Black Letter Outline on Bankruptcy and Related Law

by Nickles, Steve H.; Epstein, David G.

• ISBN13: 9780314065797
• ISBN10: 0314065792
• Edition: 2nd
• Format: Paperback
• Copyright: 2006-08-14
• Publisher: West Academic Publishing

Summary

Presents an analysis of the debtor/creditor relationship before bankruptcy, state-created alternatives to bankruptcy, bankruptcy procedure, as well as the aspects of collecting and distributing property once the bankruptcy process has begun. Discover how the debtor is protected once the matter is filed with the bankruptcy courts. Reveals alternatives to liquidation bankruptcy. A must-have for the student wishing to have a comprehensive and insightful analysis of bankruptcy and creditor rights.

Table of Contents

Capsule Summary	1	(56)
Perspective	57	(5)
Extra Judicial Collection Devices
Common Law Theories and Limitations	62	(1)
Defamation	62	(1)
Invasion of Privacy	62	(1)
Public Disclosure of Private Facts	62	(1)
Wrongful Intrusion on Solitude	63	(1)
Emotional Distress	63	(1)
Federal Fair Debt Collection Practices Act (FDCPA)	63	(2)
Scope	63	(1)
Meaning of Consumer Debt	64	(1)
Meaning of ``Debt Collector''	64	(1)
Limits on Debt Collectors	64	(1)
Contacting Third Parties	64	(1)
Contacting the Debtor	64	(1)
Verifying the Debt	65	(1)
Unfair Conduct	65	(1)
Remedies	65	(1)
Review Questions	65	(3)
Judicial Debt Collection
Exempt Property	68	(3)
Personal Property	69	(1)
Real Property	69	(1)
Procedure	69	(1)
Limits on Exemptions	70	(1)
Federal Court	70	(1)
Federal Law	70	(1)
Federal Exemptions	70	(1)
Restrictions on Garnishment	70	(1)
Amount	71	(1)
Loss of Employment	71	(1)
Relation to State Law	71	(1)
Prejudgment Remedies	71	(13)
Attachment	72	(1)
Origin and Purpose	72	(1)
Limits on Attachment	72	(1)
Kind of Action	72	(1)
Grounds Necessary	73	(1)
Bond Required	73	(1)
Due Process	73	(1)
Procedure for Attachment	73	(1)
Levy	74	(1)
Advantages of Attachment	74	(1)
Security	74	(1)
Priority	75	(1)
Jurisdiction	75	(1)
Leverage	76	(1)
Hazards of Attachment	76	(1)
Fees	76	(1)
Liability for Wrongful Attachment	76	(1)
Bankruptcy of the Debtor	77	(1)
Terminating an Attachment	77	(1)
Prejudgment Garnishment	77	(1)
How It Works	77	(1)
Relation to Attachment	78	(1)
Replevin	79	(1)
Nature of the Remedy	79	(1)
Limited Availability	79	(1)
Receivership	80	(1)
Nature of the Remedy	80	(1)
When Receiver Appointed	80	(1)
Powers of Receiver	81	(1)
Effect on Other Creditors	81	(1)
No New Lien	81	(1)
Other Creditors Stayed	82	(1)
Constitutional Due Process Limitations on Prejudgment Remedies	82	(1)
The Cases	82	(1)
Sniadach	82	(1)
Fuentes	82	(1)
Mitchell	83	(1)
North Georgia	83	(1)
Doehr	84	(1)
A Synthesis of the Cases	84	(1)
Obtaining a Judgment	84	(1)
Postjudgment Collection Concerns	84	(15)
Judgment Liens	84	(1)
Source of Law	85	(1)
Mechanics of Obtaining a Judgment Lien	85	(1)
Same State	85	(1)
Federal Court	85	(1)
Different States	86	(1)
Scope of the Judgment Lien	86	(1)
Real Property	86	(1)
After-Acquired Property	86	(1)
Enforcement of Judgment Lien	87	(1)
Duration of Judgment Lien	88	(1)
Execution	88	(1)
Nature of the Remedy	88	(1)
Lien	89	(1)
Procedure	89	(1)
Issuance	89	(1)
Levy	89	(1)
Sale	90	(1)
Chart Comparing of Postjudgment Liens on the Debtor's Real Property With Postjudgment Liens on the Debtor's Personal Property	91	(1)
Creditor's Bill	92	(1)
Nature of the Remedy	92	(1)
Reach of the Remedy and Lien	92	(1)
Possible Uses	92	(1)
Limitations	93	(1)
Supplementary Proceedings	93	(1)
History	93	(1)
How Used	94	(1)
Not Used Where Property Transferred	94	(1)
Execution Sales	95	(1)
Role of Execution Sales	95	(1)
Type of Sale	95	(1)
Insuring Fair Sale	95	(1)
Appraisal Statutes	95	(1)
Redemption	95	(1)
Judicial Review	95	(1)
Priority of Purchasers at Sale	96	(1)
General Rule: Caveat Emptor	96	(1)
Exceptions for Void Sale	96	(1)
Garnishment	97	(1)
Role of the Remedy	97	(1)
Parties to the Proceeding	97	(1)
Procedure	97	(1)
Lien	98	(1)
Review Questions	99	(5)
Fraudulent Transfers
What Is Fraudulent Transfer Law?	104	(2)
Statute of 13 Elizabeth	104	(1)
``Badges of Fraud''	104	(1)
Early Common Law: Twyne's Case	104	(1)
Acceptance by the States	105	(1)
Preference Is Not a Badge of Fraud	105	(1)
Modern Uniform Laws	106	(1)
UFCA	106	(1)
UFTA	106	(1)
Which Transfers Are Fraudulent Transfers?	106	(2)
Actual Fraud	106	(1)
Constructive Fraud	107	(1)
Insolvency	107	(1)
Reasonable Equivalent Value	107	(1)
Liens	107	(1)
Preferring an Insider	108	(1)
Fraudulent Obligations Are Also Covered	108	(1)
What Are the Consequences of Determining That a Transaction Is a Fraudulent Transfer?	108	(3)
Who Has a Remedy?	109	(1)
Not the Debtor	109	(1)
Only Some Creditors	109	(1)
What Are the Remedies?	110	(1)
Getting the Property That was Transferred by Voiding the Transfer	110	(1)
Getting Money Instead	110	(1)
Against Whom Can a Recovery Be Had?	111	(1)
Looking Back: Fraudulent Transfer and Garnishment	111	(1)
Looking Ahead: Fraudulent Transfer Law and Bankruptcy	111	(1)
Review Questions	112	(3)
Creditors with Special Rights
Consensual Liens	115	(8)
Article 9 Security Interests	116	(1)
Terminology of Article 9	116	(1)
Creation and Attachment	117	(1)
Perfection	117	(1)
Filing	117	(1)
Organization of Article 9	117	(1)
Section 9-317	117	(1)
Part 6 of Article 9	118	(1)
Meaning of Default	118	(1)
Rights Upon Default	118	(1)
Ignore the Security Interest	119	(1)
Notify Account Debtors	119	(1)
Repossess and Sell the Collateral	119	(3)
Mortgages	122	(1)
Redemption	122	(1)
Strict Foreclosure	122	(1)
Sale	122	(1)
Judicial Sale	122	(1)
Private Sale	123	(1)
Liens by Operation of Law	123	(2)
Common Law Liens	123	(1)
Specific Versus General	124	(1)
Enforcement by Possession	124	(1)
Effect of Loss of Possession	124	(1)
Equitable Liens	125	(1)
State Statutory Liens	125	(1)
Federal Claims	126	(11)
Federal Priority Provision	126	(1)
When It Applies	127	(1)
How It Applies	127	(1)
Affect on Liens	127	(1)
Choatenes	128	(1)
Federal Tax Lien	128	(1)
When Does the Federal Tax Lien Arise?	128	(1)
Time of Assessment	129	(1)
Notice	129	(1)
Relation Back	129	(1)
No Filing Required as Against the Debtor	130	(1)
What Property is Covered by a Federal Tax Lien?	130	(1)
After-Acquired Property	130	(1)
Exempt Property	130	(1)
How Can the Tax Lien be Enforced?	130	(1)
Levy and Sale	130	(1)
Notice and Right to Hearing	130	(1)
What Are the Rights of a Third Party Who Buys Property From the Taxpayer After the Tax Lien Arises?	131	(1)
Sale Before Assessment	131	(1)
Sale Before Filing	131	(1)
Sale After Filing	132	(1)
What Are the Rights of the Taxpayer's Other Creditors?	132	(1)
Choate Liens Win	132	(1)
Unfiled Tax Liens Lose	133	(1)
Security Interest	133	(1)
Lien Creditor	134	(1)
Relation to Choateness	134	(1)
Examples	135	(1)
Circuity of Priority Problems	136	(1)
Other Federal Claims	136	(1)
Setoff	137	(1)
Recoupment	138	(1)
Review Questions	138	(4)
Debtor's State Law Remedies A/K/A Collective Creditor Action
Assignments for the Benefit of Creditors	142	(4)
Nature of the Remedy	142	(1)
Assignee's Role	142	(1)
Assignee's Duties	142	(1)
Relation to Fraudulent Conveyance Law	143	(1)
Assignment for Creditors Not Fraudulent Per Se	143	(1)
Effect of Reserving Some Interest	143	(1)
Partial Assignment	143	(1)
No Discharge	144	(1)
Preferential Payments	144	(1)
Statutory Regulation	144	(1)
Recording	144	(1)
Prohibiting Preferences	145	(1)
Avoiding Powers	145	(1)
Relation to Bankruptcy	145	(1)
Workouts A/K/A Composition and Extension	146	(3)
Nature of the Remedy	146	(1)
Governed by Contract Law	146	(1)
Why Creditors Reluctant to Participate	146	(1)
Effect on Non-Participating Creditors	147	(1)
Preferring Some Creditors	147	(1)
Compared to Bankruptcy	148	(1)
Why Workout Rather Than Chapter 11	148	(1)
Why Chapter 11 Rather Than Workout	148	(1)
Compared to Assignment for Benefit of Creditors	148	(1)
Review Questions	149	(3)
Bankruptcy: An Overview
Differences Between Bankruptcy and State Law	152	(1)
The Law of Bankruptcy	153	(2)
The Bankruptcy Code	153	(1)
Bankruptcy Rules of Procedure and Forms	154	(1)
Role of State Law	154	(1)
Forms of Bankruptcy Relief	155	(1)
Liquidation	155	(1)
Reorganization	156	(1)
Bankruptcy Courts and Bankruptcy Judges	156	(2)
Under the Bankruptcy Act of 1898	156	(1)
Under the Present Law	157	(1)
Bankruptcy Court Part of District Court	157	(1)
Grant of Jurisdiction Under § 1334	157	(1)
Role of Bankruptcy Judge Under § 157	158	(1)
Trustees	158	(2)
Chapter 7 Cases	158	(1)
Chapter 13 Cases	159	(1)
Chapter 11 Cases	159	(1)
United States Trustees	160	(1)
Review Questions	160	(4)
Commencement, Conversion, and Dismissal of a Bankruptcy Case
Voluntary Cases	164	(3)
Who Can File	164	(1)
By Chapter	164	(1)
Chapter 7	164	(1)
Chapter 11	164	(1)
Chapter 13	165	(1)
Debts Excluded from the Debt Limit	165	(1)
Partly Secured Debts	165	(1)
Global Limitation on Individuals in Any Chapter	166	(1)
Other Filing Issues	166	(1)
Insolvency Not Required	166	(1)
Joint Filing	166	(1)
Frequent Filing	166	(1)
Filing Fee	166	(1)
Commencement	167	(1)
Involuntary Cases	167	(2)
Limitations on Involuntary Petitions	167	(1)
Effect of Filing an Involuntary Petition	167	(1)
Grounds for Relief	167	(1)
Debtor Not Paying Debts	167	(1)
Receiver or the Like Having Taken Possession of Debtor's Property	168	(1)
What Happens During the Gap Period Between Filing and Order of Relief	168	(1)
Court May Appoint Interim Trustee	168	(1)
If No Interim Trustee Appointed	168	(1)
Debtor's Remedies if Petition Dismissed	168	(1)
Foreign Debtors	169	(1)
Commence a Regular Case	169	(1)
Commence an Ancillary Case	169	(1)
Conversion of Cases	169	(1)
Dismissal	169	(5)
Chapter 7 Cases	170	(1)
Section 707(a)---``For Cause''	170	(1)
Section 707(b)---``Abuse''	170	(1)
Three Alternative Tests	170	(1)
When the Means Test Does Not Apply	170	(1)
When the Means Test Does Apply	171	(1)
If the debtor fails the test	172	(1)
If the debtor passes the test	172	(1)
Section 707(c)(3)---Crime Victim	173	(1)
Chapter 11 Cases	173	(1)
Chapter 13 Cases	173	(1)
Foreign Bankruptcy Cases	173	(1)
Review Questions	174	(2)
Stay of Collection Actions and Acts
Time Stay Arises	176	(1)
Scope of the Stay	177	(2)
Section 362	177	(1)
Litigation	177	(1)
Informal Collection Efforts	177	(1)
Secured Creditors	177	(1)
Exceptions	177	(1)
Third Parties Not Protected	178	(1)
Section 1301	178	(1)
Section 105	178	(1)
Not Automatic	178	(1)
Not Limited by Other Restrictions	179	(1)
Termination of the Stay	179	(1)
With Respect to Particular Property	179	(1)
Otherwise and Generally	179	(1)
Frequent Filings	180	(1)
Relief From the Stay	180	(6)
Section 362(d)(1)	180	(1)
``Cause'' In General	180	(1)
``Lack of Adequate Protection'' in Particular	180	(1)
Party in Interest	181	(1)
What Is Protected	181	(1)
Loss in Value Through Depreciation	181	(1)
Not Lost Opportunity	181	(1)
How Is It Protected	182	(1)
Payments	182	(1)
Liens	182	(1)
``Indubitable Equivalent''	183	(1)
When Adequate Protection Is Inadequate	183	(1)
Section 362(d)(2)	184	(1)
No Equity	184	(1)
Property Not Necessary to Effective Reorganization	184	(1)
Not Necessary	184	(1)
Effective Reorganization	185	(1)
Section 362(d)(3)	185	(1)
Meaning of Debt Limit ``Single Asset Real Estate''	185	(1)
Basis for Relief	185	(1)
Relationship of Section 362(d) Subsections	186	(1)
Burden of Proof in Section 362(d) Litigation	186	(1)
Consequences of Violating the Stay	186	(3)
Legal Effect of Conduct in Violation of the Stay: Void Ab Initio	186	(1)
Damages for Violating the Stay	187	(1)
Section 362(k)	187	(1)
Who is the Plaintiff?	187	(1)
Who is the Defendant?	187	(1)
What is the Wrong?	187	(1)
What are the Damages?	187	(1)
Immunity from Liability for Damages	188	(1)
Creditors Without Proper Notice	188	(1)
Sovereign Immunity	188	(1)
Review Questions	189	(2)
Property of the Estate
Why Is Property of the Estate an Important Concept?	191	(2)
Chapter 7 Cases	191	(1)
Reorganization Cases	192	(1)
Supervision of Property in Chapter 11 and 12 Cases	192	(1)
Supervision of Property in Chapter 13 Cases	192	(1)
Basis for Determining Dividends in Chapters 11, 12, and 13	193	(1)
Other Importance of the Concept	193	(1)
What Does Property of the Estate Include?	193	(4)
What Is Included in the Phrase ``Interests of the Debtor in Property as of the Commencement of the Case''?	193	(1)
Section 541(a)(1)	193	(1)
What ``All. . .Interests'' Includes	194	(1)
Limited Interests	194	(1)
Generally, Not Pre-Petition Interests	194	(1)
What Else Is Included in Property of the Estate?	195	(1)
``Any interest in property that the trustee recovers,'' Section 541(a)(3)	195	(1)
``Proceeds, product, offspring, rents or profits of or from property of the estate,'' Section 541(a)(6)	195	(1)
``Earnings from services'' and Other Property That the Debtor Acquires After the Filing of a Chapter 11 or Chapter 13 Petition, Sections 1115 and 1306	196	(1)
Certain Other After-Acquired Property	196	(1)
What Is Excluded From Property of the Estate?	196	(1)
Inalienable Trusts	196	(1)
Education Accounts	196	(1)
Exempt Property	197	(1)
Review Questions	197	(3)
Exemptions
What Property Is Exempt?	200	(3)
Debtor's Choice	200	(1)
Section 522(b)(3)---Property Exempt Under State Law and Federal Law	200	(1)
State-law exemptions	200	(1)
Tenancy-by-the-Entirety Property	200	(1)
Non-Bankruptcy Federal Exemptions	200	(1)
Retirement Funds	201	(1)
Section 522(b)(2)---Property Exempt under Section 522(d)	201	(1)
Choice of Law	201	(1)
Waivers of Exemptions	202	(1)
Timely Objecting to Exemptions	202	(1)
Pre-Petition Conversions of Property---Bankruptcy Estate ``Planning''	202	(1)
What Is the Significance in Bankruptcy of Exempt Property?	203	(4)
General	203	(1)
Section 522(f)	203	(1)
Judicial Liens	204	(1)
Consensual Liens	205	(1)
When 522(f)(1)(B) Applies to Such Liens	205	(1)
When 522(f)(1)(B) Does Not Apply	205	(1)
Does Not Apply to Purchase Money Liens	205	(1)
Does Not Apply to Possessory Liens	205	(1)
Does Not Apply to Usually Important Stuff	205	(1)
Further Limit---Section 522(f)(3)	206	(1)
Section 722	206	(1)
Review Questions	207	(3)
Avoidance of Prebankruptcy Transfers
Basic Issues	210	(2)
Transfer Means Voluntary and Involuntary	210	(1)
When Avoidance Is an Issue	211	(1)
Procedure	211	(1)
What Are the Consequences of Avoiding a Transfer?	212	(2)
Recovering Transferred Interest for the Estate	212	(1)
Affects Ammount of Claim	212	(1)
Affect on Transfer of Interest for Security	213	(1)
Recovering Value	213	(1)
From Initial Transferee	213	(1)
From Later Transferees	214	(1)
Preferences	214	(16)
Elements of a Preference	214	(1)
``Transfer of an Interest of the Debtor in Property''	215	(1)
Transfers by Other People Not Preferences	215	(1)
Earmarking Doctrine	215	(1)
``Transfer ... Made Within 90 Days Before ...''	216	(1)
And Perfection	216	(1)
And Insiders	216	(1)
Preferential Effect	217	(1)
Applying Section 547(b)	217	(2)
Indirect Preferences	219	(1)
Important When Transferee Insolvent	220	(1)
Important When Actual Transfer Not Avoidable	220	(1)
Levit Case	220	(1)
Amendment to Section 550 Overrules Deprizio	221	(1)
Newer Amendment Finishes the Job	221	(1)
Exceptions (Section 547(c))	222	(1)
Contemporaneous New Value	222	(1)
Ordinary Course Payments	222	(1)
Enabling Loans	223	(1)
Subsequent Credit	224	(1)
Floating Liens	224	(1)
How After-Acquired Interest Is a Preference	225	(1)
How 547(c)(5) Protects the After-Acquired Interest	226	(1)
Two-Step Test	226	(1)
Applications of 547(c)(5)	226	(2)
Statutory Liens	228	(1)
Payment of Domestic Obligations	229	(1)
Payment of Consumer Debts	229	(1)
Payment of Debts by Non-Consumer	229	(1)
Setoffs	230	(5)
General Rules	230	(1)
Under State Law	230	(1)
Right of Setoff Generally Preserved in Bankruptcy	230	(1)
Exceptions	231	(1)
``Mutual Debt''	231	(1)
``Arose Before the Commencement of the Case''	231	(1)
``Disallowed,'' Section 553(a)(1)	231	(1)
``Acquired'' Claims, Section 553(a)(2)	231	(1)
Build-ups, Section 553(a)(3)	232	(1)
Improvement in Position, Section 553(b)	232	(1)
Applications	233	(1)
Postpetition Setoffs	234	(1)
Automatic Stay Applies to Setoffs	234	(1)
``Recoupment' Treated Differently	234	(1)
Fraudulent Transfers and Obligations	235	(7)
Section 548	235	(1)
Similar to State Law	235	(1)
Actual Fraud	235	(1)
Constructive Fraud	236	(1)
Applied to Common Business Transactions	236	(1)
Foreclosure Sales	236	(1)
Intercorporate Guarantees	237	(1)
Leveraged Buyouts	238	(1)
Remember Insolvency	238	(1)
Comparison of Fraudulent Transfers and Preferential Transfers	238	(1)
Comparison of Section 548 and State Law	239	(1)
No Requirement of Actual Unpaid Creditors	239	(1)
One--Year Reach-Back Period	239	(1)
Exempt Property	239	(1)
No ``Good Faith'' Requirement	240	(1)
Section 544(b)	240	(1)
Incorporates State Law	240	(1)
Effect of Avoidance Enhanced in Bankruptcy	241	(1)
Chart Comparing of Sections 548 and 544(b)	241	(1)
Transfers Not Recorded or Otherwise Perfected	242	(5)
Section 544(a) [a/k/a ``Strong Arm Clause'']	243	(1)
Requirements	243	(1)
Examples	243	(3)
General Rules for Using 544(a)	246	(1)
Section 545(2)	246	(1)
Transfers Not Timely Recorded or Otherwise Perfected	247	(6)
Section 547(e)	247	(1)
``Deeming'' Time of Perfection as Time of Transfer-Section 547(e)	247	(2)
Grace Period	249	(1)
Examples	249	(2)
Section 548(d)	251	(1)
Section 544(b) [Not]	252	(1)
Landlords' Liens	253	(1)
Disguised Priorities	253	(1)
Seller's Reclamation and Return Rights	254	(3)
Rights Granted by State Law	254	(1)
Effect of Bankruptcy Law on State--Law Rights	254	(1)
Effect of Debtor's Transfer of Rights in Goods	255	(1)
Priority Claim	256	(1)
Bankruptcy Right of Return	256	(1)
Review Questions	257	(2)
Postpetition Transfers
When Do Postbankruptcy Transfers Happen?	259	(1)
How Does a Postbankruptcy Transfer Happen?	260	(1)
How Does Section 549 Affect Postbankruptcy Transfers of Property of the Estate by the Debtor?	261	(2)
Authorized Transfers	261	(1)
Gap Transfers	261	(1)
Recorded Real Estate Transfers	262	(1)
How Does Section 542 Affect Postbankruptcy Transfers of Property of the Estate by Third Parties?	263	(1)
Review Questions	263	(3)
Effect of Bankruptcy on Secured Claims
What Is a Secured Claim?	266	(2)
Meaning	266	(1)
Valuation	267	(1)
The Rash Case---Replacement Value	267	(1)
Foreclosure Value Sometimes Used	267	(1)
Invalidation of Liens	268	(1)
What Can Happen to Secured Claims During Bankruptcy?	268	(5)
Delay in Realizing on Collateral	269	(1)
Debtor's Use, Lease or Sale of Collateral	269	(1)
Nonaccrual of Interest	269	(1)
Loss of Priority	270	(1)
Limitations on Floating Liens	270	(1)
Section 552(a) Sinks Floating Liens	270	(1)
Except for Proceeds	271	(1)
Return of Repossessed Property	272	(1)
Return What?	272	(1)
Whiting Pools Case	272	(1)
Effect of Discharge on Secured Claims	272	(1)
Satisfaction of Secured Claims	273	(7)
Recovery of Collateral	273	(1)
Payment of Amount Equal to the Value of the Collateral in Chapter 7 and Chapter 11 Cases	274	(1)
Chapter 7	274	(1)
Payment from Trustee's Sale	274	(1)
Payment from Postpetition Money	274	(1)
Reaffirmation	275	(1)
Redemption	275	(1)
Comparison of Sections 524 and 722	276	(1)
Chapters 11 and 13	276	(1)
Cram Down Explained	276	(1)
Limitations on Cram Down	277	(1)
Value of the Collateral	277	(1)
Present Value of Plan Distributions	278	(1)
Distinguish Paying Interest on Over-Secured Claims	278	(1)
Comparison of Paying Interest on Over-Secured Claims and Calculating Cram Down Interest	279	(1)
Payment of the Debt in Full in Chapter 13 Cases and Chapter 11 Cases With Individual Debtors	279	(1)
Chapter 13 Differences	279	(1)
Chapter 11 Comparison	280	(1)
Postponement of Tax Liens in Chapter 7 Cases	280	(1)
If No Valid Tax Lien, Then Section 507	280	(1)
If Valid Lien in Chapter 7, Then Section 724	281	(1)
Review Questions	281	(3)
Claims
Why Is ``Claim'' an Important Bankruptcy Concept?	284	(1)
What Is a Claim? (and, Who Cares?)	284	(1)
What Is an Unsecured Claim?	285	(1)
Collection of Unsecured Claims From the Debtor	286	(1)
What Property Is Distributed to Holders of Unsecured Claims?	287	(1)
What Property Is Distributed to Holders of Unsecured Claims in Chapter 7 Cases?	287	(1)
What Property Is Distributed to Holders of Unsecured Claims in Chapter 12, Chapter 13, and Individual Chapter 11 Cases?	287	(1)
What Property Is Distributed to Holders of Unsecured Claims in Other Chapter 11 Cases?	288	(1)
Which Holders of Unsecured Claims Are Eligible to Participate in the Bankruptcy Distribution?	288	(6)
Proof of Claim	288	(1)
Bankruptcy Rules Govern Form	289	(1)
Debtor Filing for Creditors	289	(1)
Allowance	289	(1)
Grounds for Disallowance in 502(b) and 502(d)	290	(2)
Contingent Claims and 502(c) and 502(e)	292	(1)
Time of Claim	293	(1)
What Is the Order of Distribution?	294	(6)
Treatment of Priority Claims in 7	294	(2)
Treatment of Priority Claims in 11, 12, 13	296	(1)
Section 507 Treatment of Priorities	296	(1)
Domestic Support Obligations	296	(1)
Administrative Expenses	296	(1)
Ordinary--Course Claims in Involuntary Cases	297	(1)
Wage Claims	297	(1)
Employee Benefit Plans	297	(1)
Farmers and Fishermen	298	(1)
Consumer Deposits	298	(1)
Tax Claims	298	(1)
Depository Institutions	299	(1)
DUI or FUI	299	(1)
Section 510 Treatment of Subordination	299	(1)
Classification of Claims	300	(1)
Review Questions	300	(4)
Leases and Executory Contracts
Overview	304	(3)
Hybrid Nature of Lease and Executory Contract	304	(1)
Bankruptcy Provisions	304	(1)
Different Ways of Treating Lease or Executory Contract	305	(1)
Debtor Limited in Changing Lease or Executory Contract	305	(1)
No Choice to Modify as of Right	306	(1)
Power to Persuade	306	(1)
Summary	306	(1)
Effect of Rejection, Assumption, Assignment	307	(1)
If Lease Rejected	307	(1)
If Lease Assumed	307	(1)
If Lease Assigned	308	(1)
Procedure for Rejection or Assumption	308	(2)
Chapter 7 Cases (Other Than Nonresidential Real Property Leases)	308	(1)
Chapters 11 and 13 (Other Than Nonresidential Real Property Leases)	309	(1)
Nonresidential Real Property Leases in Chapter 7, 11, and 13 Cases	309	(1)
The Gap Period	310	(1)
Nondebtor's Performance	310	(1)
Debtor's Performance	310	(1)
Limitations on the Effect of Rejection of a Lease or Executory Contract	311	(1)
Collective Bargaining Contracts	312	(1)
Employee Benefit Contracts	312	(1)
Limitations on Assumption and Assignment	312	(4)
Contract Limitations	312	(1)
Proceeds of Assignment of Lease	313	(1)
Leases and Executory Contracts That Cannot Be Assumed or Assumed and Assigned	314	(1)
Lease Terminated Before Bankruptcy	314	(1)
Loan Commitment	314	(1)
Contracts Not Assignable Under Applicable Law	314	(1)
Requirements for Assumption and Assignment	315	(1)
Section 365(b) Applies if Default	315	(1)
Requirements	315	(1)
``Adequate Assurance''	315	(1)
Definition of Executory Contract	316	(1)
Review Questions	316	(4)
Discharge:
Which Debtors Receive a Discharge?	320	(7)
Chapter 7	320	(1)
Substantive Grounds for Withholding a Chapter 7 Discharge	320	(1)
Not an Individual	320	(1)
Dishonesty	321	(1)
Fraudulent Transfers	321	(1)
Failing to Keep Records	321	(1)
Withholding Information	321	(1)
Failing to Explain Loss of Assets	322	(1)
Refusing to Testify	322	(1)
Conduct Relating to Another Bankruptcy Case	322	(1)
Earlier Discharge	322	(1)
Measuring the Time Periods	323	(1)
Limits on the Limit	323	(1)
Waiver of Discharge	323	(1)
New Grounds Added in 2005	323	(1)
Procedure for Objecting to a Chapter 7 Discharge	324	(1)
Complaint	324	(1)
Trial	324	(1)
Post-Discharge Hearing	324	(1)
Chapter 11 Cases: Business Entity Debtors	324	(1)
Confirmation Operates as Discharge	324	(1)
Grounds for Denying	325	(1)
Applying Section 1141(d)(3)	325	(1)
Chapter 13	325	(1)
Discharge Depends	325	(1)
Completing Plan	326	(1)
Experiencing Hardship	326	(1)
Reasons for Denying Discharge	326	(1)
Which Obligations Are Affected by a Bankruptcy Discharge?	327	(7)
Chapter 7	327	(1)
Taxes	328	(1)
Fraudulent Obligations	328	(1)
False Statements and False Pretences---523(a)(2)(A) and (B)	329	(1)
Comparison of Section 523(a)(2)(A) and (B)	329	(1)
Proof under 523(a)(2)(B)	329	(1)
Reliance under 523(a)(2)(A)	329	(1)
Luxuries---Section 523(a)(2)(C)	329	(1)
Risk of Asserting Section 523(a)(2) Objection	330	(1)
Unscheduled Debts	330	(1)
Fraud as Fiduciary	331	(1)
Domestic Obligations	331	(1)
Willful and Malicious Injury---Section 523(a)(6)	331	(1)
The Kawaauhau Case	331	(1)
Relation to Other Provisions	332	(1)
Fines Owed Government	332	(1)
Student Loans	332	(1)
Test for Hardship	332	(1)
Partial Discharge	332	(1)
Other Exceptions to Discharge	333	(1)
Chapter 11	333	(1)
Chapter 13	333	(1)
Discharge Under 1328(b)	333	(1)
Discharge Under 1328(a)	334	(1)
Procedure for Asserting an Exception to Discharge	334	(1)
Effect of a Discharge	334	(1)
What a Discharge Does	334	(1)
What a Discharge Does Not Do	335	(1)
No Protection of Co-Debtors	335	(1)
No Effect on Liens	335	(1)
Reaffirmation	335	(2)
What Is a Reaffirmation Agreement?	335	(1)
Why Make Such an Agreement?	336	(1)
Keep Encumbered Property	336	(1)
Protect Co--Debtors	336	(1)
Avoid Litigation About Discharge	336	(1)
Preserve Relationship	336	(1)
Bankruptcy Law Issues	337	(1)
Effect of Stay	337	(1)
Limits on Enforceability	337	(1)
Protection From Discriminatory Treatment	337	(1)
Review Questions	338	(4)
Chapter 13 Cases
Commencement of the Case	342	(2)
Eligibility	342	(1)
Effects of 2005 Amendments to Code	343	(1)
Chapter 7 Means Testing	343	(1)
Changes Approach to Chapter 13	343	(1)
Filing Begins the Case	343	(1)
Automatic Stay	344	(1)
Co-Debtor Stay	344	(1)
Requirements of the Stay	344	(1)
Termination of the Stay	344	(1)
Relief From the Stay	344	(1)
Co-Debtor Received the Consideration	344	(1)
Plan Will Not Pay Claim	345	(1)
Irreparable Harm	345	(1)
Trustees	345	(2)
Who Works as Trustee	345	(1)
Duties	345	(1)
Avoidance---Maybe, Maybe Not	346	(1)
Operating Business---Not	346	(1)
Exact Role Varies	346	(1)
Standard Roles With Respect to the Plan	347	(1)
Preparation of the Chapter 13 Plan	347	(2)
Contents of the Plan---Section 1322	347	(1)
What the Plan Must Provide (Section 1322(a))	347	(1)
What the Plan May Provide (Section 1322(b))	348	(1)
Home Mortgages	348	(1)
Funding the Plan	349	(1)
Length of Plan	349	(1)
Confirmation of the Chapter 13 Plan	349	(4)
Filing Fee	349	(1)
``Good Faith''	349	(2)
Adequacy of Plan Payments	351	(1)
``Best Interests of Creditors'' Test	351	(1)
``Best Efforts''	351	(1)
Secured Claims	352	(1)
Ability to Perform	352	(1)
Effects of Confirmation	352	(1)
Performance of the Plan	352	(1)
Modification	352	(1)
Cramdown (or Cram Down) of Secured Claims in Chapter 13	353	(2)
Alternatives to Cram Down	353	(1)
Agreed Upon Modifications	353	(1)
Surrender	353	(1)
Explaining Cram Down	353	(1)
Requirements of Cram Down	353	(1)
Before 2005 Amendments	354	(1)
After the 2005 Amendments	355	(1)
Treatment of Home Mortgages in Chapter 13 Plans	355	(3)
Strip Down Versus Strip Off	356	(1)
Allowed Modifications	356	(1)
Cure Default	357	(1)
Short-Term Mortgages	357	(1)
Preferring Some Claims	358	(1)
By Classifying Claims	358	(1)
Using Claim Classification to Pay Some Debts in Full	358	(1)
Cannot ``Discriminate Unfairly''	358	(1)
By Paying Long--Debt Terms Beyond the Plan	359	(1)
Discharge	359	(1)
Requirements of Discharge	359	(1)
Limits on Discharge	359	(1)
Debts Exceptions	359	(1)
Objection Based on Prior Bankruptcy	359	(1)
Hardship Discharge	360	(1)
Dismissal and Conversion	360	(1)
Dismissing or Converting to Chapter 7 Upon Debtor's Request	360	(1)
Dismissing or Converting to Chapter 7 Upon Creditor's Request	360	(1)
Converting to Chapter 11	360	(1)
Treatment of Postpetition Claims and Property When Converting to Chapter 7	361	(1)
Comparison of Chapters 7 and 13	361	(1)
Comparison of Chapters 11 and 13	362	(1)
Review Questions	363	(4)
Chapter Cases
Commencement of the Case	367	(3)
Filing the Petition	367	(1)
Consequences of Commencing a Chapter 11 Case	368	(1)
Notifying and Organizing the Creditors	368	(1)
Notice	368	(1)
Proof of Claim	368	(1)
Unsecured Creditors Committee	369	(1)
Trustee Appoints	369	(1)
Membership	369	(1)
Functions	369	(1)
First Day Orders	370	(1)
Operation of the Business	370	(12)
Who Operates the Business?	370	(1)
Debtor in Possession (DIP)	370	(1)
Trustee	371	(1)
Statutory Grounds for Appointment	371	(1)
Statutory Procedures for Appointment of Trustee	371	(1)
Statutory Duties	371	(1)
Business Considerations	371	(1)
Examiner	372	(1)
Requirements for Appointment	372	(1)
Purpose	372	(1)
Use of Encumbered Property Including Cash Collateral	372	(1)
In Bankruptcy Most Property is Subject to Liens	372	(1)
Postpetition, After-Acquired Property	373	(1)
Proceeds	373	(1)
But 362 Stay Stops Creditor From Repossessing	373	(1)
And 363 Allows DIP to Use Collateral---With Conditions	373	(1)
Adequate Protection	374	(1)
Inadequate Adequate Protection	374	(1)
Raising the Issue	375	(1)
Encumbered Property that is NOT ``Cash Collateral'	375	(1)
``Cash Collateral'' is Different	376	(1)
What Is It?	376	(1)
Use of Cash Collateral Only Upon Consent or Adequate Protection	376	(2)
Basics of Funding a Debtor in Chapter 11 Bankruptcy Cases	378	(1)
Possible Sources of Funding	378	(1)
Comparison of Use of Cash Collateral with Debtor-In-Possession Financing (a/k/a DIP Financing)	379	(1)
Obtaining Additional Unsecured Credit From Vendors in the Ordinary Course of Business	379	(1)
Obtaining Unsecured Credit Not in the Ordinary Course of Business	380	(1)
Obtaining Priority or Secured Credit	380	(1)
Obtaining Priming Secured Credit	380	(1)
Procedure for Obtaining Credit	381	(1)
Safe Harbor	381	(1)
Cross--Collateralization	381	(1)
Meaning	381	(1)
Forms	382	(1)
Case Law on the Second Form of Cross Collateralization	382	(1)
Preparation of the Chapter 11 Plan	382	(5)
Who Prepares and Files	382	(1)
Debtor's Exclusivity	382	(1)
Trustee	383	(1)
Creditors' Committee	383	(1)
Contents of the Plan	383	(1)
Funding for the Plan	384	(1)
Possible Sources of Funding	384	(1)
Using Securities	384	(1)
Selling Assets	384	(1)
Classification of Claims	385	(1)
Administrative Expense Class---Small Claims---1122(b)	385	(1)
Other Classes---``Substantially Similar'---1122(a)	385	(1)
Grouping	385	(1)
Excluding	386	(1)
Why Create Classes	386	(1)
Business Reason	386	(1)
Legal Reason	386	(1)
Single--Asset Real Estate	387	(1)
Acceptance of the Plan	387	(3)
Disclosure	387	(1)
Who Votes?	388	(1)
Double Deeming	388	(1)
Impairment of Claims	389	(1)
1111(b) Elections	389	(1)
Advantage of Section 1111(b) Election	389	(1)
Disadvantages of Section 1111(b) Election	390	(1)
Needed Majorities	390	(1)
Confirmation of the Plan	390	(8)
Standards for Confirmation	391	(1)
Plans Accepted by Every Class	391	(1)
Best Interests of Creditors	391	(1)
Priority Claims	391	(1)
Feasibility	392	(1)
Consenting Impaired Class	392	(1)
Plans Accepted by Less Than Every Class	392	(1)
Fair and Equitable	393	(1)
Secured Claims	393	(1)
Unsecured Claims	394	(2)
Equity	396	(1)
Effect of Confirmation	397	(1)
Discharge	397	(1)
Limitations	397	(1)
Comparison of Discharge in Chapter 7 and 11 Cases	398	(1)
Special Forms of Chapter 11 Cases	398	(4)
Prepackaged	398	(1)
Good News	398	(1)
Bad News	399	(1)
Small Business Cases	399	(1)
What Is a Small Business Case?	399	(1)
How Is a Small Business Case Different?	400	(1)
Single Asset Real Estate Cases	400	(1)
Meaning of Single Asset Real Estate Case	401	(1)
Automatic Stay Works Differently	401	(1)
Different Case Law	401	(1)
Individual Chapter 11 Cases	401	(1)
Review Questions	402	(4)
Allocation of Judicial Power Over Bankruptcy Matters
History	406	(3)
1898 Act	406	(1)
1978 Code	407	(1)
Marathon Pipeline Decision	408	(1)
Operation of Present Law	409	(5)
Bankruptcy Court as Part of the District Court, Section 151	409	(1)
Grants of Jurisdiction to the District Court, Section 1334(A) and 1334(B)	410	(1)
Cases	410	(1)
Proceedings	410	(1)
``Arising Under'' Title 11	410	(1)
``Arising in'' a Case Under Title 11	410	(1)
``Related to'' a Case Under Title 11	410	(1)
Role of the Bankruptcy Court, Section 157	411	(1)
Procedural Role	411	(1)
Core Versus ``Noncore''	411	(1)
District Court Right of Withdrawal	412	(1)
Abstention Under Section 1334(C)	413	(1)
Jury Trials	414	(1)
When Is There a Right?	414	(1)
When Can a Bankruptcy Judge Hold a Jury Trial?	415	(1)
Review Questions	415	(2)
APPENDICES
A. Answers to Review Questions	417	(18)
B. Practice Examination	435	(6)
C. Glossary	441	(10)
D.Table of Cases	451	(2)
E. Table of Statutes	453