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Bankruptcy Bankruptcy

Bankruptcy - PowerPoint Presentation

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Uploaded On 2015-10-24

Bankruptcy - PPT Presentation

Automatic Stay Once bankruptcy petition filed creditor cannot Receive a security interest Perfect a security interest Enforce a security interest repossess Bankruptcy Trustee Protects unsecured creditors ID: 170984

filing preferences creditor bankruptcy preferences filing bankruptcy creditor debtor days liens problem trustee amount security unsecured transfer judicial debt

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Presentation Transcript

Slide1

BankruptcySlide2

Automatic Stay

Once bankruptcy petition filed, creditor cannot:

Receive a security interest

Perfect a security interestEnforce a security interest (repossess)Slide3

Bankruptcy Trustee

Protects unsecured creditors.

Enemy of the secured creditor.Slide4

Status of judicial lien creditor

Bankruptcy trustee has status of judicial lien creditor.

Thus, will prevail over unperfected security interests.

Problem 361 – p. 974Slide5

Power to Raise Debtor’s Defenses

Bankruptcy trustee can raise any defenses the debtor may have such as:

Statute of limitations

Statute of fraudsSlide6

Power of any actual unsecured creditor

Moore v. Bay

1931 United States Supreme CourtTrustee’s recovery is not limited to the amount of the unsecured creditor’s claim.Slide7

Preferences

Debtor cannot prefer one creditor over another.

Creditors cannot be overly aggressive.Slide8

Preferences

1. Transfer by debtor

Includes grant of security interest.Slide9

Preferences

2. For preexisting debt

Not a new debt.Slide10

Preferences

3. Within 90 days of filing the bankruptcy petition

One year if transfer is to an insider (e.g., relative, partner, corporate officer)Slide11

Preferences

4. Increases the amount the creditor receives

Creditor is “better off” because of the transfer as compared to what the creditor would receive under a bankruptcy distribution.Slide12

Preferences

5. Debtor insolvent at time of transfer

Presumed within 90 days before

filing.Slide13

Preferences -- Exceptions

1. Contemporaneous exchange

New value given for item.

Perfection of new value within 30 days of attachment.Slide14

Preferences -- Exceptions

2. Ordinary course debt payments

Utility bills

Paying ordinary debts (even secured ones)Slide15

Preferences -- Exceptions

3.

PMSI

Perfected within 30 days of debtor receiving possession.Slide16

Preferences

Problem 362 – p. 979

June 8

$80,000 loan

$100,000 collateral

July 18

Perfection

July 19

Bankruptcy filingSlide17

Preferences

Problem 363 – p. 979

Nov. 1

value

Security agreement

Nov. 15

Rights

Attachment

Dec. 6

Bankruptcy filing

Dec. 5

FilingSlide18

Preferences

Problem 364 – p. 979Slide19

Floating Liens

[amount unsecured 90 days before filing]

minus

[amount unsecured at time of filing]

equals

preferenceSlide20

Floating Liens

Amount of

debt 90

days before filing

Value of

collateral

90 days

before filing

Preference =

Amount

of debt

at time

of filing

Value of

collateral

at time

of filing

Problem 365 – p. 981Slide21

Fraudulent Conveyances

Under federal or state law.

Actual intent to defraud

Debtor receives less than reasonably equivalent valueProblem 366 – p. 989Slide22

Judicial Liens

Judicial liens within 90 days of bankruptcy filing are preferences and trustee has priority.Slide23

Statutory Liens

Statutory liens have priority over the bankruptcy trustee if under state law:

They would prevail against a

BFP, and

Do

not arise

only because the debtor is insolvent.