcy code has 8 chapters.1,3, 5 - general definitional provisions and 1,3, 5 - general definitional provisions and

provisions covering administration, creditors, provisions covering administration, creditors, debtor and estate.debtor and estate.

Chapter 7 - liquidation proceedings.Chapter 7 - liquidation proceedings.Chapter 9 - adjustment of debts of a Chapter 9 - adjustment of debts of a

municipality.municipality.


Types of Bankruptcy ReliefTypes of Bankruptcy Relief

Chapter 11 – reorganizations. Chapter 11 – reorganizations. Chapter 12 - adjustment of debts of family Chapter 12 - adjustment of debts of family

farmers with regular incomes.farmers with regular incomes.Chapter 13 - adjustment of debts of individuals Chapter 13 - adjustment of debts of individuals

with regular incomes.with regular incomes.

Chapter 11 – reorganizations. Chapter 11 – reorganizations. Chapter 12 - adjustment of debts of family Chapter 12 - adjustment of debts of family

farmers with regular incomes.farmers with regular incomes.Chapter 13 - adjustment of debts of individuals Chapter 13 - adjustment of debts of individuals

with regular incomes.with regular incomes.


§2: Liquidation Proceedings§2: Liquidation Proceedings

Chapter 7: Ordinary or straight bankruptcy. Chapter 7: Ordinary or straight bankruptcy. All assets are turned over to a trustee.All assets are turned over to a trustee.

Trustee sells nonexempt property and Trustee sells nonexempt property and distributes the proceeds to the creditors. distributes the proceeds to the creditors. Remaining debts are discharged.Remaining debts are discharged.

Chapter 7: Ordinary or straight bankruptcy. Chapter 7: Ordinary or straight bankruptcy. All assets are turned over to a trustee.All assets are turned over to a trustee.

Trustee sells nonexempt property and Trustee sells nonexempt property and distributes the proceeds to the creditors. distributes the proceeds to the creditors. Remaining debts are discharged.Remaining debts are discharged.


Liquidation ProceedingsLiquidation Proceedings

Available for any person, individual, Available for any person, individual, corporation, partnership.corporation, partnership.

Railroads, insurance companies, banks, savings Railroads, insurance companies, banks, savings and loan and investment companies licensed by and loan and investment companies licensed by the SBA, and credit unions cannot be debtors.the SBA, and credit unions cannot be debtors.

Available for any person, individual, Available for any person, individual, corporation, partnership.corporation, partnership.

Railroads, insurance companies, banks, savings Railroads, insurance companies, banks, savings and loan and investment companies licensed by and loan and investment companies licensed by the SBA, and credit unions cannot be debtors.the SBA, and credit unions cannot be debtors.


Filing the Chapter 7 PetitionFiling the Chapter 7 Petition

Straight bankruptcy is commenced by the filing Straight bankruptcy is commenced by the filing of a voluntary or involuntary petition in of a voluntary or involuntary petition in bankruptcy with the bankruptcy court.bankruptcy with the bankruptcy court.

Voluntary vs. Involuntary bankruptcy.Voluntary vs. Involuntary bankruptcy.

Straight bankruptcy is commenced by the filing Straight bankruptcy is commenced by the filing of a voluntary or involuntary petition in of a voluntary or involuntary petition in bankruptcy with the bankruptcy court.bankruptcy with the bankruptcy court.

Voluntary vs. Involuntary bankruptcy.Voluntary vs. Involuntary bankruptcy.


Voluntary BankruptcyVoluntary BankruptcyPetitioner must understand there are other Petitioner must understand there are other

chapters available.chapters available.Debtor does not have to be insolvent.Debtor does not have to be insolvent.List secured and unsecured creditors and List secured and unsecured creditors and

addresses and amount of money owed. List addresses and amount of money owed. List of all property owned including property of all property owned including property claimed; current income and expenses.claimed; current income and expenses.

Swear to these and sign. Federal crime to Swear to these and sign. Federal crime to misrepresent. misrepresent.

Petitioner must understand there are other Petitioner must understand there are other chapters available.chapters available.

Debtor does not have to be insolvent.Debtor does not have to be insolvent.List secured and unsecured creditors and List secured and unsecured creditors and

addresses and amount of money owed. List addresses and amount of money owed. List of all property owned including property of all property owned including property claimed; current income and expenses.claimed; current income and expenses.

Swear to these and sign. Federal crime to Swear to these and sign. Federal crime to misrepresent. misrepresent.


Voluntary BankruptcyVoluntary Bankruptcy

Court issues order of relief.Court issues order of relief.Clerk of court gives trustee and Creditors mailed Clerk of court gives trustee and Creditors mailed

notice of the order within 20 days.notice of the order within 20 days.Court will deny if “substantial abuse” of Chapter Court will deny if “substantial abuse” of Chapter

7.7.

Case 30.1: Case 30.1: In Re LamannaIn Re Lamanna (1998). (1998).

Court issues order of relief.Court issues order of relief.Clerk of court gives trustee and Creditors mailed Clerk of court gives trustee and Creditors mailed

notice of the order within 20 days.notice of the order within 20 days.Court will deny if “substantial abuse” of Chapter Court will deny if “substantial abuse” of Chapter

7.7.

Case 30.1: Case 30.1: In Re LamannaIn Re Lamanna (1998). (1998).


Involuntary BankruptcyInvoluntary Bankruptcy

Creditors force Debtor into bankruptcy Creditors force Debtor into bankruptcy proceedings. (Not against a farmer, charitable proceedings. (Not against a farmer, charitable institution).institution).

If there are 12 or more creditors, need three or If there are 12 or more creditors, need three or more with unsecured claims totaling at least more with unsecured claims totaling at least $10,000 to join in petition.$10,000 to join in petition.

Creditors force Debtor into bankruptcy Creditors force Debtor into bankruptcy proceedings. (Not against a farmer, charitable proceedings. (Not against a farmer, charitable institution).institution).

If there are 12 or more creditors, need three or If there are 12 or more creditors, need three or more with unsecured claims totaling at least more with unsecured claims totaling at least $10,000 to join in petition.$10,000 to join in petition.



If there are less than 12 creditors, one or more If there are less than 12 creditors, one or more having a claim of $10,000 may file.having a claim of $10,000 may file.

Court will order relief if Debtor is generally not Court will order relief if Debtor is generally not paying debts as they come due.paying debts as they come due.

If there are less than 12 creditors, one or more If there are less than 12 creditors, one or more having a claim of $10,000 may file.having a claim of $10,000 may file.

Court will order relief if Debtor is generally not Court will order relief if Debtor is generally not paying debts as they come due.paying debts as they come due.



Court will order relief if:Court will order relief if: A general receiver, assignee, or custodian took A general receiver, assignee, or custodian took

possession of, or was appointed to take charge of, possession of, or was appointed to take charge of, substantially all of debtor’s property within 120 days substantially all of debtor’s property within 120 days before filing.before filing.

Penalties for frivolous petitions against debtors, Penalties for frivolous petitions against debtors, including Punitive damages.including Punitive damages.

Court will order relief if:Court will order relief if: A general receiver, assignee, or custodian took A general receiver, assignee, or custodian took

possession of, or was appointed to take charge of, possession of, or was appointed to take charge of, substantially all of debtor’s property within 120 days substantially all of debtor’s property within 120 days before filing.before filing.

Penalties for frivolous petitions against debtors, Penalties for frivolous petitions against debtors, including Punitive damages.including Punitive damages.


Automatic StayAutomatic Stay

Either voluntary or involuntary.Either voluntary or involuntary.Creditors cannot commence or continue most Creditors cannot commence or continue most

legal actions.legal actions.Damages for violation of stay.Damages for violation of stay.Creditors can get “adequate protection.”Creditors can get “adequate protection.”

Periodic or one time cash payments or indubitable Periodic or one time cash payments or indubitable equivalent.equivalent.

Either voluntary or involuntary.Either voluntary or involuntary.Creditors cannot commence or continue most Creditors cannot commence or continue most

legal actions.legal actions.Damages for violation of stay.Damages for violation of stay.Creditors can get “adequate protection.”Creditors can get “adequate protection.”

Periodic or one time cash payments or indubitable Periodic or one time cash payments or indubitable equivalent.equivalent.


Property of the EstateProperty of the Estate

Debtor’s Estate includes:Debtor’s Estate includes: All Debtor’s legal and equitable interests in property All Debtor’s legal and equitable interests in property

presently held, including community property;presently held, including community property; Property transferred in a “voidable” transaction; and Property transferred in a “voidable” transaction; and Property which Debtor becomes entitled within 180 Property which Debtor becomes entitled within 180

days after filing.days after filing.

Debtor’s Estate includes:Debtor’s Estate includes: All Debtor’s legal and equitable interests in property All Debtor’s legal and equitable interests in property

presently held, including community property;presently held, including community property; Property transferred in a “voidable” transaction; and Property transferred in a “voidable” transaction; and Property which Debtor becomes entitled within 180 Property which Debtor becomes entitled within 180

days after filing.days after filing.


Property of the EstateProperty of the Estate

Estate includes (Estate includes (cont’dcont’d):): Proceeds and profits from the property of the estate.Proceeds and profits from the property of the estate. After-acquired property such as inheritances, After-acquired property such as inheritances,

property settlements, and life insurance death property settlements, and life insurance death proceeds.proceeds.

Estate includes (Estate includes (cont’dcont’d):): Proceeds and profits from the property of the estate.Proceeds and profits from the property of the estate. After-acquired property such as inheritances, After-acquired property such as inheritances,

property settlements, and life insurance death property settlements, and life insurance death proceeds.proceeds.


Creditor’s Meeting and ClaimsCreditor’s Meeting and Claims

Ten-thirty days after filing, Court calls meeting Ten-thirty days after filing, Court calls meeting of creditors. Debtor is examined under oath of creditors. Debtor is examined under oath about his debts and assets.about his debts and assets.

Within 90 days, Creditors must file “proof of Within 90 days, Creditors must file “proof of claim” with court clerk.claim” with court clerk.

Leases cannot be for more than one year.Leases cannot be for more than one year.

Ten-thirty days after filing, Court calls meeting Ten-thirty days after filing, Court calls meeting of creditors. Debtor is examined under oath of creditors. Debtor is examined under oath about his debts and assets.about his debts and assets.

Within 90 days, Creditors must file “proof of Within 90 days, Creditors must file “proof of claim” with court clerk.claim” with court clerk.

Leases cannot be for more than one year.Leases cannot be for more than one year.


Creditor’s Meeting and ClaimsCreditor’s Meeting and Claims

Allowed unless disputed.Allowed unless disputed.If claim is disputed or unliquidated, court will If claim is disputed or unliquidated, court will

decide value.decide value.It is a crime to file false claim.It is a crime to file false claim.Employment contracts and real estate.Employment contracts and real estate.

Allowed unless disputed.Allowed unless disputed.If claim is disputed or unliquidated, court will If claim is disputed or unliquidated, court will

decide value.decide value.It is a crime to file false claim.It is a crime to file false claim.Employment contracts and real estate.Employment contracts and real estate.


ExemptionsExemptions

See list in text pages 611-612.See list in text pages 611-612.States may pass law requiring Debtor use state States may pass law requiring Debtor use state

exemptions.exemptions.In some states, Debtor may choose state or In some states, Debtor may choose state or

federal exemptions.federal exemptions.

See list in text pages 611-612.See list in text pages 611-612.States may pass law requiring Debtor use state States may pass law requiring Debtor use state

exemptions.exemptions.In some states, Debtor may choose state or In some states, Debtor may choose state or

federal exemptions.federal exemptions.


The TrusteeThe Trustee

Court-appointed until first meeting of creditors.Court-appointed until first meeting of creditors.Creditors elect permanent trusteeCreditors elect permanent trusteeAdministers estate.Administers estate.Collects proceeds, liquidates assets and pays Collects proceeds, liquidates assets and pays

Creditors in order of priority.Creditors in order of priority.

Court-appointed until first meeting of creditors.Court-appointed until first meeting of creditors.Creditors elect permanent trusteeCreditors elect permanent trusteeAdministers estate.Administers estate.Collects proceeds, liquidates assets and pays Collects proceeds, liquidates assets and pays

Creditors in order of priority.Creditors in order of priority.


Trustee’s PowersTrustee’s Powers

Trustee has rights to get Debtor’s property back Trustee has rights to get Debtor’s property back from those Creditors that he can defeat by from those Creditors that he can defeat by asserting the rights of:asserting the rights of: Debtor against the creditors.Debtor against the creditors. Lien creditors against the creditors.Lien creditors against the creditors. Bona fide purchaser against the creditors.Bona fide purchaser against the creditors. Trustee still loses to the PMSI creditor who perfects Trustee still loses to the PMSI creditor who perfects

within his “magic” 10-day period.within his “magic” 10-day period.

Trustee has rights to get Debtor’s property back Trustee has rights to get Debtor’s property back from those Creditors that he can defeat by from those Creditors that he can defeat by asserting the rights of:asserting the rights of: Debtor against the creditors.Debtor against the creditors. Lien creditors against the creditors.Lien creditors against the creditors. Bona fide purchaser against the creditors.Bona fide purchaser against the creditors. Trustee still loses to the PMSI creditor who perfects Trustee still loses to the PMSI creditor who perfects

within his “magic” 10-day period.within his “magic” 10-day period.


Voidable RightsVoidable Rights

Trustee can stand in shoes of debtor and assert Trustee can stand in shoes of debtor and assert any lack of capacity or lack of assent.any lack of capacity or lack of assent.

Trustee can stand in shoes of debtor and assert Trustee can stand in shoes of debtor and assert any lack of capacity or lack of assent.any lack of capacity or lack of assent.


PreferencesPreferences

A Debtor is not permitted to transfer property or A Debtor is not permitted to transfer property or make a payment that favors—or gives a make a payment that favors—or gives a preference to—one creditor over another. preference to—one creditor over another.

For a Trustee to recover preferential payment, For a Trustee to recover preferential payment, Debtor must be insolvent and transferred Debtor must be insolvent and transferred property for pre-existing debt within previous 90 property for pre-existing debt within previous 90 days.days.

A Debtor is not permitted to transfer property or A Debtor is not permitted to transfer property or make a payment that favors—or gives a make a payment that favors—or gives a preference to—one creditor over another. preference to—one creditor over another.

For a Trustee to recover preferential payment, For a Trustee to recover preferential payment, Debtor must be insolvent and transferred Debtor must be insolvent and transferred property for pre-existing debt within previous 90 property for pre-existing debt within previous 90 days.days.


PreferencesPreferences

Trustee can use preferential payment to pay a Trustee can use preferential payment to pay a real preexisting debt, not for current real preexisting debt, not for current consideration.consideration.

Creditor gets more than he would in a Chapter 7.Creditor gets more than he would in a Chapter 7.Consumer can transfer up to $600 without Consumer can transfer up to $600 without

constituting a preference.constituting a preference.

Trustee can use preferential payment to pay a Trustee can use preferential payment to pay a real preexisting debt, not for current real preexisting debt, not for current consideration.consideration.

Creditor gets more than he would in a Chapter 7.Creditor gets more than he would in a Chapter 7.Consumer can transfer up to $600 without Consumer can transfer up to $600 without

constituting a preference.constituting a preference.


Liens on Debtor’s PropertyLiens on Debtor’s Property

Trustee can avoid statutory liens that became Trustee can avoid statutory liens that became effective when bankruptcy petition filed, or when effective when bankruptcy petition filed, or when debtor became insolvent.debtor became insolvent.

Can avoid liens which were unperfected on date Can avoid liens which were unperfected on date of bankruptcy.of bankruptcy.

Trustee can avoid statutory liens that became Trustee can avoid statutory liens that became effective when bankruptcy petition filed, or when effective when bankruptcy petition filed, or when debtor became insolvent.debtor became insolvent.

Can avoid liens which were unperfected on date Can avoid liens which were unperfected on date of bankruptcy.of bankruptcy.


Fraudulent TransfersFraudulent Transfers

Trustee may avoid fraudulent transfers made Trustee may avoid fraudulent transfers made within one year of filing of petition.within one year of filing of petition.

Trustee may proceed under state law for fraud Trustee may proceed under state law for fraud with a 3 year statute of limitations.with a 3 year statute of limitations.

Trustee may avoid fraudulent transfers made Trustee may avoid fraudulent transfers made within one year of filing of petition.within one year of filing of petition.

Trustee may proceed under state law for fraud Trustee may proceed under state law for fraud with a 3 year statute of limitations.with a 3 year statute of limitations.


Distribution of PropertyDistribution of PropertyIf Secured property:If Secured property:

Consumer debtors. Consumer debtors. • Have 30 days from filing petition or before first Have 30 days from filing petition or before first

meeting of creditors.meeting of creditors.• Debtor must tell what she intends to do with Debtor must tell what she intends to do with

collateral-- keep or surrender.collateral-- keep or surrender.• Trustee must enforce within 45 days.Trustee must enforce within 45 days.

If surrenders: creditor can keep or sell.If surrenders: creditor can keep or sell.• If creditor keeps = full satisfaction of debt.If creditor keeps = full satisfaction of debt.• If creditor sells = can use extra for costs, or can If creditor sells = can use extra for costs, or can

become unsecured creditor for deficiency.become unsecured creditor for deficiency.

If Secured property:If Secured property: Consumer debtors. Consumer debtors.

• Have 30 days from filing petition or before first Have 30 days from filing petition or before first meeting of creditors.meeting of creditors.

• Debtor must tell what she intends to do with Debtor must tell what she intends to do with collateral-- keep or surrender.collateral-- keep or surrender.

• Trustee must enforce within 45 days.Trustee must enforce within 45 days. If surrenders: creditor can keep or sell.If surrenders: creditor can keep or sell.

• If creditor keeps = full satisfaction of debt.If creditor keeps = full satisfaction of debt.• If creditor sells = can use extra for costs, or can If creditor sells = can use extra for costs, or can

become unsecured creditor for deficiency.become unsecured creditor for deficiency.


Distribution of PropertyDistribution of Property

Unsecured propertyUnsecured property Paid according to bankruptcy law.Paid according to bankruptcy law. All of one class must be paid before moving to next.All of one class must be paid before moving to next. Creditor within last class receive proportionately if Creditor within last class receive proportionately if

not enough.not enough. See Priority List in text.See Priority List in text. All creditors paid, trustee gives extra back to debtor.All creditors paid, trustee gives extra back to debtor.

Unsecured propertyUnsecured property Paid according to bankruptcy law.Paid according to bankruptcy law. All of one class must be paid before moving to next.All of one class must be paid before moving to next. Creditor within last class receive proportionately if Creditor within last class receive proportionately if

not enough.not enough. See Priority List in text.See Priority List in text. All creditors paid, trustee gives extra back to debtor.All creditors paid, trustee gives extra back to debtor.


DischargeDischarge

Exceptions. Exceptions. Case 30.2:Case 30.2: In re Savage (2004).In re Savage (2004).

Objections to Discharge.Objections to Discharge. Case 30.3: Case 30.3: Archer v. WarnerArcher v. Warner (2003). (2003).

Effect of Discharge.Effect of Discharge.Revocation of Discharge.Revocation of Discharge.Reaffirmation of a Debt.Reaffirmation of a Debt.

Exceptions. Exceptions. Case 30.2:Case 30.2: In re Savage (2004).In re Savage (2004).

Objections to Discharge.Objections to Discharge. Case 30.3: Case 30.3: Archer v. WarnerArcher v. Warner (2003). (2003).

Effect of Discharge.Effect of Discharge.Revocation of Discharge.Revocation of Discharge.Reaffirmation of a Debt.Reaffirmation of a Debt.


Exceptions to DischargeExceptions to Discharge

Claims for back taxes.Claims for back taxes.Claims for amounts borrowed by Debtor to pay Claims for amounts borrowed by Debtor to pay

federal taxes.federal taxes.Claims against property/money obtained by Claims against property/money obtained by

Debtor under false pretenses.Debtor under false pretenses.Claims by Creditors who did not know about Claims by Creditors who did not know about

bankruptcy.bankruptcy.

Claims for back taxes.Claims for back taxes.Claims for amounts borrowed by Debtor to pay Claims for amounts borrowed by Debtor to pay

federal taxes.federal taxes.Claims against property/money obtained by Claims against property/money obtained by

Debtor under false pretenses.Debtor under false pretenses.Claims by Creditors who did not know about Claims by Creditors who did not know about

bankruptcy.bankruptcy.


Reaffirmation of DebtReaffirmation of Debt

Debtor may wish to pay a debt notwithstanding Debtor may wish to pay a debt notwithstanding the debt could be discharged in bankruptcy.the debt could be discharged in bankruptcy.

Agreement is filed with court.Agreement is filed with court.Debtor can rescind agreement at any time.Debtor can rescind agreement at any time.

Debtor may wish to pay a debt notwithstanding Debtor may wish to pay a debt notwithstanding the debt could be discharged in bankruptcy.the debt could be discharged in bankruptcy.

Agreement is filed with court.Agreement is filed with court.Debtor can rescind agreement at any time.Debtor can rescind agreement at any time.


§ 3: Reorganizations§ 3: ReorganizationsChapter 11—Corporations. Debtor and Chapter 11—Corporations. Debtor and

Creditors formulate a plan under which the Creditors formulate a plan under which the Debtor pays a portion of its debts and is Debtor pays a portion of its debts and is discharged of the rest.discharged of the rest.

Same debtors as are eligible under Chapter 7.Same debtors as are eligible under Chapter 7.

Chapter 11—Corporations. Debtor and Chapter 11—Corporations. Debtor and Creditors formulate a plan under which the Creditors formulate a plan under which the Debtor pays a portion of its debts and is Debtor pays a portion of its debts and is discharged of the rest.discharged of the rest.

Same debtors as are eligible under Chapter 7.Same debtors as are eligible under Chapter 7.


ReorganizationsReorganizations

““Fast tract” Chapter 11 for small business Fast tract” Chapter 11 for small business debtors whose liabilities do not exceed $2 debtors whose liabilities do not exceed $2 million and who do not own or manage real million and who do not own or manage real estate.estate.

““Workouts”.Workouts”.

““Fast tract” Chapter 11 for small business Fast tract” Chapter 11 for small business debtors whose liabilities do not exceed $2 debtors whose liabilities do not exceed $2 million and who do not own or manage real million and who do not own or manage real estate.estate.

““Workouts”.Workouts”.


ReorganizationsReorganizations

Debtor in Possession (DIP).Debtor in Possession (DIP). Trustee may be appointed.Trustee may be appointed. DIP has same powers as trustee in Chapter 7.DIP has same powers as trustee in Chapter 7.

• Strong-arm clause.Strong-arm clause.

Collective Bargaining Agreements.Collective Bargaining Agreements.Creditors Committees.Creditors Committees.

Debtor in Possession (DIP).Debtor in Possession (DIP). Trustee may be appointed.Trustee may be appointed. DIP has same powers as trustee in Chapter 7.DIP has same powers as trustee in Chapter 7.

• Strong-arm clause.Strong-arm clause.

Collective Bargaining Agreements.Collective Bargaining Agreements.Creditors Committees.Creditors Committees.


The Reorganization PlanThe Reorganization Plan

Filing the Plan.Filing the Plan. Within 120 days after date relief order.Within 120 days after date relief order. Plan must be equitable.Plan must be equitable.

Acceptance and Confirmation of the Plan.Acceptance and Confirmation of the Plan.Discharge.Discharge.

Filing the Plan.Filing the Plan. Within 120 days after date relief order.Within 120 days after date relief order. Plan must be equitable.Plan must be equitable.

Acceptance and Confirmation of the Plan.Acceptance and Confirmation of the Plan.Discharge.Discharge.


§4: Bankruptcy Relief under §4: Bankruptcy Relief under Chapter 13 and Chapter 12Chapter 13 and Chapter 12

Chapter 13: Individuals’ Repayment Plans. For Chapter 13: Individuals’ Repayment Plans. For individuals with regular income who owe fixed individuals with regular income who owe fixed unsecured debts of <$269,250 or fixed secured unsecured debts of <$269,250 or fixed secured debts of <$807,750.debts of <$807,750.

Not for partnerships, corporations.Not for partnerships, corporations.

Chapter 13: Individuals’ Repayment Plans. For Chapter 13: Individuals’ Repayment Plans. For individuals with regular income who owe fixed individuals with regular income who owe fixed unsecured debts of <$269,250 or fixed secured unsecured debts of <$269,250 or fixed secured debts of <$807,750.debts of <$807,750.

Not for partnerships, corporations.Not for partnerships, corporations.


Bankruptcy Relief under Bankruptcy Relief under Chapter 13 and Chapter 12Chapter 13 and Chapter 12

Chapter 12: Family Farmer PlansChapter 12: Family Farmer Plans ““Family Farmer”: 50% of gross income comes from Family Farmer”: 50% of gross income comes from

farming and whose debts are 80% farm related.farming and whose debts are 80% farm related. Procedure for filing.Procedure for filing. Content of plan.Content of plan. Court confirmation.Court confirmation.

Chapter 12: Family Farmer PlansChapter 12: Family Farmer Plans ““Family Farmer”: 50% of gross income comes from Family Farmer”: 50% of gross income comes from

farming and whose debts are 80% farm related.farming and whose debts are 80% farm related. Procedure for filing.Procedure for filing. Content of plan.Content of plan. Court confirmation.Court confirmation.

COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the...

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