Bankruptcy:
1. Which are the forms of bankruptcy relief?
There are two general forms of bankruptcy relief: liquidation and rehabilitation or
reorganization.
2. Mention the bankruptcy chapters and explain very briefly.
Businesses and individuals seeking relief under the US Bankruptcy Code are allowed to file a
petition under the Bankruptcy Code chapters 7, 9, 11, 12, 13, and 15.
Chapter 7- Liquidation: the trustee collects the non-exempt property of the debtor, converts
that property to cash, and distributes the cash to the creditors.
Chapter 9 – Reorganization of Municipalities: it involves governmental entities as debtors, and
it is infrequently used.
Chapter 11- Reorganization of the debtor´s assets: it is available to businesses, whether a sole
proprietorship, partnership, or corporation. The debtor remains in charge of the business as a
debtor in possession but under the oversight of the bankruptcy court.
Chapter 12 – Reorganization of the debtor´s assets: it is only applicable to family farmers and
fishermen. It provides additional benefits such as higher debt ceilings.
Chapter 13 - Reorganization of the debtor´s assets: it provides a reorganization plan to
individuals who do not want to go through a Chapter 7 bankruptcy. Individuals get an
opportunity to reorganize their financial affairs while under the protection of the bankruptcy
court.
Chapter 15 – Cross-Border insolvency: it allows for the cooperation between United States
courts, foreign courts, and other authorities involved in cross-border insolvency cases. During
certain bankruptcy proceedings in foreign countries, a business or individual may have a
connection to assets located in more than one country. Cross-border insolvency focuses on the
choice of law rules, jurisdiction rules, and the enforcement of judgement rules.
3. State the differences, if any, among bankruptcy referee, bankruptcy judge, bankruptcy
court, US bankruptcy judge; US trustee.
Bankruptcy referee: his judicial role was relatively minor. The referee was primarily an
administrator and supervisor of bankruptcy cases, not a judicial officer. Amendments to the
Bankruptcy Act made the bankruptcy referee more of a judicial officer. In 1973, the Bankruptcy
Rules changed the title of the office from bankruptcy referee to bankruptcy judge. (Thus, there
is no difference between bankruptcy referee and bankruptcy judge).
United States bankruptcy courts function as units of the district courts and have subject-
matter jurisdiction over bankruptcy cases. The federal district courts have original and
exclusive jurisdiction over all cases arising under the bankruptcy code, and bankruptcy cases
cannot be filed in state court.
US bankruptcy judge is a judicial officer of a United Stated district court who is appointed by
the majority of judges of the U.S. court of appeals to which his or her specific district court is
attached. Bankruptcy judges exercise jurisdiction over bankruptcy matters.
US trustee is a government official appointed by the Attorney General. Essentially, the United
States trustee performs appointing and other administrative tasks that the bankruptcy judge
would otherwise have to perform. To illustrate, the United States trustee, not the bankruptcy
judge, selects and supervises the bankruptcy trustees. The United States trustee is more of a
substitute for the bankruptcy judge with respect to supervisory and administrative matters.
4. Bankruptcy trustee. Describe. Differences according to the chapters.
Bankruptcy trustee will be a private citizen, not an employee of the federal government. A
bankruptcy trustee is an active trustee and is the representative of the estate. The bankruptcy
trustee is the person who sues on behalf of or may be sued on behalf of the estate.
In both Chapter 7 and Chapter 13 bankruptcies, it’s the trustee’s duty to review your
bankruptcy forms and investigate and verify your financial information.
One of the trustee’s responsibilities in doing this is to make sure your bankruptcy claim is not
fraudulent.
The duties of a bankruptcy trustee in a Chapter 7 case include:
1- Collecting the property of the estate.
2- Challenging certain prebankruptcy and post-bankruptcy transfers of the property of
the estate.
3- Selling the property of the estate.
4- Objecting to creditors´ claims that are improper
5- In appropriate cases, objecting to the debtor´s discharge
The main job of a Chapter 7 bankruptcy trustee is to sell your nonexempt property and repay
your creditors as quickly as possible.
The Chapter 7 trustee is also required to decide if your nonexempt property can be sold in
order to pay back a significant portion of your debt. If so, you’ll have to turn that property
over.
A Chapter 13 trustee is responsible for overseeing your repayment plan. That includes …
Making sure your plan is reasonably affordable
Collecting your payments according to the plan
Distributing payments to your creditors
The trustee also holds the meeting of creditors in a Chapter 13 bankruptcy.
5. US trustee. Explain
US trustee is a government official appointed by the Attorney General. Essentially, the United
States trustee performs appointing and other administrative tasks that the bankruptcy judge
would otherwise have to perform. To illustrate, the United States trustee, not the bankruptcy
judge, selects and supervises the bankruptcy trustees. The United States trustee is more of a
substitute for the bankruptcy judge with respect to supervisory and administrative matters.
6. Differences between voluntary and involuntary cases
There are two different ways in which a bankruptcy proceeding can be initiated -- voluntary
and involuntary. A voluntary bankruptcy, by far the most common type of bankruptcy
proceeding, is initiated by a debtor who wishes to seek relief. Involuntary bankruptcies, which
are very rare, are initiated by a debtor’s creditors who want to receive payment for what they
are owed.
7. Explain property of the estate
The filing of any bankruptcy petition automatically creates an “estate”, and that estate
includes the assets of the debtors as of the time of the bankruptcy filing.
