BUSA 2106 LEGAL ENVIRONMENT Ethics Corporate Governance Edwin K Palmer Secured Transactions SECURED TRANSACTIONS A transaction whereby a Creditor acquires and maintains an interest in collateral belonging to Debtor Types of Collateral 1 2 3 Tangible Goods Quasi Tangible notes instruments and the like Intangible MORTGAGES same song second verse Bankruptcy Chapter 7 CHAPTER 7 LIQUIDATION The Debtor s nonexempt property is sold for cash the cash is distributed to the creditors and any unpaid debts are discharged Bankruptcy Chapter 7 THE PROCEDURE Filing a petition which commences the case o o Voluntary Involuntary And post October 17 2005 filing providing o Means Test All about abuse State median income Required Chapter 13 in some instances o o o Pay Advices Tax returns Consumer Credit Counseling Bankruptcy Chapter 7 AUTOMATIC STAY The moment the petition is filed there exists an automatic stay or suspension of almost all litigation and other actions by unsecured creditors Motion to Lift the Automatic Stay filed by Secured Creditors o o The Right to Seize Secured Collateral when granted and when not Bankruptcy Chapter 7 First Meeting of Creditors 341 Meeting Trustee Proof of Claim Exempt property o o what s mine remains mine sometimes Bankruptcy Chapter 7 Discharge o After nonexempt property is liquidated and distributed the remaining unpaid claims are discharged and the Debtor gets a fresh start Non Dischargeable Debts Objections to Discharge Reaffirmation Agreements Bankruptcy Chapter 13 CHAPTER 13 WAGE EARNER INDIVIDUAL DEBT ADJUSTMENT A rehabilitation form of Bankruptcy that permits the Court to supervise the individual s plan for repayment of unpaid debt by installment Except as required under the 2005 Act voluntary only Bankruptcy Chapter 13 Individual wage earners only earn a regular income are entitled to file so long owe less than 360 475 00 in unsecured debt and less than 1 081 400 00 in secured debt File petition as in Chapter 7 File a plan of repayment in full or in part of all debts within a period of up to 5 years the length of time determined by Debtor s median family income The Plan is based upon Debtor s reasonable and necessary monthly expenses with the surplus going towards the plan of repayment A plan may be modified based on a change in Debtor s income Payments go to a Chapter 13 Trustee who is responsible for remitting payments to the creditors Bankruptcy Chapter 11 CHAPTER 11 REORGANIZATION A method of reorganizing Debtor s financial affairs under the supervision of the Bankruptcy Court Bankruptcy Chapter 11 PROCEDURE o Chapter 7 principals apply regarding the filing of petitions the first meeting of creditors the filing of proofs of claims and the automatic stay DEBTOR IN POSSESSION o In most instances the Debtor and its management team is left in place to operate the business A Trustee can be appointed by the Court upon a showing of cause such as fraud dishonesty or gross mismanagement by Debtor Bankruptcy Chapter 11 UNSECURED CREDITORS COMMITTEE o The Court will appoint this Committee which is usually composed of creditors holding the seven largest claims of unsecured debt EXECUTORY CONTRACTS o Leases and the like can be rejected by Debtor DISCLOSURE STATEMENT PLAN OF REORGANIZATION o o which must be approved by creditors and the Court and the cram down powers of the Court