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Ch. 22: Bankruptcy Law - No. 11
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Ch. 22: Bankruptcy Law - No. 12
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Ch. 22: Bankruptcy Law - No. 13
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PROPERTY DISTRIBUTION
Secured creditors have priority over unsecured creditors to
the proceeds from the disposition of secured collateral. To
the extent that a secured creditor’s claims are not satisfied by
the secured collateral, he becomes an unsecured creditor for
the balance due.
Ch. 22: Bankruptcy Law - No. 14
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
DISCHARGE
A number of debts are non-dischargeable, including back
taxes, alimony and child support, student loans, and consumer
debts incurred to purchase “luxury” items or in exchange for a
large cash advance. (See pp. 592-93)
(3) failing to complete mandatory credit counseling; and
(4) pending felony charges against the debtor.
Revocation of Discharge: The bankruptcy court may revoke
a discharge within one year if it discovers that the debtor was
Ch. 22: Bankruptcy Law - No. 15
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
A debtor may voluntarily agree to pay off a debt even
though the debt could be discharged in bankruptcy. An
agreement to do so is called a reaffirmation agreement, and
debtor is represented by counsel, court approval is not
needed, provided the debtor’s attorney declares or affirms that
(1) the debtor has been fully informed of the consequences
of the agreement (and of default under the agreement),
(2) the debtor made the agreement voluntarily, and
Ch. 22: Bankruptcy Law - No. 16
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
REORGANIZATION BANKRUPTCY
Creditors’ Committee: A committee of unsecured
creditors appointed to consult with the trustee or DIP
concerning the debtor’s reorganization.
Reorganization Plan: A plan to conserve and administer the
Confirmation: The various creditor classes must agree to the
plan, and the bankruptcy court must confirm it.
Cram-Down: Once at least one class of creditors has
agreed to the plan, the court may confirm it over the
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Ch. 22: Bankruptcy Law - No. 18
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
REPAYMENT BANKRUPTCY - PT. I
Procedure: A Chapter 13 repayment bankruptcy begins when
a debtor files a voluntary petition.
Certain Chapter 7 and Chapter 11 cases may be
converted to Chapter 13 with the debtor’s consent.
plan period, and
(3) provide equal treatment for all claims within a
particular class.
trustee must retain all plan payments until the court
confirms the debtor’s plan.
Ch. 22: Bankruptcy Law - No. 19
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
REPAYMENT BANKRUPTCY - PT. II
Confirmation: Once the individual debtor has filed his plan,
the bankruptcy court holds a hearing and will confirm the
plan with respect to each claim of a secured creditor if
(1) the secured creditor has accepted the plan, or
(2) the plan provides that the creditor retains its claim and
the property to be distributed under the plan is sufficient
to satisfy the secured claim, or
was due to circumstances beyond the debtor’s control.
Ch. 22: Bankruptcy Law - No. 20
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
percent farm dependent and whose debts, which may not
total more than $3,792,650, are at least 50 percent farm
related.
Family Fisherman: A person (or entity that is at least 50
Procedure: The procedure for a family farmer or fisherman
bankruptcy, under Chapter 12 of the Bankruptcy Code, is
essentially the same as for a Chapter 13 consumer repayment
bankruptcy.
Chapter 12 Plan: The content of and court confirmation
procedure are essentially the same as in Chapter 13.
Discharge: After the debtor has made all plan payments, the
bankruptcy court will discharge all plan debts.
Ch. 22: Bankruptcy Law - No. 12
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Ch. 22: Bankruptcy Law - No. 13
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PROPERTY DISTRIBUTION
Secured creditors have priority over unsecured creditors to
the proceeds from the disposition of secured collateral. To
the extent that a secured creditor’s claims are not satisfied by
the secured collateral, he becomes an unsecured creditor for
the balance due.
Ch. 22: Bankruptcy Law - No. 14
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
DISCHARGE
A number of debts are non-dischargeable, including back
taxes, alimony and child support, student loans, and consumer
debts incurred to purchase “luxury” items or in exchange for a
large cash advance. (See pp. 592-93)
(3) failing to complete mandatory credit counseling; and
(4) pending felony charges against the debtor.
Revocation of Discharge: The bankruptcy court may revoke
a discharge within one year if it discovers that the debtor was
Ch. 22: Bankruptcy Law - No. 15
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
A debtor may voluntarily agree to pay off a debt even
though the debt could be discharged in bankruptcy. An
agreement to do so is called a reaffirmation agreement, and
debtor is represented by counsel, court approval is not
needed, provided the debtor’s attorney declares or affirms that
(1) the debtor has been fully informed of the consequences
of the agreement (and of default under the agreement),
(2) the debtor made the agreement voluntarily, and
Ch. 22: Bankruptcy Law - No. 16
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
REORGANIZATION BANKRUPTCY
Creditors’ Committee: A committee of unsecured
creditors appointed to consult with the trustee or DIP
concerning the debtor’s reorganization.
Reorganization Plan: A plan to conserve and administer the
Confirmation: The various creditor classes must agree to the
plan, and the bankruptcy court must confirm it.
Cram-Down: Once at least one class of creditors has
agreed to the plan, the court may confirm it over the
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Ch. 22: Bankruptcy Law - No. 18
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
REPAYMENT BANKRUPTCY - PT. I
Procedure: A Chapter 13 repayment bankruptcy begins when
a debtor files a voluntary petition.
Certain Chapter 7 and Chapter 11 cases may be
converted to Chapter 13 with the debtor’s consent.
plan period, and
(3) provide equal treatment for all claims within a
particular class.
trustee must retain all plan payments until the court
confirms the debtor’s plan.
Ch. 22: Bankruptcy Law - No. 19
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
REPAYMENT BANKRUPTCY - PT. II
Confirmation: Once the individual debtor has filed his plan,
the bankruptcy court holds a hearing and will confirm the
plan with respect to each claim of a secured creditor if
(1) the secured creditor has accepted the plan, or
(2) the plan provides that the creditor retains its claim and
the property to be distributed under the plan is sufficient
to satisfy the secured claim, or
was due to circumstances beyond the debtor’s control.
Ch. 22: Bankruptcy Law - No. 20
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
percent farm dependent and whose debts, which may not
total more than $3,792,650, are at least 50 percent farm
related.
Family Fisherman: A person (or entity that is at least 50
Procedure: The procedure for a family farmer or fisherman
bankruptcy, under Chapter 12 of the Bankruptcy Code, is
essentially the same as for a Chapter 13 consumer repayment
bankruptcy.
Chapter 12 Plan: The content of and court confirmation
procedure are essentially the same as in Chapter 13.
Discharge: After the debtor has made all plan payments, the
bankruptcy court will discharge all plan debts.
