Bankruptcy Outline

BANKRUPTCY OUTLINE
 
I.                     NON-Bankruptcy Law – Creditors’ Rights and Remedies
a.      What is non-bankruptcy creditors’ rights law?
                                                               i.      State creditors rights law
1.      Unsecured debt enforcement and collection – suit, judgment, judgment lien, garnishment of wages, execution, levy
a.      Execution = sheriff or some legal authority on behalf of judgment creditor seize personal property of judgment debtor, execute on the property, sell it, and give money to apply to the judgment
b.      Levy = levy on real estate; like foreclosure
2.      Secured debt enforcement and collection– account debtor notification, replevin (claim and delivery), foreclosure, statutory liens
a.      Quicker; can repossess the item, just take it unless the person objects – then you get a court order of possession and the sheriff comes to take it
b.      The remedy is to sell the property and apply the proceeds to the debt. What if the item does not cover the debt? The debt will only be partially secured. How do I collect the balance of the debt? You have to use the remedies of an unsecured creditor. Secured creditors always get paid first, we respect the priorities.
c.      You don’t have to go to court under Article 9 just notify the account debtor, most of the time they will pay you directly. Or, you can repossess by self help or file an action. Or, you can foreclose on real estate – judicially or by advertisement. Statutory liens create secured claims.
3.      Lease enforcement – lease termination and eviction
a.      Leases are not secured claims; they are contracts for the use of property.
b.      Under state law, the rights exercised involve termination of lease and eviction
c.      Or repossession in case of personal property
 
NOTE: Know the different rights and remedies for unsecured and secured creditors
 
b.      Why is non-bankruptcy creditors’ rights law important to the study of bankruptcy law?
                                                               i.      Butner v. United States: property interests are created and defined by state law and should be treated uniformly by state and federal courts to reduce uncertainty, discourage forum shopping and prevent windfalls merely by the happenstance of bankruptcy, unless there is a federal interest that requires a different result
                                                             ii.      state law property interests of creditors are to be protected in bankruptcy to the greatest extent possible as long as consistent with the purposes of federal law
c.      What exactly are state law creditors’ rights and how do they work?
d.      Ways in which debt obligations are created:
                                                               i.      Contractual obligations
                                                             ii.      Tax Obligations
                                                            iii.      Tort Liability
                                                           iv.      Judgment Based Obligations
e.      Once an obligation arises, then who is liable? Who do we sue?
                                                               i.      Who can be sued?
1.      single debtor
2.      multiple debtors
a.      joint liability = must hold both liable; common law compulsory joinder rule
                                                                                                                                       i.      If you couldn’t serve one party because they were out of the jurisdiction the other could stay there and would not be sued
b.      several liability = each is separately obligated for the entire amount
c.      statutory conversion of joint liability to joint and several liability
3.      partnerships v. partners
a.      Partners can be sued for partnership debts
4.      corporations v. shareholders
a.      Corporation is a separate entity that can be sued
b.      Only ways the shareholders can be sued:
                                                                                                                                       i.      piercing the corporate veil
                                                                                                                                     ii.      dissolved corporations
5.      limited partnerships v. general partners/limited partners
a.      Limited partners cannot be sued except when they do things that involve them in the partnership
b.      General partners can be sued
6.      limited liability companies v. members
a.      Members generally not liable but can pierce the corporate veil if