CLASS NOTES
Old testement dooderodemy
Alien terminology
Discharge
Adequate protection
Confirmation
Absolute priority rule
Voidable preferences
Cram down
Fresh start lien avoidance
Strong arm power
BKY “definition” born of economic necessity
Federal law (U.S. constitution)
Protect debtor from creditors
Protect creditors from each other (equality)
Give debtor relief and release (fresh start)
Economic reality and necessity (suicide?)
History
Roman empire “to break the bench” this is what bankruptcy means in latin, in old Roman times they would take an ax and break a bunch in front of a store to show the world the person did not pay their bills. They would then crucify them for not paying bills. England sent you to jail for life.
England “debtor’s prison”
Wild west “tar and feather” – West of the Mississippi they would tar and feather the debtor in the United States. Many people died for not paying their debts.
1898 first U.S. BKY Act – this law was virtually unchanged until 1978, except for some amendments. It was a mess at the time congress finally got around to changing it.
1978 Bankruptcy Code – truly designed to be a creditors remedy. The theory is that at least all the creditors will get something out of the pie. Is to make creditors equal so they each get a share. Need to understand it is a creditors remedy, not the debtors. Most creditors think that the code is too liberal and debtor oriented. Creditors don’t like the bankruptcy code, even though its their remedy. There is a continuous trade off in the code.
BKY law sources everything incorporated into 11 usc.
BKY Code 1978 11U.S.C. (cross referencing nightmare) Core Bankruptcy code, but made up of more things. There are thirteen chapters to the bankruptcy code.
BKY amendments and judgeship act 1984 11 usc, 28 usc. Good share of code declared unconstitutional. Judges had to be appointed for life.
Family farmer debt adjustment 1986 11 usc There seemed to be a Farmer crisis at this time for the family farms. This was signed into law and is chapter 12.
BKY reform act 1994 11 usc This was some cleaning up of the code. The republicans ram rodded through this to beef up protection for the businesses.
BKY amendments 1998 11 usc
Caselaw from foregoing
Caselaw from 1898 act where consistent can still be useful and important.
BKY rules of procedure (U.S. Supreme Court). Similar to Fed. Rules of Civ. Pro. In the way they are set up.
Local BKY Rules (Fed. Dist. Ct.). must know these as well as the Fed Rules above, uses substantive law of the state debtor creditor law where debtor live, resides or has principle place of business.
STATE SUBSTANTIVE LAW
In chapter 11 the business (board of directors) still runs the business, instead of a trustee. Whenever the word trustee appears in chapter 11 it actually means the board of directors.
Under state law..ex. finance co. loans you 18,000 dollars and asks what you have to secure it. They agree to take a security interest in personal property in your home. Under state law you can take the personal possessions. Under BKY laws the debtor is allowed under a mere motion to avoid any non purchased security interests. Meaning that the creditor can not take the personal property of the debtor. You can get the security interest eliminated.
1978 BKY Code
means these judges could hear any cases related to BKY that was a civil proceeding. Meaning when BKY was filed then all state proceedings had to stop and be taken up in BKY court. This was based on Federal preemption. This was the most powerful judge on earth appointed only for a 14 year term. The Supreme Court said that the constitution does not allow for this type of power of BKY judges.
BKY Judge – 14 year term – president appoints
Original and exclusive jurisdiction over BKY cases and all related civil proceedings
Bankruptcy Court
Collection
Sexual harassment
Real estate
Race discrimination
Tax litigation
BKY process à coming from steps of building on diagram
Foreclosure
Antitrust
Contract
Divorce
Tort
All but the BKY coming from the sides of the courthouse diagram
1984 BKY amendmends and judgship fix
original and exclusive jurisd
, can be related because it effects bottom dollar, but the claim would have been there whether bankruptcy or not. 4 suit could not have been commenced in federal court if not for the bankruptcy, for example divorce. 5 the action sought to be abstained must be pending. In the 8th circuit this means that the situation occurred, some courts say have to have case actually filed. Need to show judge that the matter abstained from will be timely adjudicated (toughest hurdle)
·
§ Permissiveàin respect of state law, can say too busy or don’t know the state law as well, send it back and then the state court sends decision back. In the interest of justice the state is experts at blank. We are going to permissively abstain. Once the results are in then the court takes the judgment and follows through with the bankruptcy.
· A bankruptcy judge is a true judge, not a referee. Early on they were not necessarily actual judges but are now
· The appeal of the bky decision can be appealed to the district court, then to the circuit ct of appeals, however the parties can agree to go to a bky appellate panel. Can also by stipulation agree to skip the district ct and go straight to the circuit ct. (seems like often times the circuit cts make both sides losers)
TYPES OF BANKRUPTCY
Page 5-11 is a summary of what happens in each type of bankruptcy case. There is a chronology of events for each case—this is very very important.
A. common to all types of BKY
a. automatic stay – everything comes to a hault, nobody can take any action against a creditor, all forms harassing debtors must cease, to give the debtor breathing room.
b. exemptions
