1/11/2018. Bankruptcy Basics JOSHUA D. GREENE SPRINGER BROWN, LLC. Introduction. I. Parties. A. Debtor. Creditor. C. Trustee. D. United States Trustee

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1 1/11/2018 Bankruptcy Basics JOSHUA D. GREENE SPRINGER BROWN, LLC Introduction I. Parties A. Debtor B. Creditor C. Trustee D. United States Trustee 1

2 1/11/2018 Hypothetical 1 You meet with new clients Johnny and Amy. Johnny operates a small business making widgets and makes $120,000 per year. Amy is a stay at home mom but teaches part time and makes $10,000 per year. They have three kids. They own their home, which is slightly underwater and have two cars which each have loans outstanding. They have $60,000 in credit card debt and $20,000 in loans for Johnny s business. They are being sued by two creditors who will likely obtain judgments soon. II. Procedure A. Petition -Consists of various schedules of assets, list of creditors and statement of financial affairs. All forms are national forms. B. Types of Bankruptcy Cases 1. Chapter 7 Liquidation (11 U.S.C. 701) -Corporations stop operating and the doors close -Trustee liquidates assets and pays creditors -Individuals must qualify based on income 2

3 1/11/2018 B. Types of Bankruptcy Cases 2. Chapter 13 Reorganization (11 U.S.C. 1301) -Only for individuals -Must be under debt limit -Trustee collects monthly payments from Debtor -Creditors cannot vote for the plan but can object B. Types of Bankruptcy Cases 3. Chapter 11 Reorganization (11 U.S.C. 1101) -Debtor acts as its own trustee, called Debtor in Possession -Debtor operates as a going concern -Creditors can vote for the plan -Creditor s Committee C. Meeting of Creditors -Typically around 30 days after the petition date. -Creditors can appear and ask questions 3

4 1/11/2018 D. Adversarial Proceedings 1. Initiated by Creditor or Trustee. Plaintiff v. Defendant 2. Governed by Rules of Civil Procedure 3. Trustees or Debtors in Possession File Avoidance Actions 4. Creditors can Request that a debt be determined nondischargeable 5. Trustees or Creditors can file objection to discharge III. Representing Debtors DUTIES WHEN REPRESENTING DEBTORS A. Chapter 7 Proceedings 1. Preparing Schedules 2. Meeting of Creditors 3. Reaffirmation Agreements 4. Lien Avoidance 5. Answering Document Requests 4

5 1/11/2018 B. Chapter 13 Cases 1. Preparing Schedules 2. Meeting of Creditors 3. Plan of Reorganization 4. Motions to Dismiss C. Chapter 11 Cases 1. Preparing Schedules 2. First Day Motions 3. Meeting of Creditors 4. Plan of Reorganization D. Adversarial Proceedings 1. Objections to Discharge 2. Objections to Dischargeability 3. Typically Separate Engagement 5

6 1/11/2018 E. Practice Pointers 1. In a bankruptcy filing, the legwork is done on the front end. 2. Deadlines, deadlines, deadlines 3. Back to Hypothetical. What type of bankruptcy should Johnny and Amy file? IV. Representing Creditors GET YOUR CLIENT PAID! A. Schedules and Creditors Meeting 1. Calendar the creditors meeting date 2. If you believe any fraudulent activity has occurred, contact the trustee 3. Get copy of petition and schedules 6

7 1/11/2018 B. Examination of Debtor 1. Federal Rule of Bankruptcy Procedure 2004 allows for an examination of the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor s estate, or to the debtor s right to a discharge. 2. Courts have said that a Rule 2004 Examination is a fishing expedition. C. Objections to Discharge/Dischargeability 1. Objections to Dischargeability of Debt (11 U.S.C. 523) -523(a)(1): Taxes -523(a)(2): false pretenses, false representation or actual fraud -523(a)(4): fraud or defalcation while acting in a fiduciary capacity -523(a)(5): domestic support obligations -523(a)(6): willful or malicious injury -523(a)(8): student loans C. Objections to Discharge/Dischargeability 2. Objections to Discharge (11 U.S.C. 727) -Typically involves misconduct related to the bankruptcy case itself -727(a)(2): transfer of property of the estate -727(a)(3): destruction of books or records -727(a)(4): false oath or account -727(a)(5): failure to explain loss or assets or deficiency of assets 7

8 1/11/2018 D. Avoidance Actions 1. Preferential Transfers (11 U.S.C. 547) -Payments made by debtor within 90 days of the filing date. -Statutory defenses 2. Fraudulent Transfers (11 U.S.C. 548, 544) -Actual Fraud -Constructive Fraud E. Keeping Track of Deadlines 1. Deadline for Filing of Claims 2. Deadline to Object to Claim of Exemptions 3. Deadline to Object to Discharge 4. Deadlines to Object to Plans of Reorganization or Vote 8

BANKRUPTCY CLIENT FORM We accept the following forms of payment: cash or check. Cell Phone:

Name: Spouse s Name: Business Names: Mailing Address: Home Phone: Fax: Email: BANKRUPTCY CLIENT FORM We accept the following forms of payment: cash or check. City: Have you filed bankruptcy before? Yes