Bankruptcy Legal Research Guide

Table of Contents Slides I. Introduction …… II. Secondary Sources ………11-36 III. Primary Authority …...…37-70 IV. Practice Materials …… V. Online Materials VI. Conclusion

Bankruptcy Introduction

Introduction Credit is a wonderful thing. It allows people and businesses to purchase goods and services now while delaying payment until later. Credit is not only convenient; it is absolutely necessary. Who can write a non-bouncing check for $300,000 to pay for a new house? How about $25,000 for a new car? And $5 billion for a fleet of new aircraft? The answer is: Bill Gates. But for everyone else, credit is required. Credit is a wonderful thing. It allows people and businesses to purchase goods and services now while delaying payment until later. Credit is not only convenient; it is absolutely necessary. Who can write a non-bouncing check for $300,000 to pay for a new house? How about $25,000 for a new car? And $5 billion for a fleet of new aircraft? The answer is: Bill Gates. But for everyone else, credit is required. By accepting credit, a person or business becomes a debtor and is obligated to pay the creditor the initial amount of the loan plus interest. If the debtor fulfills this obligation in a timely manner (which is usually the case), the remaining slides in this presentation are irrelevant. By accepting credit, a person or business becomes a debtor and is obligated to pay the creditor the initial amount of the loan plus interest. If the debtor fulfills this obligation in a timely manner (which is usually the case), the remaining slides in this presentation are irrelevant.

Introduction However, some debtors run into financial problems for a variety of reasons (unemployment, medical problems, terrorist attack, etc…). Over time, their debts increase while their income/revenue and assets stay the same or decrease. These debtors will eventually be unable to pay their creditors. At that point, creditors will demand to be paid and may threaten legal action if they are not. If this occurs, debtors can seek refuge in the Bay of Bankruptcy. However, some debtors run into financial problems for a variety of reasons (unemployment, medical problems, terrorist attack, etc…). Over time, their debts increase while their income/revenue and assets stay the same or decrease. These debtors will eventually be unable to pay their creditors. At that point, creditors will demand to be paid and may threaten legal action if they are not. If this occurs, debtors can seek refuge in the Bay of Bankruptcy. Bankruptcy is a federal procedure that provides relief to debtors who are insolvent and cannot pay their creditors. Debtors usually spell relief in one of two ways. Bankruptcy is a federal procedure that provides relief to debtors who are insolvent and cannot pay their creditors. Debtors usually spell relief in one of two ways. 1.L-I-Q-U-I-D-A-T-I-O-N. 2.R-E-O-R-G-A-N-I-Z-A-T-I-O-N

Introduction Liquidation – Chapter 7 Bankruptcy Liquidation – Chapter 7 Bankruptcy –Debtors choosing liquidation are required to sell all of their non- exempt property. The proceeds from this sale are then distributed to the creditors. –All of the debts owed by the debtor are then discharged, even if the proceeds of the sale are insufficient to pay off the entire amount due to each creditor.

Introduction Reorganization – Chapter 11 Bankruptcy Reorganization – Chapter 11 Bankruptcy –Debtors may not want to put their property on the auction block. If so, Chapter 11 of the Bankruptcy Code allows them to keep their property by reorganizing their debts. –Under Chapter 11, a debtor is allowed to retain its property and stay in business. However, the debtor must obtain court approval of a plan that uses revenue generated after bankruptcy to pay off pre-bankruptcy debts. –Creditors receive similar treatment under reorganization. They are forced to discharge the debts owed by the debtor even if the amount they receive under the plan is less than the total amount due.

Introduction Whether the debtor uses liquidation or reorganization, bankruptcy provides financial and emotional relief to the debtor. Such a fresh start allows the debtor to once again sail in the Sea of Credit (hopefully with better results). Whether the debtor uses liquidation or reorganization, bankruptcy provides financial and emotional relief to the debtor. Such a fresh start allows the debtor to once again sail in the Sea of Credit (hopefully with better results). The U.S. Constitution granted Congress the authority to control bankruptcy law for the entire country. Congress exercised this authority by passing the 1978 Bankruptcy Code, which is contained in Title 11 of the United States Code. In contrast, states have no power to regulate bankruptcy (although they can pass laws that govern other aspects of the debtor-creditor relationship). The U.S. Constitution granted Congress the authority to control bankruptcy law for the entire country. Congress exercised this authority by passing the 1978 Bankruptcy Code, which is contained in Title 11 of the United States Code. In contrast, states have no power to regulate bankruptcy (although they can pass laws that govern other aspects of the debtor-creditor relationship). Therefore, a bankruptcy-related research project will primarily focus on federal law. Therefore, a bankruptcy-related research project will primarily focus on federal law.

Introduction The theory behind bankruptcy is rather easy to understand. However, the practice of bankruptcy presents a myriad of difficult issues that must be answered by debtors and creditors alike. The following list provides a few examples of these issues: The theory behind bankruptcy is rather easy to understand. However, the practice of bankruptcy presents a myriad of difficult issues that must be answered by debtors and creditors alike. The following list provides a few examples of these issues: –What are the debtors rights? –What can creditors do to protect their interests? –How does a person or business file for bankruptcy? –Which form of bankruptcy should a debtor use? –What property may the debtor protect from creditors? –Which creditors have priority for the debtors property? –What actions can creditors take against a debtor after bankruptcy has been filed? This Legal Research Guide is a useful tool for finding the answers to these questions. This Legal Research Guide is a useful tool for finding the answers to these questions.

Introduction The following Legal Research Guide provides a (long) roadmap for the law student or practitioner faced with a bankruptcy-related problem. This map consists of the following sections: The following Legal Research Guide provides a (long) roadmap for the law student or practitioner faced with a bankruptcy-related problem. This map consists of the following sections: 1.Secondary Sources2. Primary Authority –Dictionary – Cases –Encyclopedias – Statutes –Treatises – Administrative Materials –ALR Annotations –Legal Periodicals 3.Practice Materials4. Online Materials –Looseleaf Services – Commercial – Lexis –Federal Practice Materials – Internet Legal Research –Forms – Books –State Practice Materials