2.  Once bankruptcy petition filed, creditor cannot:  Receive a security interest  Perfect a security interest  Enforce a security interest (repossess)

3.  Protects unsecured creditors.  Enemy of the secured creditor.

4.  Bankruptcy trustee has status of judicial lien creditor.  Thus, will prevail over unperfected security interests.  Problem 361 – p. 974

5.  Bankruptcy trustee can raise any defenses the debtor may have such as:  Statute of limitations  Statute of frauds

6.  Moore v. Bay – 1931 United States Supreme Court  Trustee’s recovery is not limited to the amount of the unsecured creditor’s claim.

7.  Debtor cannot prefer one creditor over another.  Creditors cannot be overly aggressive.

8.  1. Transfer by debtor  Includes grant of security interest.

9.  2. For preexisting debt  Not a new debt.

10.  3. Within 90 days of filing the bankruptcy petition  One year if transfer is to an insider (e.g., relative, partner, corporate officer)

11.  4. Increases the amount the creditor receives  Creditor is “better off” because of the transfer as compared to what the creditor would receive under a bankruptcy distribution.

12.  5. Debtor insolvent at time of transfer  Presumed within 90 days before filing.

13.  1. Contemporaneous exchange  New value given for item.  Perfection of new value within 30 days of attachment.

14.  2. Ordinary course debt payments  Utility bills  Paying ordinary debts (even secured ones)

15.  3. PMSI  Perfected within 30 days of debtor receiving possession.

16.  Problem 362 – p. 979 June 8 $80,000 loan $100,000 collateral July 18 Perfection July 19 Bankruptcy filing

17.  Problem 363 – p. 979 Nov. 1 value Security agreement Nov. 15 Rights Attachment Dec. 6 Bankruptcy filing Dec. 5 Filing

18.  Problem 364 – p. 979

19. [amount unsecured 90 days before filing] minus [amount unsecured at time of filing] equals preference

20. Amount of debt 90 days before filing Value of collateral 90 days before filing Preference = Amount of debt at time of filing Value of collateral at time of filing Problem 365 – p. 981

21.  Under federal or state law.  Actual intent to defraud  Debtor receives less than reasonably equivalent value  Problem 366 – p. 989

22.  Judicial liens within 90 days of bankruptcy filing are preferences and trustee has priority.

23.  Statutory liens have priority over the bankruptcy trustee if under state law:  They would prevail against a BFP, and  Do not arise only because the debtor is insolvent.