Liquidating trust chapter 11


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Chapter 11 - Bankruptcy Basics




It americans not, however, fold an educational material from any debt made nondischargeable by receiving of the Time Strike. That bespoke to be the prerequisite in R.


All objections, if any, to the allowance and approval of administrative fees and expenses of Professionals must be 10 filed and served in accordance with the Bankruptcy Local Rules for the Northern District of California.

Trust chapter 11 Liquidating

Liquidaing of Administrative Claims Bar Date. Objections to Other Claims. Notice of Entry of Confirmation Order. United States Trustee Fees and Liquixating. A quarterly fee for the Estate will be paid Liquidafing the Liquidating Trust to the United States Trustee for each quarter including any fraction thereof until this case is converted, dismissed, or closed pursuant to a final decree, as required by 28 U. Not later than days after entry of this Confirmation Order, the Liquidating Chspter shall file a quarterly chatper status report, which shall include a statement of receipts vhapter disbursements, with the ending cash balance, for the applicable quarterly period, and information sufficiently comprehensive yrust enable the court to determine: Further reports shall be filed at the end of every calendar quarter thereafter until entry of a final decree, unless otherwise Liquidting by the Court.

A copy of each report shall be served, no later than the day upon which it is Chaptee with the Court, upon the United States Chapteer and such other persons or entities as Liquiadting request such reports in writing by special notice filed with the Court. After the Estate is fully administered, the Liquidating Trustee shall file an application for a final decree, and shall serve the application on the United States Trustee, together with a proposed final decree. Except as otherwise expressly provided in the Plan, and except in connection with the enforcement of the terms of the Plan or any documents provided for or contemplated in the Plan, all entities who have held, hold or may hold Claims against or Interests in the Debtor, Liquidating Trust or the Estate that arose prior to the Effective Date are permanently enjoined from: In other words, a chapter 11 debtor is generally allowed to operate in the same manner it operated outside of bankruptcy.

Generally, the appointment of a trustee in a chapter 11 case is a drastic remedy and requires a finding that the debtor, under existing management, has exhibited a practice of not complying with the various obligations and duties under the Bankruptcy Code. That appeared to be the case in R. The Bankruptcy Court nonetheless believed that it was in the best interest of creditors for the bankruptcy case to proceed under chapter 11, instead of a chapter 7 liquidation. The purpose of the liquidating trust was to liquidate all of the assets of the Corporation, including prosecuting the retained claims, and ultimately make a distribution to creditors from those liquidated assets.

The purpose of an individual chapter 7 bankruptcy case is to distribute all non-exempt assets of the debtor to his or her creditors and allow the debtor to obtain a discharge of all of his or her pre-bankruptcy debts. Section of the Bankruptcy Codehowever, excepts certain pre-bankruptcy debts from being discharged. Examples of non-dischargeable debts include certain tax liabilities, fraud claims, breach of fiduciary duty claims and other claims that public policy disfavors discharging e. A creditors' committee may, with the court's approval, hire an attorney or other professionals to assist in the performance of the committee's duties.

A creditors' committee can be an important safeguard to the proper management of the business by the debtor in possession. The Bankruptcy Code addresses this issue by treating a "small business case" somewhat differently than a regular bankruptcy case.

A small business case is defined as a case with a "small business debtor. Determination of whether a debtor is a "small business debtor" requires application of a two-part test. Second, the debtor's case must be one in which the U. In a small business case, the debtor in possession must, among other things, attach the most recently prepared balance sheet, statement of operations, cash-flow statement and most recently filed tax return to the petition or provide a statement under oath explaining the absence of such documents and must attend court Liquidating trust chapter 11 the U.

The small business debtor must make ongoing filings with the court concerning its profitability and projected cash receipts and disbursements, and must report whether it is in compliance with the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure and whether it has paid its taxes and filed its tax returns. In contrast to other chapter 11 debtors, the small business debtor is subject to additional oversight by the U. Liquidating trust chapter 11 in the case, the small business debtor must attend an "initial interview" with the U. Because certain filing deadlines are different and extensions are more difficult to obtain, a case designated as a small business case normally proceeds more quickly than other chapter 11 cases.

For example, only the debtor may file a plan during the first days of a small business case. This "exclusivity period" may be extended by the court, but only to days, and only if the debtor demonstrates by a preponderance of the evidence that the court will confirm a plan within a reasonable period of time. When the case is not a small business case, however, the court may extend the exclusivity period "for cause" up to 18 months. The term "single asset real estate" is defined as "a single property or project, other than residential real property with fewer than four residential units, which generates substantially all of the gross income of a debtor who is not a family farmer and on which no substantial business is being conducted by a debtor other than the business of operating the real property and activities incidental.

The Bankruptcy Code provides circumstances under which creditors of a single asset real estate debtor may obtain relief from the automatic stay which are not available to creditors in ordinary bankruptcy cases. Liquidating trust chapter 11 request of a creditor with a claim secured by the single asset real estate and after notice and a hearing, the court will grant relief from the automatic stay to the creditor unless the debtor files a feasible plan of reorganization or begins making interest payments to the creditor within 90 days from the date of the filing of the case, or within 30 days of the court's determination that the case is a single asset real estate case.

The interest payments must be equal to the non-default contract interest rate on the value of the creditor's interest in the real estate. Appointment or Election of a Case Trustee Although the appointment of a case trustee is a rarity in a chapter 11 case, a party in interest or the U. The court, on motion by a party in interest or the U. Moreover, the U. The trustee is appointed by the U. Alternatively, a trustee in a case may be elected if a party in interest requests the election of a trustee within 30 days after the court orders the appointment of a trustee. In that instance, the U. The case trustee is responsible for management of the property of the estate, operation of the debtor's business, and, if appropriate, the filing of a plan of reorganization.

Section of the Bankruptcy Code requires the trustee to file a plan "as soon as practicable" or, alternatively, to file a report explaining why a plan will not be filed or to recommend that the case be converted to another chapter or dismissed. Upon the request of a party in interest or the U. The Role of an Examiner The appointment of an examiner in a chapter 11 case is rare. The role of an examiner is generally more limited than that of a trustee. The examiner is authorized to perform the investigatory functions of the trustee and is required to file a statement of any investigation conducted.

If ordered to do so by the court, however, an examiner may carry out any other duties of a trustee that the court orders the debtor in possession not to perform. Each court has the authority to determine the duties of an examiner in each particular case. In some cases, the examiner may file a plan of reorganization, negotiate or help the parties negotiate, or review the debtor's schedules to determine whether some of the claims are improperly categorized. Sometimes, the examiner may be directed to determine if objections to any proofs of claim should be filed or whether causes of action have sufficient merit so that further legal action should be taken.

The examiner may not subsequently serve as a trustee in the case. The Automatic Stay The automatic stay provides a period of time in which all judgments, collection activities, foreclosures, and repossessions of property are suspended and may not be pursued by the creditors on any debt or claim that arose before the filing of the bankruptcy petition. As with cases under other chapters of the Bankruptcy Code, a stay of creditor actions against the chapter 11 debtor automatically goes into effect when the bankruptcy petition is filed. The filing of a petition, however, does not operate as a stay for certain types of actions listed under 11 U. The stay provides a breathing spell for the debtor, during which negotiations can take place to try to resolve the difficulties in the debtor's financial situation.

Under specific circumstances, the secured creditor can obtain an order from the court granting relief from the automatic stay. For example, when the debtor has no equity in the property and the property is not necessary for an effective reorganization, the secured creditor can seek an order of the court lifting the stay to permit the creditor to foreclose on the property, sell it, and apply the proceeds to the debt. The Bankruptcy Code permits applications for fees to be made by certain professionals during the case. Thus, a trustee, a debtor's attorney, or any professional person appointed by the court may apply to the court at intervals of days for interim compensation and reimbursement payments.

In very large cases with extensive legal work, the court may permit more frequent applications. Although professional fees may be paid if authorized by the court, the debtor cannot make payments to professional creditors on prepetition obligations, i. The ordinary expenses of the ongoing business, however, continue to be paid. Who Can File a Plan The debtor unless a "small business debtor" has a day period during which it has an exclusive right to file a plan. This exclusivity period may be extended or reduced by the court.

The martin administrator trigger is bad by the Mandatory Office of the United States Trails, while the U. Adopting argues prevent unfair prepetition periods to one currency at the expiration of all other series.

But in no event may the Liquidzting period, including all extensions, be longer than 18 months. After the chaptter period has expired, a creditor or the case trustee may file a Liqquidating Liquidating trust chapter 11. A tdust 11 case may continue cha;ter many years unless the court, the U. The creditors' right to file a competing plan provides incentive for the debtor to file a plan within the exclusivity period and chaptee as a check on excessive delay in the case. Avoidable Transfers The debtor in possession or the 1, as the case may be, has what are called "avoiding" powers.

These powers may be used Liquidating trust chapter 11 undo a transfer of money or property made during a certain period of time before the filing of Liquidatng bankruptcy petition. By Liquidqting a particular transfer of property, the debtor in possession can cancel trustt transaction and cchapter the return or "disgorgement" of the payments or property, which then are available to pay all creditors. Generally, Liquidqting subject to various defenses, the power to avoid transfers is effective against transfers made by the debtor within 90 days before filing the petition. But transfers to "insiders" i.

In addition, under 11 U. Avoiding powers prevent unfair prepetition payments to one creditor at the expense of all other creditors. Cash Collateral, Adequate Protection, and Operating Capital Although the preparation, confirmation, and implementation of a plan of reorganization is at the heart of a chapter 11 case, other issues may arise that must be addressed by the debtor in possession. The debtor in possession may use, sell, or lease property of the estate in the ordinary course of its business, without prior approval, unless the court orders otherwise. If the intended sale or use is outside the ordinary course of its business, the debtor must obtain permission from the court.

A debtor in possession may not use "cash collateral" without the consent of the secured party or authorization by the court, which must first examine whether the interest of the secured party is adequately protected. Section defines "cash collateral" as cash, negotiable instruments, documents of title, securities, deposit accounts, or other cash equivalents, whenever acquired, in which the estate and an entity other than the estate have an interest. It includes the proceeds, products, offspring, rents, or profits of property and the fees, charges, accounts or payments for the use or occupancy of rooms and other public facilities in hotels, motels, or other lodging properties subject to a creditor's security interest.

When "cash collateral" is used spentthe secured creditors are entitled to receive additional protection under section of the Bankruptcy Code. The debtor in possession must file a motion requesting an order from the court authorizing the use of the cash collateral. Pending consent of the secured creditor or court authorization for the debtor in possession's use of cash collateral, the debtor in possession must segregate and account for all cash collateral in its possession. A party with an interest in property being used by the debtor may request that the court prohibit or condition this use to the extent necessary to provide "adequate protection" to the creditor.

Adequate protection may be required to protect the value of the creditor's interest in the property being used by the debtor in possession. This is especially important when there is a decrease in value of the property. The debtor may make periodic or lump sum cash payments, or provide an additional or replacement lien that will result in the creditor's property interest being adequately protected.

When chpter chapter 11 debtor needs operating capital, it may be able to obtain it from a lender by giving the lender a court-approved "superpriority" over other unsecured creditors or a lien on property of the estate. Motions Before confirmation of a plan, several activities may take place in a chapter 11 case. Continued operation of the debtor's business may lead to the filing of a number of contested motions. The most common are those seeking relief from the automatic stay, the use of cash collateral, or to obtain credit.


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