What are the 6 types of bankruptcy?
- Chapter 7 - Liquidation
- Chapter 9 - municipal debt adjustment
- Chapter 11 - Reorganzation
- Chapter 13 - adjustments of debts of individuals with regular income
- Chapter 15 - ancillary and other cross border cases
What is Chapter 7 bankruptcy?
Liquidation - Trustee is appointed and if the debtor is a business, ceases to operate (Dissolved)
- If married, may file jointly
- If individual –> must pass means an abuse test (if income too high– converted to chapter 13)
Define Chapter 11 bankruptcy
Reorganization.
No Trustee required
Debtor remains in possession of his or her assets and a plan of reorganization is adopted.
Business continues, assets are not liquidation, creditors are paid to the extent possible
Define chapter 13 bankruptcy
Debt adjustment.
Trustee appointed, debtor or creditors come up with a 3-5 year repayment plan
Chapter 15 bankruptcy
Cross-border case. Commenced by a “foreign representative” filing a petition for recognition
Can a chapter 7 case be dismissed?
Yes
Define a debtor
person who lives or has place of business in the USA is eligible
Debtor who is under chapter 7 may also be chapter 11
Under Chapter 7 - what are the objections to discharge? (4)
aka reasons to deny a discharge of all debts -
- Debtor is not an individual
- Fraudulent transfers of property
- failed to keep adequate books and records
- received a prior discharge within 8 year
Under Chapter 7 - what are the exceptions to discharge? (6)
Debts arising from:
- Willful and malicious injury
- Alimony
- Fraud
- Taxes
- Educational loans
- Debts
Under chapter 7 - what are the 3 categories of distribution of debtors estate?
Secured claimants- paid first to the extent of the value of the collateral
Priority claimants - paid next by category
General creditors - Paid last
Under chapter 7 - what are the priority claimants( 9)
Support obligations to spouse and children
Admin expenses
Gap claims (claims that accrued after a involuntary petition is filed and before an order for relief is entered)
Wage claims per employee up to $13,650 within 180 days of bankruptcy
EBP within 180 days prior to bankruptcy
Grain farmers & claims against storage/ processing facilities
Consumer deposits up to $3k
Tax claims
Injury (personal) claims from intoxicated rivers
Who is liable in workers compensation?
Employers are Strictly liable regardless of fault as long as employees injury occurred while acting in the scope of employment
What are the 6 different types of entities?
- Sole proprietorship
- General Partnership/ Joint Venture
- Limited liability partnership
- Limited partnership
- LLC
- Corporation
Who is liable in workers compensation?
Employers are Strictly liable regardless of fault as long as employees injury occurred while acting in the scope of employment
What are the 6 different types of entities?
- Sole proprietorship
- General Partnership/ Joint Venture
- Limited liability partnership
- Limited partnership
- LLC
- Corporation
Summary of sole proprietor ship
- not considered legal entity separate form owner
- Unlimited liability to the single owner
- profit and losses on owners Schedule C
- no papers filed with the state to form
What is the key difference between a joint venture and a general partnership?
Joint is formed for a single transaction or project(s)
When is a partnership liquidated and what is the order of payouts?
Partnership is liquidated when it ceases to do a business
Pay out order:
- Creditors (partners if creditors)
- partners (first to return contributions then on account of profits)
- Not enough to pay back –> shared equally
Summary of Limited Liability Partnership
Partners are generally not liable for contracts of the partnership or acts of fellow partners, employees, or agents
- partners are liable for own negligence
- formation requires filing with state it is operating
Summary of LLC
- run like corporation or partnership and taxed like a partnership
- member managed or manger managed
- owners (members) are not personally liable
- file with state, cant transfer ownership without consent of other members
Under chapter 7 - what debt is discharged?
Secure claims are discharged
Under Revised model business corporation act - what type of dividends is not defined as a distribution?
Stock dividends
What type of party cannot be petitioned into involuntary petition?
Farmers and nonprofit
What type of bankruptcy is a farmer unable to file under?
Chapter 9
