Exam 38: Bankruptcy

A composition would bind all of the debtor's creditors to the settlement.

In reorganization cases the creditors usually look to the debtor's property at the commencement of the bankruptcy proceeding.

The Packer Video Company files for Chapter 7 bankruptcy. Its only non-exempt asset is a piece of equipment valued at $15,000. The claims that have been approved by the trustee are as follows: (1) $2,500 in expenses of the trustee in the administration of the estate. (2) $4,000 in wages, salaries, and commissions earned by employees within ninety days before the filing of the bankruptcy petition and the cessation of the business. (3) $500 in employment taxes owed to the state. (4) Unsecured claims in the amount of $10,000. (5) A perfected security interest in the amount of $2,000 which is held by First Bank and which is secured by the item of equipment. How much money will be available to pay the general unsecured creditors who have no priority?

Within each federal district court is established a bankruptcy court staffed by bankruptcy judges.

Margaret has $3,200 cash after selling off her television, sound system, and personal computer. She has debts of $4,800 owing to the following creditors: Anna - $900 Bob's Shop - $1500 Hyatt's - $2100 Jones - $300 If they all agree to a composition, how much will Hyatt's be able to collect?

The doctrine of subordination of claims might result in two unsecured creditors getting unequal proportions of their debts paid.

Once a Chapter 13 plan has been confirmed, it may:

Able gets a judgment against Baker in state court for $50,000 on July 1. On July 15, Baker files a bankruptcy petition under Chapter 7. In this case:

The court has the sole right to accept or reject a proposed plan of reorganization under Chapter 11.

Under Chapter 7, the court will not grant the debtor a discharge if the debtor

Creditors entitled to priority are paid before:

The 1994 amendments allow the creditors to elect a trustee in a Chapter 11 proceeding if the court orders the appointment of a trustee for cause.

The various chapters of the Bankruptcy Code are the only options for resolving the conflict between creditor rights and debtor relief.

A Chapter 13 plan of reorganization may include all but which one of the following?

Edward's Excursions Inc. filed for Chapter 7 bankruptcy. It has $100,000 of assets and has the following debts outstanding: $50,000 to Arthur secured by a boat worth $25,000. $30,000 to Bradley secured by a truck worth $30,000. $20,000 to Clarence unsecured. The month before Edward's closed and filed for bankruptcy, its employees earned $10,000 for which they did not get paid. They also should have been credited with $3,000 for their pension plan. Edward's owes $4,000 in back taxes. In the process of administering the estate, the trustee paid $5,000 in attorney fees. In what order will these claims be paid?

A trustee in bankruptcy under Chapter 7 may sell the property of the debtor's estate.

Which of the following debts would be discharged in bankruptcy?

The bankruptcy definition of "insolvency" is a financial condition such that the sum of one's debts exceeds the sum of all one's property at fair valuation.

A receiver is a disinterested person appointed at the discretion of the court to manage, liquidate, and conserve assets of a debtor.

Abe has an allowed claim of $5,000 against the estate of Deborah and has a security interest in her art collection in the amount of $3,000 of the $5,000 claim.