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Bankruptcy 101: From a Creditor's Perspective

Overview of Bankruptcy basics from a creditor's perspective.

Jeffrey Nicolet

on 23 January 2015

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Transcript of Bankruptcy 101: From a Creditor's Perspective

Federal Law governs
Impact of Bankrupcty Case
Prevented from pursuing debtor
Common Terms
Bankruptcy Code
Chapter 7
Alternatives to Bankruptcy
Debtor is insolvent
Receiver operates debtor
Chapter 11
Business Reorganization
What to do?
Request assurance
Affirmation from bond surety
Order from the Court
What are they?
Significant performance remaining by both parties
Types of Filings
Executory Contracts
Bankruptcy 101:
Founded in 1932 by C.J. Wagner
Entrepreneurial spirit
Partner with our clients for their long term success
Specialize in commercial collections, business & corporate law, civil litigation and construction law
About WFJ...
Jeffrey S. Nicolet
Wagner, Falconer & Judd, Ltd.
1700 IDS Center
80 South 8th Street
Minneapolis, MN 55402
Fresh Start
Chance to offset current losses with future business
Debtor just shuts down
Chapter 7 To Do List
Confirm the filing
Comply with Automatic Stay
Obtain Petition and Mailing Matrix
Confirm debt is scheduled correctly
Confirm correct mailing address
File Proof of Claim
Review Transactions within last 90 days
Consider Adversary Proceeding due to fraud
Confirm lien rights
...same for Chapter 11
Automatic Stay
Stops (almost) all collection efforts
No action against debtor
No demands
No lawsuits
No enforcing judgments or liens
Does not stop
of lien rights
Proof of Claim
Purpose of a Proof of Claim
In a Chapter 7...
Deadline 90 days from date first set for the meeting of creditors
In a Chapter 11...
Deadline set by Court for claims not scheduled, disputed, contingent, or unliquidated
"Self-Help" for goods delivered withing 45 days of bankruptcy filing
Written Demand
Before 45 days after receipt of such goods by debtor OR
If 45 period expires after commencement of bankruptcy case, before 20 days after commencement
Decision must be made...
(within 60 days in Chapter 7 or
by plan confirmation in a Chapter 11)
...to either:
Assume and perform
Assume and assign
If debtor is already in default, trustee must provide adequate assurance of cure or future performance
Continue to perform until advised otherwise
Trustee has broad avoiding powers
Transfer made for the benefit of a creditor
Transfer is payment of antecedent debt
Debtor was insolvent when transfer made
Transfer made within 90 days preceding filing of the bankruptcy petition
Transfer enabled creditor to receive more than the creditor would have received from the estate in a Chapter 7 liquidation
Defenses to a Preference Claim
Contemporaneous exchange
Ordinary course
New value
Extending New Credit
After a Chapter 7
Corporation cannot continue after filing
Eight (8) years before another Chapter 7
Four (4) years before Chapter 13
After a Chapter 11
No restrictions on a second filing
Free to negotiate new terms
From a Creditor's Perspective
Six different types
Three most common - 7,11, 13
Debtor's goal is to get out of debt, have debts discharged
Creditor's Meeting
Automatic Stay
Executory Contracts
Proof of Claim
Adversary Proceeding
Debt could be discharged
Affect lien rights?
More likely than not, you will not get paid
Full transcript