BUSA 2106 - LEGAL ENVIRONMENT: Ethics & Corporate Governance Edwin K. PalmerSecured TransactionsSECURED TRANSACTIONS A transaction whereby a Creditor acquires and maintains an interest in collateral belonging to Debtor. Types of Collateral:1. Tangible (Goods)2. Quasi Tangible (notes, instruments and the like)3. Intangible MORTGAGES.. same song, second verseBankruptcy – Chapter 7CHAPTER 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 7THE PROCEDURE Filing a petition, which commences the caseo Voluntaryo Involuntary ... And post October 17, 2005, filing/providing o Means Test • All about abuse • State median income• Required Chapter 13 in some instanceso Pay Adviceso Tax returnso Consumer Credit CounselingBankruptcy – Chapter 7AUTOMATIC 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 The Right to Seize Secured Collateralo .. when granted and when not?Bankruptcy – Chapter 7 First Meeting of Creditors - 341 Meeting Trustee Proof of Claim Exempt property o ... what’s mine remains mineo ... sometimesBankruptcy – 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 AgreementsBankruptcy – Chapter 13CHAPTER 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 11CHAPTER 11 REORGANIZATION A method of reorganizing Debtor’s financial affairs under the supervision of the Bankruptcy CourtBankruptcy – Chapter 11 PROCEDUREo 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 POSSESSIONo 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’ COMMITTEEo The Court will appoint this Committee which is usually composed of creditors holding the seven largest claims of unsecured debt. EXECUTORY CONTRACTSo Leases and the like can be rejected by Debtor. DISCLOSURE STATEMENT PLAN OF REORGANIZATIONo … which must be approved by creditors and the Court. o … and the “cram down” powers of the