1. Creditors’ Rights In Bankruptcy

2. Chapter 7

3. Chapter 13
Debtor
Creditor
Trustee
Trustee

4. Chapter 11
Debtor
Creditor
Trustee
Trustee

5. The Players
Debtor
Trustee
Creditors

6. The Automatic Stay

7. Statements and Schedules
Critical Information Regarding Debtor
Critical Information Regarding You

10. 341 Meeting

11. Protect your right to disbursement
Proof of Claim
Protect your right to disbursement
Form available online:

13. Reclamation

14. Reclamation Timing Notice Requirement Limitations
Delivered within 45 days of filing
Notice Requirement
Within 45 days of delivery, no later than 20 days after commencement
Limitations
Secured Party
Good Faith Buyer

15. Reclamation Procedure
Make Written Demand to Debtor/Debtor’s Counsel
File Notice of Reclamation with Court
Consider Injunction
File Motion for Relief from Stay for Return

16. Missed The Window? Goods Sold To Third Party?
Reclamation
Missed The Window? Goods Sold To Third Party?

17. Objections to discharge
Dischargeability
What?
Objections to discharge
Global
Bad things in bankruptcy
Just You
Bad things to you

18. Not Comply with Bankruptcy Rules Not Comply with Court Orders
Global Examples
Lie
Not Comply with Bankruptcy Rules
Not Comply with Court Orders

19. Obtain property by false representations
Just For You Examples
Obtain property by false representations
False financial statement
Willful/malicious injury to property

20. Priority Secured Creditors (in their collateral) Domestic Support
Admin Expenses
* Value of goods within 20 days
Unsecured Claims for Wages
Unsecured Claims for Contributions to Employee Benefit Plan
Taxes
DUI
Unsecured Creditors
Equity

21. Preferences Transfer of the Debtor’s Property
To or for benefit of Creditor
Within 90 days of bankruptcy filing
On account of antecedent debt
While Debtor insolvent
Which gives Creditor greater return than would receive in Chapter 7.

22. 5 Defenses to Preference Action
Contemporaneous Exchange For New Value
Ordinary Course
New Value
Too Small
Venue

23. Contemporaneous Exchange
Transfer was intended by Debtor and Creditor to be contemporaneous new value, and
Was a substantially contemporaneous exchange.

24. Ordinary Course of Business
Payment for debt incurred in the ordinary course of business affairs of Debtor and Transferee and was made:
In the ordinary course of the business affairs of the debtor and the transferee OR
According to ordinary business terms.

25. Ordinary Course: Subjective Test
Pre-Preference Period Payments v.
Preference Period Transfers
Length of time parties engaged in transaction
Amount or form of tender differed from past practices
Debtor or creditor engaged in any unusual collection or payment activity
Circumstances under which payment made.

26. Ordinary Course: Subjective
Payment
Invoice No.
Invoice Date
Days Late
1/10/10
1122
11/23/09 48
2/23/10
3344
12/22/09 63
3/21/10
5566
2/14/10 35
6/9/10
7788
4/15/10 55
9/10/10
9900
7/30/10 42
Average
48.6

27. Ordinary Course: Objective Test
Were the Payments Consistent With the Terms That Creditors and Debtors Use In Ordinary Circumstances When Debtors are Healthy?

28. New Value
Following a Preference Payment, Creditor Provides New Value on Account of which the Debtor did not Make an Otherwise Unavoidable Transfer.

29. New Value Payment Date Invoice No. Amount Shipped Invoice Date
Preference Balance
$25,000
1/1/10
10/1/09
1500
$10,000
1/15/10
$15,000
1515
$5,000
1/20/10
2/1/10
1600
2/10/10
- 0-

30. Too Small
Less than $6,225?
You keep it!
Cannot use preference defense to reduce exposure to threshold amount.

31. Venue Limits
Less than $12,475?
They have to come to you
State of Incorporation
State of operating business

32. Practice Tips Apply To Most Recent Invoices Go COD
Third-Party Guarantees
Avoid Post-Dated Checks
Consistent Policies and Accurate Record Keeping

33. Sherilyn A. Olsen
(801)