Chapter 17
CORPORATE LIQUIDATIONS AND REORGANIZATIONS
Chapter Outline
BANKRUPTCY LAW A Bankruptcy law is contained in Title 11 of the United States Code (USC), referred to as
the Bankruptcy Act. B The Bankruptcy Reform Act was passed in 1978 and has been amended several times. C The Bankruptcy Abuse and Consumer Protection Act (BAPCPA) 1 Made it more difficult for debtors to abuse the spirit behind bankruptcy provisions.
2 Debtor company is given 120 days initially to submit a plan of reorganization.
Exclusivity period is limited to a maximum of 18 months.
3 Retail debtors now have only 120 days to assume or reject non-residential real
property unexpired leases with a maximum 90 day extension.
D Provisions of the Act and its amendments 1 The Bankruptcy Act created bankruptcy courts.
a The jurisdiction of the bankruptcy court covers all cases under Title 11 of
U.S.C.
b Congress attempted to speed up bankruptcy cases with amendments to
the Act in 1994. The court was given the authority to set dates by which certain parties to the bankruptcy case must complete their duties.
2 The Bankruptcy Act created the Office of U.S. Trustee. a U.S. trustees are appointed by the attorney general.
b U.S. trustees are responsible for the administration of bankruptcy
cases.
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c d e
U.S. trustees maintain and supervise a panel of private trustees to serve in liquidation cases.
A U.S. trustee serves as trustee or interim trustee in some cases where a private trustee is not available.
The U.S. trustee monitors appointed creditor committees and presides over creditor meetings.
The Bankruptcy Act also provides for bankruptcy judges a b
Bankruptcy judges are appointed by Federal Appeals Court Judges for a 14-year period.
The role of the bankruptcy judge is judicial, and duties of the bankruptcy judge include
? Settling disputes in the case.
? Approving all payments of debts incurred before the bankruptcy filing.
? Approving all other payments that are considered extraordinary.
E
Corporate bankruptcy cases 1 2
A case begins when a petition is filed under which the debtor is initially brought into bankruptcy court.
The petition may be filed by the debtor (a voluntary bankruptcy proceeding) or by creditors (an involuntary bankruptcy proceeding).
The petition may be filed under Chapter 7 or Chapter 11 of the Bankruptcy Act. a b
Chapter 11 petitions anticipate the reorganization of the debtor. Chapter 7 cases anticipate the debtor’s liquidation.
3
4 The Bankruptcy Court has the power to
? ? ? ?
Enter the order for relief (accept the petition), Dismiss the case,
Convert a Chapter 7 case to a Chapter 11 case, or Convert a Chapter 11 case to a Chapter 7 case
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CHAPTER 7 LIQUIDATION CASES A Commencing a Chapter 7 case
1 A Chapter 7 case is commenced voluntarily when the debtor corporation files a
petition with the bankruptcy court.
2 A Chapter 7 case is commenced involuntarily when
a A filing is made by 3 or more creditors holding unsecured claims
aggregating at least $10,000, or b A single creditor with an unsecured claim of at least $10,000 files, and
there are fewer than 12 unsecured creditors.
c The Court will accept the petition under Chapter 7 if the creditors
prove their claims and the debtor does not contest the petition.
d The debtor may respond by filing for protection under Chapter 11.
3 The filing of a case creates an estate.
B The U.S. trustee (or the bankruptcy judge in non U.S. trustee districts) appoints an
interim trustee to take possession of the debtor corporation’s estate until a trustee is elected. C Unsecured creditors with undisputed claims vote for a trustee.
1 Electing a trustee requires that creditors holding at least 20% in amount of
claims vote and that one candidate gets the votes of creditors holding a majority of the amount of claims voting.
2 If a trustee is not elected, the interim trustee serves as trustee. D Unsecured creditors that can vote also elect a creditors’ committee of 3 to 11
members. E The trustee takes possession of the estate, converts the estate assets into cash, and
distributes the proceeds according to priority of claims, as directed by the bankruptcy court. The trustee also 1 Investigates the financial affairs of the debtor. 2 Provides information about the debtor’s estate and its administration to parties
in interest.
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高级会计学(第10版)教师手册 (17)[10页]
