Bankruptcy Davis Fall 2012
State Law
I. Collection Remedies
a. First in time
i. Lien creditors beat unperfected SI (9-317a)
ii. Buyer wins if buy before levy. Takes free of SI if value + delivery w/o knowledge before perfected (9-317b)
iii. PMSI perfected w/in 20 days of delivery has priority (9-317e)
b. Lien on levy
c. Turnover orders
d. Judgment liens by recordation
i. Against real property, file in county land records
ii. Effects all real estate in county existing & future
e. Voluntary liens
i. Legal effect against 3rd parties notice (filing)
ii. Collateral sold for less = deficiency
iii. Consumer dtr if argue no proper notice, C stuck with deficiency
iv. Requires security agreement
v. Security interest in personal property
1. Self help repossession
2. Retain in satisfaction
f. Dormancy and limitations
i. Fla does NOT have dormancy. Limitations 20 years. Bring an action on the judgment before it expires to get a new judgment with interest accrued
g. Credit Bureau of Broken Bow
i. Manual interference not necessary if asserts dominion & control
ii. Note: Some courts require possession if feasible. If goods remain with debtor for an unreasonably long period of time the lien will be lost (to avoid fraud)
h. Pre-Judgment Remedies
i. Showing of need + bond
ii. PDP requires notice & hearing
i. Garnishment
i. Date of garnishment is date of service by sheriff to garnishee. First to deliver to garnishee wins. If simultaneous, pro rata
ii. Temporal net from service to answer
iii. Setoff argument by bank usually wins b/c K
1. May even beat exemptions on waiver theory
iv. Garnishee may be liable for full $ of jmj but can seek restitution
v. Any tangible or intangible property can be garnished (FL)
j. Restrictions on wage garnishment
i. Wags of heads of family or if have dependents are exempt up to $500 (FL)
ii. Can only garnish 25% of disposable earnings (after tax) or 30x minimum wage, whichever less (CCPA)
iii. Nondiscrimination – “any one indebtedness”
II. Florida’s Judgment Lien on Personal Property
a. 55.202
i. (2) all personal property in state NOT fixtures, money, negotiable instruments and mortgages
ii. (2c) first in time determined by filing date
b. 55.204
i. (1) lapses 5 years
ii. (2) child support or tax 20 years & no 2nd lien
iii. (3) within 6 mos before or after lapse may acquire a second lien. Effective date of 2nd lien is date of filing. 2nd lien lapses after 5 years and no 3rd lien
iv. (4) lien continues as to itemized property for 90 more days:
1. itemized & location described w sufficient particularity
2. instructions delivered to sheriff prior to lapse
3. property located in county where sheriff has jx
a. Extension for extraordinary circs
c. 55.205
i. (1) lien on levy, subject to claims of priority judgment creditors
ii. (2)
1. buyer in ordinary course beats jmj lien despite knowl
2. valid SI in APP perfected before Dtr interest in property beats judgment lien on AAP
iii. (3) indiv buyer of goods for personal, family or household use + seller who held for personal, family or household use + w/o knowledge entitled to lien on goods that beats jmj lien. Ct may adjust equities for improvements but this sec inapplicable to:
1. transfer to relative or insider
2. fraudulent transfer
3. fraudulent asset conversion
4. 25% of transfer in which aggregate value exceeds 10k
5. 50% of transfer aggregate value exceeds 25k
6. any transfer aggregate exceeds 30k
iv. (4) stock buyer takes free of jmj lien if val + gd faith + no notice
d. 56.061 Property subject to execution
i. …
ii. Interest in pers prop in possession of buyer under retained title or conditional sale K
e. 56.27
i. (1) sheriff for costs; levying creditor for $500; priority lienholder or attorney
ii. (2) surplus to jmj liens that haven’t lapsed and then to Dtr
iii. (3) value of property levied shouldn’t unrsbly exceed total debt
iv. (5) sheriff not liable for damages from wrongful levy
f. ARGUE judgment lien does not attach to titled vehicles. Cases haven’t yet appeared
III. Fraudulent Conveyances
a. UFTA
i. Note: Can always be argued that the market is not perfect b/c what you get is a function of the market in which you sell it.
ii. UFTA protects creditors not debtors
iii. 1 Definitions
1. Asset; Insider ; Relative; Transfer; Valid lien
2. Asset does not include property to extent encumbered by lien, exempt under nonbankr law or held by TE
iv. 2 Insolvency
1. Balance sheet: debts greater than assets
2. Equity: not paying debts as come due
3. Assets do not include property that has been transferred with intent to hinder, delay or defraud creditors
4. Debts do not include an obligation to extent secured by valid lien not included as asset
v. 3 Value
vi. 4 Transfers Fraudulent as to Present and Future Creditors
1. Actual intent to hinder, delay or defraud OR
2. Without receiving REV
a. Engaged or about to engage in transaction for which remaining assets would be unreasonably small in relation to transaction – LBO ex OR
b. Intended to incur or believed or reasonably should have believed would become equity insolvent
3. In determining actual intent consider:
a. Made to insider
b. Debtor retained possession or control
c. Transfer disclosed or concealed
d. Debtor sued or threatened with suit
e. Substantially all of assets
f. Absconded
g. Removed or concealed assets
h. REV
i. Insolvent or became insolvent
j. Shortly before or after substantial debt incurred
k. Transferred essential assets to lienor who transferred to debtor
vii. 5 Transfers Fraudulent as to Present Creditors
1. No REV and insolvent at time or became insolvent
2. Made to insider for antecedent debt, debtor insolvent and insider had reasonable cause to believe deb
rate
v. Willful violation damages inc attys fees. Good faith actual damages only
III. Adequate Protection 361
a. May be provided by
i. Cash payments
ii. Additional or replacement lien
iii. Other relief that is indubitable equivalent
IV. 366 Utility Service
a. Can’t discontinue because filing
b. May refuse within 20 days if no adequate assurance
Chapter 7, Liquidation Bankruptcy
I. Priorities 507
a. (a) have priority
i. (1) unsecured domestic support
ii. (2) administrative expenses under 503b
1. actual necessary costs & expenses of preserving estate
2. trustee has priority over domestic support claims to extent administers assets for such claims; otherwise 2nd priority
3. Hierarchy
a. Ch 7 trustee admin expense
b. Other ch 7 admin expenses paid before 11 admin expenses
c. Super duper priority claims for post petition financers under 361c1 which claims have priority over 507b admin expenses
d. Superpriority claims for failed adequate protection which have priority under 507b over every other allowable claim under 507a2
e. Ordinary admin claims under 507a2 (i.e. claims under 503b)
iii. (4) unsecured wages up to $11,725 earned within 180 days
1. Wages or private serve K of independent contractor??
iv. (5) unsecured employee benefit plan
v. (8) unsecured income taxes for which return is last due including extensions after 3 years before date of filing; property tax incurred before commencement and last payable without penalty after one year before date of filing
II. Eligibility
a. In re Shaw
i. 4th circuit test for substantial abuse (now just abuse 707)
1. Sudden illness, calamity etc?
2. Statements reasonably accurate?
3. Cash adv + consumer purch in excess of ability to pay?
4. Proposed family budget is excessive or unreasonable?
5. Filed in good faith?
b. Presumption of Abuse (707)
i. §707b(1) dismiss or convert to Ch 13/11 if Ch 7 is abuse
ii. §707(b)(3) dismissal for abuse catch-all if presumption of abuse doesn’t apply or is rebutted
1. Bad faith
2. Totality of circumstances
c. Means test (also see Form 22A)
i. CMI defined §101(10A)
1. 6 months prior to filing
2. Doesn’t include tax deductions
3. Includes any amount paid by other entities on a regular basis for household expenses of Dtr or dependents but NO Social Security benefits
