Exam 30: Bankruptcy Law

To adjust debt and institute a repayment plan, Sven-who is not a corpo?ration, a partnership, or a family farmer or fisherman-may file a peti?tion in bankruptcy under the Bankruptcy Code's Chapter

Bankruptcy proceedings are held in state small-claims courts.

On a debtor's bankruptcy, a secured creditor cannot recover more on a debt than the value of the collateral covering the debt.

The principal duty of a trustee is to liquidate and close up the debtor's es?tate as quickly as possible.

Elmo files a petition in bankruptcy. If the court concludes that there are grounds for a finding of "substantial abuse," the court will most likely

In general, the claims of all of the creditors of an estate must be satisfied before any re?maining amounts can be given to the debtor.

Fact Pattern 30-1A Eve sells her motorcycle to her brother Floyd for $1,000. Twelve days later, Eve files for bankruptcy under Chapter 7. -Refer to Fact Pattern 30-1A. Floyd dies while riding the cycle. Eve is Floyd's only heir. With respect to the bankruptcy estate, the inheritance is

Veda believes that she needs to obtain a Chapter 13 discharge in bank?ruptcy. A Chapter 13 proceeding can be initiated by a filing of a pe?tition by

First State Bank is a secured party on a $5,000 loan to Geoff, who owns Happy Hours, a nightclub. When Geoff experiences financial difficulty, creditors other than First State Bank petition him into involuntary bankruptcy. The value of the secured collateral has substantially decreased in value. On its sale, the debt to First State Bank is reduced to $2,500. Geoff's estate consists of $100,000 in exempt assets and $2,000 in nonexempt assets. After the bankruptcy costs and back wages to Geoff's employees are paid, nothing is left for unsecured creditors. Geoff receives a discharge in bankruptcy. Later he decides to go back into business. By selling a few exempt assets and getting a small loan, he is able to buy the Idle Inn, a small, but profitable, restaurant. Geoff goes to First State Bank for the loan. The bank claims that the balance of its secured debt was not discharged in Geoff's bankruptcy. He signs an agreement to pay First State Bank the $2,500, and the bank makes a new unsecured loan to him. Is First State Bank correct that the balance of its secured debt was not discharged in bankruptcy? What is the legal effect of Geoff's agreement to pay the bank $2,500 after the discharge in bankruptcy?

Gem Jewelers files a voluntary petition for bankruptcy. In listing its as?sets, Gem in?tentionally omits certain valuable stones. After Gem is granted a discharge, Hasty Catering, one of Gem's unsecured creditors whose claims were discharged, learns of the fraud. Hasty can

Fact Pattern 30-2A Rely Credit Company loans Standard Manufacturing Company $50,000 and takes a se?curity interest in the equipment that Standard buys with the money and receives on July 1. Standard files for bankruptcy on July 12. -Refer to Fact Pattern 30-2A. If Rely perfects its security interest be?fore Standard files for bankruptcy, then Rely will be a secured credi?tor and the trustee of Standard's estate can

Almost any legal obligation of a debtor can constitute a creditor's claim.

A Chapter 11 plan is binding on confirmation and the debtor is discharged.

It is possible, on a debtor's bankruptcy, that an unsecured creditor might receive nothing to cover a debt.

Current City (CC) is a retail seller of television sets. CC sells Dhani a $5,000 large-screen, high-definition, plasma set on a retail installment security agreement in which he pays $100 down and agrees to pay the balance in equal installments. CC retains a security interest in the set, and perfects that interest by filing a financing statement centrally. Two months later, Dhani is in default on the payments to CC and is involun?tarily petitioned into bankruptcy by other creditors. Discuss CC's right to repossess the TV set and whether CC has priority over the trustee in bankruptcy to any proceeds from the disposal of the set.

Fact Pattern 30-1B In January, Jazz Dance Studio owes Kay, its musical director, $1,800 for cur?rent wages, receives $700 as a down payment for dance lessons from Lora, and pays a Music, Inc., a sheet music supplier, $1,500 of $3,000 owed. In February, the studio files for bankruptcy under Chapter 7. -Refer to Fact Pattern 30-1B. Based on the size of the studio's estate in bank?ruptcy, each of Jazz's creditors will get only 10 percent of their claims. Regarding the payment to Music, Inc., the trustee may

To adjust debt and institute a repayment plan, Q.T. Café, a small business, may file a petition in bankruptcy under the Bankruptcy Code's Chapter

The procedure and content of a Chapter 12 plan are similar to the proce?dure and content of a Chapter 13 plan.

Mabel files a petition in bankruptcy. The initial proceeding on this peti?tion will be in

Lulu joins with other creditors to force Mikhail, a debtor, into bankruptcy. One of the goals of bankruptcy law with respect to creditors is to