Discharge

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Fraudulent transfer: Transfer a debtor made which the debtor did not receive adequate value o It could be a gift o You must first avoid the transfer Is there a debt and a payment The Discharge itself: You get a discharge (524) o Applies in all different types of bankruptcies Exceptions to discharge (524c) o Reaffirmation agreement o Under secured claims we talked about this Continuation of obligation even though there is a 524 discharge Chapter 7 Discharge (727a) o Unless the debtor is not an individual (109) o Time limit: cannot get a discharge if you commenced a case, and the new case filing is within eight years of the filing of the first Chp 11 (1141d) o Provided for under the plan o Must confirm the plan and to the extent that it has been confirmed, then you can pay your debt, and get your discharge o Problem: if you look in chapter 11; it is not one which you walk away without paying a bunch of debt (absolute priority rule- unless you pay the claims in full you cant retain your assets) o Have to be reorganizing and not liquidated Pretty limiting o Dont get it if it is dischargeable under 523, 727 Chp 13 (1328) o No long term mortgage debt discharge o Time limit: 2 years; from the discharge to the filing

Dischargability: 523(a) o Individual to certain debts o Taxes: if it is a priority claim then it is nondischargeable Return that was not filed (it could be outside 507; could not be a priority, but you never filed the return and if you dont, then it is nondischargable) o Money that was obtained based on bad act Without a statement: any kind of fraud (Ponzi schemes are the most common example) With a statement Loan applications

Davis v. Davis: Chapter 7 debtor would be denied discharge upon determination that he transferred his interest in marital home to his wife within one year of filing petition, with intent to hinder, delay or defraud creditors, notwithstanding retransfer of property to himself completed day before bankruptcy petition was filed.

Exam Review
15 questions Last one on the last page Most are 3 points each

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Not on exam Chapter 13 o Except for eligibility or something like that o The insides of doing what Hildebrand does, nope Preferences Dischargeability Over the head type of review: Jx: powers of the bankruptcy court, jurisdiction to the district court (1334), core and noncore issue o Procedural thing: what is an adversary proceding, what types of cases, how do you determine what is one, how do you determine if you should file a motion or an adversary o Related to o Arising in o Arising under Venue Eligibility (109) o Who is eligible o What type of case o Involuntary petitions and eligibility; requirements o Filing of the petition Dismissal after filing (707) o Different types of cause you can find and what Congress did in 2005 in determining what is to be dismissed or presumed abusive (this is sort of important) Means test Property of the estate o 541 o What includes property of the estate It can depend on the filing of the petition as deciding when the assets are (preferences, inheritances, etc.)

o Definition of claim and how important this is in so many areas o What about exemption provisions They arent to be included in the liquidation and will ultimately be abandoned by the trustee What does it mean for property to be exempt and for it to be abandoned What are the decisions that go into abandonment What is surrender, who is the debtor surrendering it to, what is the significance of the other concepts that relate (secured claims, reaffirmation, redemption of the obligation) Automatic Stay Provision o What is stayed and what is the impact of different actions Brought by the debtor? Brought by the creditor? o Importance of the claim here! It determines whether the stay applies If it is not a claim then the first part of the automatic stay isnt met Proof of claim process o Definition of a claim is important Is the claim going to be discharged The claimant isnt subject to the stay and wont receive distribution if it isnt a claim; and the claim is a broad definition But if it is a claim (this could be bad if there isnt any distribution), then it wont receive anything and will be discharged o Is this core to the bankruptcy? It is a determination of distribution which is what the court is supposed to do But on the other hand it requires decisions based on contract and non bankruptcy issues, in which they dont have jx otherwise except for proof of claim process Once someone files a claim they have now subjected themselves to the equitable court requirements

507 and 503 o Priority claims o 507a1: domestic support obligation; moved it ahead of general admin expenses under 503; before that alimony and stuff were way down the list o 507a1C: it has a carve out; if the trustee is appointed in a chp 7/11 case, the admin expenses of the trustee shall be paid before the claim of A and B; it is an exception Priority and caps o Wages cap o Limitation on taxes 3 years in determining this o 1) how is that claim treated during the bankruptcy Pay attn. to the question; some questions will address hat treatment under a plan, and during the bankruptcy case itself; THEY ARE DIFFERENT Secure claims are entitled to distribution UNDER A PLAN (Cramdown: provide at least as much theyd get in the liquidation, value of collateral is important, during the cramdown they must provide present value over the reasonable time fair and equitable test) Timbers vs. Cramdown

506 o a Undersecured Secured and unsecured claim o b Oversecured No unsecured claim; how much interest and how do you decide this, would they be entitled to receive payment o c Surcharge o d Stripping of the unsecured lien that Dusmet addressed Relief from the Stay for Secured Claims o 362d Four requirements

Adequate protection, no equity, reasonable possibility of plans (Timber), single asset, hinder/delay/defraud

Chp 11 o What do you do during the operation of the case What assets are available for the debtor to operate on Cash collateral 363 What constitutes it What can the court do in allowing the debtor to use funds What rights does the creditor get in adequate protection o Replacement lien on other assets How the code was created to 1) provide means for creditor to get paid but also to 2) give the debtor something to trade to entice the creditor to cooperate 552 (the debtor gets assets free and clear, accts and inventory generated post filing, those types are free and clear in creditor claim; different than what happens with state law) What you need to do to operate o Using the creditors collateral o What about situations where the debtor needs more seasonal needs or whatever Post petition debtor possession financing (364)

Requirements under 364 Unsecured credit in ordinary course of business without court approval, but beyond that you need approval This requires the creditor to give it to you Liquidation of assets Step 1 Goes back to 363

363 f Factors that exist in the sale of assets Marital property? Etc. Warranty claims? Buying assets does that mean you dont have to honor them, free and clear?

Really important!! Provides for what cash the debtor can use, but it provides for the mechanism Use of property of the estate, use and sales

Line of cases that address this Due process Nexus test that the courts have applied; we will allow it to be sold but this party should have known about the bankruptcy Sales and fees? o Process itself Need to file a plan within the timing Timing requirements Disclosure statement What is involved in the disclosure statement What you must and may put in a plan Must: classify claims (types of claims you can classify), substantially similar to be in same class; voting, impaired classification Exclusivity period of a debtor in filing Roles of the committee Small business cases vs. individual cases DIDNT DISCUSS RAILROADS Acknowledge all splits in circuits a Good faith Liquidation test Payment of priority claims How theyre treated 1129a9 Voting

o 1129

Feasibility a11 A15 as it relates to individuals get consent? One class to vote in favor; ok No gerrymandering Now youre in cramdown o Cramdown Secured creditor 3 tests Retain their lien and pay over time (present o Dont value) How do you determine present value (value of collateral how do you test this, liquidation or going concern (plan, going concern test)) Indubitable equivalent (we know this doesnt mean the sale of assets free and clear of a credit bid, Philadelphia Newspaper Rad Ex,c ant use it to override one of the other tests (allowing the sale and credit bid)) Unsecured Two tests Pay in full Satisfy absolute priority rule o You have to determine what does that mean and what is retention of assets for the debtor in satisfying that; can the debtor come up with new value as an exception to the absolute priority rule (terminate stock, create new stock, based on new value, it has to be in cash or monies worth (Alorsno sweat and equity)

Individuals: does this exception give a free ride Or is it a narrow view: it only applies to the post petition assets that the debtor earns; you can keep those o Not much because they still need to pay disposable income test o 1111b election Secured creditors can avoid the problem of the PInegate decision (pay off value of secured claim and not pay anything more on nonrecourse debt) 1) eliminates nonrecourse under state law, and make it recourse 2) give the creditor an election so that they are entitled to receive the full amt of the debt under the plan (this is a limited right because the debtor can easily deal with it litmus test present value) Stretch out debt over time so that total payments equal full amt, and that present value still equals the value of the collateral

Gives up unsecured claim, particularly as a deficiency claim (could be imp in attacking gerrymandering, voting, absolute priority rule) o LaSalle decision Absolute priority rule Both Aylors and LaSalle stopped short of saying there is an exception, but if there is one, these dont meet that test 1) aylors: there isnt money, just sweat equity 2) LaSalle: not an auction or competitive bidding to test the value of the collateral Executory contracts o Agreements between both sides to complete their operations o 365: exception: executory contracts dealing with financial debt are not deemed to be executory contracts Cannot just be assumed by filing a motion under 365

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