BANKRUPTCY

PROCESS
 BANKRUPTCY
JUDGE

PROFESSIONALS
attorneys, DEBTOR
accountants, corporate
financial advisors, individual
agents

BANKRUPTCY
CASE

BANKRUPTCY
TRUSTEE CREDITORS
ch 7, 13 or 11

US TRUSTEE
Timeline

Prepetition Postpetition

BANKRUPTCY
PETITION FILING
28 USC 28 USC
§1334 §157

Arising under Title

11 Core (§157(b)(2))

Non-core
Arising in a case •Counterclaims
•Fraudulent transfers
under Title 11 •Personal injury

Related to cases
under Title 11
 Commencement or continuation of prepetition action against debtor or to
STAY recover prepetition claim against the debtor
APPLIES Enforcement against debtor or property of the estate or prepetition
judgment
Act to obtain possession or property of the estate

Creation or perfection or enforcement of lien against property of the

estate
Creation of lien to secure prepetition claim against property of the debtor

Act to collect prepetition claim

Set off of prepetition debt owed to debtor against claim against debtor

Commencement or continuation of US tax court proceeding on tax liability

AUTOMATIC When property no longer property of the estate
TERMINATION
OF THE STAY Case is closed

Case is dismissed

Discharge of the debtor obtained

Debtor files intent to surrender collateral to secured creditor

Debtor filed second case after first was dismissed within the last
year of the debtor’s current BK case (30 days after petition date)
TERMINATION Sec. 362(d)(1)
BY MOTION
(d) On request of a party in interest and after notice and a
hearing, the court shall grant relief from the stay provided
under subsection (a) of this section, such as by terminating,
annulling, modifying, or conditioning such stay--
(1) for cause, including the lack of adequate protection of an
interest in property of such party in interest;

S. 362(d)(2)
(2) with respect to a stay of an act against property under
subsection (a) of this section, if--
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective
reorganization;
Adequate Protection
§ 361. Adequate protection
When adequate protection is required under section 362, 363, or 364 of this title [11 USCS
§ 362, 363, or 364] of an interest of an entity in property, such adequate protection may be
provided by—
(1) requiring the trustee to make a cash payment or periodic cash payments to such entity,
to the extent that the stay under section 362 of this title [11 USCS § 362], use, sale, or
lease under section 363 of this title [11 USCS § 363], or any grant of a lien under section
364 of this title [11 USCS § 364] results in a decrease in the value of such entity's interest
in such property;
(2) providing to such entity an additional or replacement lien to the extent that such stay,
use, sale, lease, or grant results in a decrease in the value of such entity's interest in such
property; or
(3) granting such other relief, other than entitling such entity to compensation allowable
under section 503(b)(1) of this title [11 USCS § 503(b)(1)] as an administrative expense, as
will result in the realization by such entity of the indubitable equivalent of such entity's
interest in such property.
11 USC s. 362 (d)(3) (SARE)
(3) with respect to a stay of an act against single asset real estate under subsection (a),
by a creditor whose claim is secured by an interest in such real estate, unless, not later
than the date that is 90 days after the entry of the order for relief (or such later date as
the court may determine for cause by order entered within that 90-day period) or 30
days after the court determines that the debtor is subject to this paragraph, whichever
is later--
(A) the debtor has filed a plan of reorganization that has a reasonable possibility of
being confirmed within a reasonable time; or
(B) the debtor has commenced monthly payments that--
(i) may, in the debtor's sole discretion, notwithstanding section 363(c)(2) [11 USCS
§ 363(c)(2)], be made from rents or other income generated before, on, or after the
date of the commencement of the case by or from the property to each creditor whose
claim is secured by such real estate (other than a claim secured by a judgment lien or
by an unmatured statutory lien); and
(ii) are in an amount equal to interest at the then applicable nondefault contract
rate of interest on the value of the creditor's interest in the real estate;
362(d) (4) with respect to a stay of an act against real property under subsection (a), by
a creditor whose claim is secured by an interest in such real property, if the court finds
that the filing of the petition was part of a scheme to delay, hinder, or defraud creditors
that involved either-
■ (A) transfer of all or part ownership of, or other interest in, such real property
without the consent of the secured creditor or court approval; or
■ (B) multiple bankruptcy filings affecting such real property.
■ Public Benefits
522(d)(10)(A) - Public assistance, Social Security, Veteran’s benefits, Unemployment
Compensation.
522(d)(11)(A) - Crime victim’s compensation.

■ Tools of Trade
522(d)(6) - Implements, books, and tools of the trade, up to $2,525.

■ Alimony and Child Support

522(d)(10)(D) - Alimony and child support needed for support.

■ Insurance
522(d)(7) - Unmatured life insurance policy except for credit insurance.
522(d)(8) - Life insurance policy with loan value up to $13,400.
522(d)(10)( C ) - Disability, unemployment or illness benefits.
522(d)(11)( C ) - Life insurance payments for a person you depended on, which you need for
support.

■ Wildcard
522(d)(5) - $1,325 of any property, and the unused portion of homestead exemption up to
$12,575.
Week 2: Property of the Estate and the Automatic Stay

Last week’s problem sets and Stern v. Marshal, Belingham etc.

I. STRUCTURE OF THE BANKRUPTCY CODE

II. ROLES OF EACH PARTY INVOLVED IN BANKRUPTCY CASE
III. PURPOSE OF BANKRUPTCY
I. Equal distribution to creditors
II. Giving a debtor a fresh start
IV. 3 IMPORTANT CONSEQUENCES OF A BK FILING
V. PROPERTY OF THE ESTATE (Sec. 541)
I. Exception: (retirement and educational trust accounts; income from services
rendered by an individual D postpetition)
VI. AUTOMATIC STAY
I. 2 Purposes
Federal Bankruptcy Exemptions Amounts
■ Section 522(d). The amounts allowed under the federal bankruptcy exemptions are adjusted every three
years on April 1 to reflect changes in the Consumer Price Index. The federal bankruptcy exemption figures
listed in this article are the April 1, 2019 figures. The federal bankruptcy exemptions will be adjusted
again on April 1, 2022.

■ Homestead
522(d)(1), (5) - Real property, including mobile homes and co-ops, or burial plots up to $25,150. The
unused portion of the homestead exemption up to $12,575 can be used for other property.

■ Personal Property
522(d)(2) - Motor vehicle up to $4,000.
522(d)(3) - Animals, crops, clothing, appliances and furnishings, books, household goods, and musical
instruments up to $625 per item, and up to $13,400 total.
522(d)(4) - Jewelry up to $1,700.
522(d)(9) - Health aids.
522(d)(11)(B) - Wrongful death recovery for a person you depended upon.
522(d)(11)(D) - Personal injury recovery up to $25,150 except for pain and suffering or for pecuniary loss.
522(d)(11)(E) - Lost earnings payments.

■ Pensions
522(b)(3)(C) - Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money
purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
522(b)(3)(C)(n) - IRAS and Roth IRAs to $1,362,800.
Claims
Prepetition Interest

•Unsecured creditors
•Secured creditors
•Agreement must provide for allowance of interest payment

Prepetition Attys Fees/Cost

•Unsecured creditors
•Secured creditors
•Ageement must provide for the atty fees/costs or by statute

Postpetition Interest

•Oversecured creditor until equity is exhausted

Postpetition Attys Fees/Cost

•Oversecured creditor until equity in exhausted

•Undersecured creditor entitled to fees if contract provides for it
Claims (controlling statutes)
s. 502 s. 503 s. 507 S 506

•Properly filed proof of •Arise postpetition •Priority scheme in •Secured claim is only to
claim is deemed allowed •Receives priority over all bankruptcy the extent of the value of
unless a party objects claims 1.Domestic support and the collateral
•Unmatured interest is •Actual and necessary related trustee’s fees •Undersecured claim is
disallowed cost of the estate 2.Admin expenses under bifurcated as secured
s. 503 and unsecured portions
3.Ordinary course claims •Oversecured claim
during gap period entitled to postpetition
4.Employee wages interest and fees
5.Employee benefits
6.Claims of grain
producers
7.Deposit for purchase,
lease or rental property
8.Income taxes
9.Claism toamintain
capital of fed depository
institution
10.Personal injury claims
or death due to DUI
Distribution of property of the estate
(s. 726) (waterfall)
1. priority claims under 507 (which will include administrative claims) (pro rata among
claimants of the same claims; except if converted from chapter 11, then chapter 7
administrative claims over chapter 11 priority claims)
2. timely filed unsecured claims
3. untimely filed unsecured claims if creditor did not receive notice of the BK to file a
timely claim and POC is filed in time to participate in distribution
4. untimely filed unsecured claim
5. penalties and punitive damages
6. interest payments on all of the above
7. debtor
Discharge

s. 727
s. 523 s. 722
Objection to
Nondischargeability redemption
discharge

s. 524(c)
reaffirmation