True / False: An objection to discharge will end any attempt at a Chapter 7 Liquidation bankruptcy.
What are the 7 means of objecting to a discharge via Chapter 7 Liquidation bankruptcy?
Debtor is not an individual
Fraudulent transfers or concealment of property (in the year before or after the petition was filed)
[most often tested] Unjustifiably failed to keep books and records (purposeful concealment of the situation)
Prior discharge within eight years
Commission of a bankruptcy crime
++ making a false oath or account
++ presenting or using a false claim
++ giving or receiving a bribe
++ withholding records or documents
Failure to explain loss of assets
Refusal to obey orders or to answer questions
What are the 11 exceptions to discharge of debt for either a Chapter 7 Liquidation or Chapter 11 Reorganization?
Luxury goods if over $675 to a single creditor are incurred within 90 days of the order for relief
Open-ended credit to customers if over $950 and obtained within 70 days of the order for relief (such as using a credit card)
Operating a vehicle while intoxicated
Fines and penalties
Denial of discharge in a prior bankruptcy
F = Fraud = Debts incurred by fraud, embezzlement, or larceny
A = Alimony, maintenance, support, and settlements from marital separation
T = Taxes due within 3 years prior to filing
W = Willful and malicious injury
++ but negligent torts are dischargeable
E = Educational loans
D = Debts undisclosed in the bankruptcy petition
After the Chapter 7 Liquidation is complete and the debtor is discharged of the debts, what 4 reasons can the creditor’s use to revoke the discharge?
The debtor obtained the discharge fraudulently and the party seeking revocation didn’t discover the fraud until after d/c was granted.
The debtor acquired property that would constitute property of the estate and knowingly or fraudulently failed to disclose this fact.
The debtor failed to obey a court order or answer material questions
The debtor has not given a satisfactory explanation for a failure to make documents available in connection with an audit that may be ordered by the United States Trustee or for a material misstatement in such documents.
True / False: A trustee is assigned to a Chapter 7 Liquidation bankruptcy?
What is the order in which creditors are paid from the distribution of a Chapter 7 Liquidation?
Secured Claimants: To the extent of the value of the collateral securing their claims. Claims in excess of collateral are treated like General Creditors
Priority Claimants: See separate flashcard for the 9 levels
General Creditors: If filed their claims on time
[HEAVILY TESTED] What are the 9 levels of Priority Claimants
(1) Support obligations to spouse and children
(2) Administrative expenses of the bankruptcy (filing fees, attorney fees, accountant fees, etc)
(3) Involuntary case gap claims that occur during the course of business after filing but before the appt of a trustee
(4) Wage claims that occurred within 180 prior to filing; priority up to $12,850, all remaining wages are a nonpriority claim
(5) Employee benefit plans up to $12,850 per employee for health ins or pension that occurred 180 prior to filing
(6) Grain farmers and fishermen up to $6,325 against a grain or fish processing or storage facility
(7) Consumer deposits up to $2,850 per consumer (such as a $3,000 deposit made on furniture to be delivered)
(8) Tax claims
(9) Personal injury claims arising from intoxicated driving
How are funds distributed from a Chapter 7 Liquidation when there is not enough money to satisfy all debts within a priority category?
All of the creditors within the category receive a pro rata share.
[HEAVILY TESTED] True / False: A trustee is appointed for a Chapter 11 Reorganization.
A debtor may request a trustee, but one is not automatically appointed
What is a creditors’ committee?
The top 7 unsecured creditors must be formed to provide counsel during a Chapter 11 Reorganization
What is an equity security holders’ committee?
The top 7 equity holders for a corporation may be appointed to ensure the interests of the shareholders are considered during a Chapter 11 Reorganization.
During a Chapter 11 Reorganization, who is in possess of the company’s assets?
What is the timeframe after filing for Chapter 11, where the debtor has the exclusive right to file a reorganization plan?