Thursday, November 29, 2012

Bankruptcy Law, The Law of Debtors and Creditors Problem Set Answers, Warren Westbrook Sixth Edition - Problem Set 18

Problem Set 18, p.383

  • As an attorney, how can you find that the debtor also missed other bills? How to make the debtor to tell you?
  • UCC search for the personal credit; hire a private detective, credit firms.
  • Maintain the relationship with the clients: through the personal approach.
  • Lure the debtor: if you can prove it cannot pay the bill, we would negotiate with this debt.
  • Pre-Contract it.
  • Pottow: Just sue it; discovery procedure.
  • The risk is that if the involuntary petition is dismissed, the creditor may have to pay the fees and costs and the debtor, and also possible punitive damages if he is regarded as in bad faith.
  • I would like to ask
  • how many creditors he has;
  • how much debt he owes;
  • whether he can expect how many creditors would join in SSB’s suit.
  • Alternative methods?
  • Grace period to pay: but it may be found by other creditors and force it to go bankrupt
  • Why not give SSB a lien silently? Fraudulent conveyance.
Equity insolvency; balance insolvency; I am not persuaded that he is insolvent from the balance sheet §303(h).

  • Can Universal file the petition under §303(b)? How to calculate the number of creditors?
  • Insider? See §101(31).
  • A case in the textbook: You cannot mechanically calculate the number of the debtor, and we should care the policy behind the number.
  • Universal cannot count its subsidiaries; they may be regarded as one person.
  • §303(h) generally not paying?
  • §303(i) - Shifting the expense; if you sue others wrongfully, you shoulder the expense.
  • Is the debtor in bad faith? Laughing.
  • Fraudulent conveyance?
  • §303(a) – the debtor should be a person or an incorporated corporation. But the committee is not incorporated.
  • Mon-commercial corporation
  • What is a moneyed corporation?
  • Pottow: I am afraid that they may not file against the committee?
  • §303(a) – the concern here is whether he is a farmer that is an exception. But here he is not a farmer
  • Is it bad faith for AFF to transfer his assets to his friends?
  • Good faith requirement
  • Bad faith – punitive damages?

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    Problem Set 21, p.468
    21.1 (not discussed)
  • §364(a) Borrow money as an administrative expense.
  • §364(c) request the court to authorize TIB the obtaining of credit with
  • priority over any administrative expense
  • lien
  • a junior lien.
  • §364(d) super priority security interest or equal lien.
  • The trustee is unable to obtain such credit otherwise.
  • There is adequate protection of the existing secured debts.

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