...BANKRUPTCY This article is intended to provide some general bankruptcy information and is certainly not intended to replace the tailored information a debtor will receive from an attorney. Bankruptcy is governed by Federal Law (Title 11 of the US Code separated into individual Chapters, each dealing with a different type of bankruptcy) but the bankruptcy laws of each state also play an important part; consequently, though there are bankruptcy kits, you will probably need a lawyer to successfully file and a lawyer search should focus on a bankruptcy attorney or bankruptcy law firm licensed in the debtor’s state of residence. The attorney licensed in your state can tell you how to file for bankruptcy in a federal court within your state. American bankruptcy is actually a form of relief granted by a court, so it is not so much a matter of a debtor “declaring bankruptcy”; rather, someone files a petition requesting that the court discharge or reduce or restructure debts in bankruptcy. In American bankruptcy, a federal court manages a debtor’s property to protect the debtor from his/her creditors and to benefit the creditors as much as possible under the circumstances. While bankruptcy is designed for long-term relief, one of the most important features of filing for bankruptcy is the “automatic stay.” When a petition is filed for bankruptcy, either by the debtor (“voluntary bankruptcy”) or by one of his/her creditors (“involuntary bankruptcy”), most collection efforts such...
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...Bankruptcy Examiner’s Report in Auditor Malpractice Suits A bankruptcy examiner’s report may provide a roadmap to auditors’ negligence, breach of contract, gross negligence, and / or cooperation to cover up fraud committed by the debtor management. A bankruptcy examiner is appointed by the court to investigate the debtor and the debtor’s estate for the purpose to determine if fraud, dishonesty, misconduct, incompetence, and irregularity by the debtor management has occurred before and during the filing of the bankruptcy. The judge call for an examiner based on a request from the trustee, the creditors, major shareholders, and / or his personal judgment. The parties who utilize the finding of the examiner’s report to sue the auditor for malpractice are the trustees, creditors, major shareholders of the debtor, and any other party that may find joining the lawsuit is in the best interest of the society. The examiner’s investigation- first- focuses on many aspects of the debtor’s assets, liabilities, equities, and how the operation is carried out in compliance with rules and regulations. The examiner gathers, verifies, tests, and interprets information from different sources (employees, customers, vendors, lenders, and other professionals who provide service to the entity under investigation). Second, through...
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...Business Law November 25, 2014 Bankruptcy The legal status of a person or entity that cannot repay the debts it owns to creditors is known as bankruptcy. In most of the cases it is imposed by a court order, often initiated by the debtor. If the person or entity is not able to pay debts, the best way to solve this problem is to set up an arrangement with the creditors. There are two options for the bankrupt person, declares a voluntary petition to become bankrupt or let the creditor take action to have this person declared bankrupt by an order of the court usually known as sequestration order. ("American Bankruptcy Institute.") The consequences of bankruptcy are really serious. The person or entity which is declared in bankruptcy will be registered in a permanent record named the National Personal Insolvency Indez (the NPII), which is an electronic register of al personal insolvency proceedings. This site is able for any person and includes personal information such as the name, date of birth and address of the person who is registered. In addition to, during the declaration of bankruptcy a trustee is appointed to look over the situation. The duties of this person are to specify in legislation and this person must have to attach to certain standards while he is on duty. The roughness part of bankruptcy is when the trustee is force to sell all the assets, including that person acquired or become owner during bankruptcy; nonetheless, this person would be able to keep some...
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...INTRODUCTION Bankruptcy is a legal status of an individual or someone who cannot pay back debts owed to creditors. Bankruptcy is mostly imposed by a court order, often initiated by the debtor. Bankruptcy is not the only legal status that an insolvent person or other entity may have, and the term bankruptcy is therefore not a synonym for insolvency. In some countries, including the United Kingdom, bankruptcy is limited to individuals, and other forms of insolvency proceedings (such as liquidation and administration) are applied to companies. A creditor can file a bankruptcy petition to the High Court against a person or persons who have failed to repay debts. Under Section 6 of the Bankruptcy Ordinance, the amount of debt in a creditor's petition must be equal to or exceed a certain amount and must be unsecured. Other than the Creditor's Bankruptcy Petition (legal action commenced by creditors), debtors can also institute bankruptcy petitions against themselves (i.e. Debtor's Bankruptcy Petition). PROCEDURES INVOLED IN WINDING UP A COMPANY BASED ON BANKRUPTCY. Firstly, a liquidator is appointed either by the company shareholders passing resolution or by the court making an order, then liquidator collects the assets of the company and pays creditors in order to priority. The liquidator also distributes any surplus fund to the share holders and hence the company is then formally dissolved. In Reinsurance Australia Corporation Ltd v Odyssey Re (Bermuda) Ltd (2001) 36 ACSR 348;...
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...Bankruptcy Assignment Warren and Westbrook, The Law of Debtors and Creditors Sara Israelyan Spring Semester 2011 University of Minnesota Law School March, 2011 Warren and Westbrook, The Law of Debtors and Creditors Problems 8.1 Absent bankruptcy, what can Harv and Lois protect as the creditors begin to move in? What if they filed a Chapter 7? What could they protect if they lived in Cheyenne, Wyoming? When considering bankruptcy, pre-bankruptcy planning is one of the most important steps for Harv and Lois. In a Chapter 7 bankruptcy, the TIB will take all non-exempt valuable property that he can sell to distribute the money to the creditors. The main idea behind the Chapter 7 bankruptcy is ‘liquidation’. However, Harv and Lois can arrange their property and debt before filing for Chapter 7 bankruptcy, in order to maximize their exemptions. Generally, during a pre-bankruptcy planning, the debtor converts some of its non-exempt assets to exempts ones to save the property for creditors. In this case, usually the debtor sells or borrows against non-exempt property in order to buy exempt property. This right to maximize the exemptions however is not unlimited. After filing bankruptcy, all of Harv’s and Lois’s property, both real and personal, becomes a part of the bankruptcy estate. However, under the Bankruptcy Code, they are allowed to exclude certain property deemed necessary for everyday life and sustain a reasonable fresh start after discharge. Harv and Lois...
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...Bankruptcy laws help people who can no longer pay their creditors get a fresh start by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation. Most cases are filed under the three main chapters of the bankruptcy code. They are Chapter 7, Chapter 11, and Chapter 13. Federal courts have exclusive jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court. Below is a high-level summary on each bankruptcy code: Chapter 7 – Liquidation under the bankruptcy code: The chapter of the Bankruptcy Code providing for "liquidation," ( i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors.) Chapter 11 - Reorganization under the bankruptcy code: The chapter of the Bankruptcy Code providing (generally) for reorganization, usually involving a corporation or partnership. (A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.) Chapter 13 – Individual debt adjustment: The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.) To some extent, Chapters...
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...Blockbuster Reorganization Dana Brown ACC 401 02/23/2014 Professor Neely Blockbuster Reorganization INTRODUCTION In today’s economy so many businesses are failing and having to file for different types of bankruptcy. Some of the very common ones are Chapter 13, Chapter 7 and Chapter 11. Chapter 11 is more common for corporation and businesses. Chapter 11 reorganization is when the business is on the “verge of bankruptcy but believes it can be successful again” ("Chapter 11 Definition", n.d.,). The goal in filing Chapter 11 is to reorganize the assets and liabilities to become profitable again. Investopedia talks about how the value of the stock can drop as well as the bonds ("Chapter 11 Definition", n.d.,). Chapter 11 allows the business one more chance to be successful and be profitable by restricting the way business is done in the company. One of the companies that filed a Chapter 11 bankruptcy is the well-known Blockbuster chain. BACKGROUND The first Blockbuster store opened up in 1985 in Dallas, TX with 8,000 VHS tapes, a computerized check out process and a big dream. Mr. David Cook founded the well-known Blockbuster store (The History Channel, n.d.,).The store did so well that it opened three more in 1986. In 1987, the owner sold a portion to a group of investors, one of them being a well-known investor Wayne Huizenga (The History Channel, n.d.,). Mr. Huizenga was the founder of Waste Management, Inc. Eventually Mr. Huizenga assumed total control after Mr...
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...Chapter 11 bankruptcy allows a business to remain in operation while reorganizing its structure and debt. According to the Fried Law Firm, unlike a chapter 7 bankruptcy, which requires total liquidation and a cease in business activities, the company can continue normal operations. In addition, the company in all likelihood will be able to continue paying employee salaries, pensions, and health benefits. Chapter 7 bankruptcy is sometimes also called liquidation bankruptcy. Firms experiencing this form of bankruptcy are past the stage of reorganization and must sell off any un-exempt assets to pay creditors. In chapter 7, the creditors collect their debts according to how they loaned out the money to the firm .A trustee is appointed who ensures that any assets that are secured are sold and that the proceeds are paid to the specific creditors. Chapter 11 is much more involved than Chapter 7 bankruptcy as it enables the firm to reorganize its debt and to try to re-emerge as a healthy organization. An advantage of Chapter 11, if one is able to meet all of the statutory requirements, is that there is no set limit on a plan's duration. Chapter 11 plans often provide for debtors to make payments to creditors over a period of three to five years. The bankruptcy court can confirm a Chapter 11 plan with a longer term, however, if one requires more time to make required payments. A typical Chapter 7 bankruptcy case is opened and closed within three to six months, and the person filing...
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...Bankruptcy prediction From Wikipedia, the free encyclopedia This article is an orphan, as few or no other articles link to it. Please introduce links to this page from related articles; suggestions may be available. (December 2009) Bankruptcy prediction is the art of predicting bankruptcy and various measures of financial distress of public firms. It is a vast area of finance and accounting research. The importance of the area is due in part to the relevance for creditors and investors in evaluating the likelihood that a firm may go bankrupt. The quantity of research is also a function of the availability of data: for public firms which went bankrupt or did not, numerous accounting ratios that might indicate danger can be calculated, and numerous other potential explanatory variables are also available. Consequently, the area is well-suited for testing of increasingly sophisticated, data-intensive forecasting approaches. Contents [hide] 1 History 2 Modern methods 3 References 4 External links [edit]History The history of bankruptcy prediction includes application of numerous statistical tools which gradually became available, and involves deepening appreciation of various pitfalls in early analyses. Interestingly, research is still published that suffers pitfalls that have been understood for many years. Bankruptcy prediction has been a subject of formal analysis since at least 1932, when FitzPatrick published a study of 20 pairs of firms, one failed and one...
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...Introduction Besides corporate bankruptcy which is the major focus on this paper, an overview of personal review of consumer bankruptcy helps in understanding, bankruptcy trends in both United States and Canada. Every year, over 100, 000 Canadians usually file for a consumer proposal or personal bankruptcy. In 2013, close to 120,000 Canadians filed for a consumer proposal and bankruptcy (Modest Money. 2014). While the percentage of personal bankruptcies dropped by 3 percent, the number of consumer proposals increased by 5.5 percent. This rise in the number of filing for debt relief illustrate a long term trend about the increasing number of Canadians whose debt has grown faster than their earnings. Statistics Canada report revealed that...
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...Business activity can in practice end in two different ways. Bankruptcy can be brought up on itself controllably and voluntarily by an insolvent debtor, alternatively, it may be also forced to end on court orders issued on creditors’ request as a result of financial difficulties. Bankruptcy is a legal procedure for liquidating a business which cannot fully pay its debts out of its current assets. Two major objectives of a bankruptcy are first of all, fair settlement of the legal claims of the creditors through an equitable distribution of a debtor’s assets. The second objective is to provide the debtor and opportunity to a fresh start. Bankruptcy can be a very tough process that causes losses for all stakeholders. For example, is a society...
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...On April 14th, 2005, the United States House passed a business sought bankruptcy bill with a 302-126 vote, while the Senate had passed it on March 10th, with a 74-25 vote. Bankruptcy reform was initially introduced in 1998, but had difficulty in getting passed until now. This bill is a huge victory for credit card companies and retailers, but will undoubtedly affect millions of Americans in a negative manner (www.onlin.wsj.com/20050415). The bill is the first major change to the bankruptcy laws in twenty-seven years (www.pbs.org/3.25.05). The bill will make it harder for consumers to eliminate their debt with the use of bankruptcy. There are now new restrictions and a “means-test”, which determine if consumers can have their debts erased by Chapter 7 bankruptcy or Chapter 13 bankruptcy. The bill also makes attorneys liable for any inaccuracies in their clients’ bankruptcy filings. This bill has several controversial issues associated with it and will be explained later, along with the actual provisions of the bill. To understand the controversy, one must first understand what bankruptcy is and the difference between Chapter 7 and Chapter 13 bankruptcy filings. Chapter 7 bankruptcy is a liquidation proceeding in which the debtor turns over all of their non-exempt property to a bankruptcy trustee who converts it to cash to pay off the creditors. Within four months, the debtor is usually relieved of all obligations. In many cases, the debtor has no assets to lose, so Chapter...
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...When is it bankruptcy fraud? Bankruptcy serves a vital role in the economy. Without bankruptcy, some debtors would never be able to dig their way out of debt. With no ability to discharge debts, they would have to pay their debt by going to prison. At the very least, debtors with no way out could never recover and become contributing members of society. Bankruptcy should be viewed as a tool for those that intend to repay their debts but ultimately can’t. Unfortunately, there are a few that try to cheat the system. This is known as bankruptcy fraud. The bankruptcy process is complex, and there are many regulations in place to make sure it isn’t taken advantage of. While many who commit bankruptcy fraud do it on purpose, there are some who do it in ignorance. Here are a few things to keep in mind in order to avoid bankruptcy fraud. Types of bankruptcy fraud Bankruptcy is intended to be for those that cannot repay their debts on their own. Consequently, there is a limit to how much income a bankruptcy filer can make. There are many different types of income and all of them must be declared in the bankruptcy. Failing to report income, either on purpose or on accident could result in your case being thrown out. In order to prevent bankruptcy from being misused, there is a limit to how often a person may file for bankruptcy. Falsifying information in order to file bankruptcy before the minimum waiting period is another form of bankruptcy fraud. Yet another dishonest...
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...Using the Bankruptcy Process to Solve the Foreclosure Crisis The scourge of foreclosure has already affected millions of Americans, and the fear of losing one's home looms over millions more. President Obama's "Making Home Affordable" program has been a step in the right direction insofar as it encourages homeowners to work with their lenders to modify their mortgage loans. These modifications have helped borrowers by allowing them to keep their homes, and they have helped lenders by allowing them to receive more money than they would typically receive in the auctions sale which almost always inevitably follows a foreclosure. However, there is more that can and should be done in order to help a larger portion of homeowners, especially those facing immanent foreclosure as a result of having less equity in their homes than the amount owed on their mortgage loans (i.e. homeowners with "underwater mortgages"). Solving the Foreclosure Crisis: Amending §1322(b)(2) In order to solve the present foreclosure crisis, I recommend that Congress amend the bankruptcy code to allow debtors to modify a secured claim on the debtor’s principal residence, i.e. his or her home, to reflect the present market value of the home rather than the projected value of the home when the debtor signed the mortgage. Under Chapter 13 of the bankruptcy code, a debtor may file bankruptcy and keep assets so long as he or she comes up with a plan to repay his or her creditors. This plan prioritizes secured...
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...Chapter 50 1. Which of the following is NOT essential to the transfer of real estate by deed? Signature of the Grantee. 2. Which of the following carries with it no warranties or guarantees of title? Quitclaim deed. 3. If Stan's land is condemned in order to build a subway system for the city: he must be given the fair market value of the property as of the time of the taking. 4. In order for a deed to be effective between the seller and purchaser, the deed must: be in writing, signed by the seller, and delivered to the buyer with the intent to transfer title. 5. The seller's warranty that he has marketable title to the land would be breached if the buyer discovers: a lien on the land. a defect in the chain of title. a lease on the premises. All of the above. 6. The action through which the mortgage holder takes the property from the mortgagor, ends the mortgagor’s rights in the property, and sells the property to pay the mortgage debt is: foreclosure. 7. The elements of adverse possession include: continuous, open, actual, and exclusive of the true owner. 8. A typical enabling statute grants municipalities which of the following power(s)? To establish setback lines. To limit the intensity of use of lot areas. To restrict the location of industries and trades. All of the above. 9. Marketable title means that the title is free from which of the following? Encumbrances. Defects in the chain of title appearing in the land records. Events depriving...
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