BUSINESS BANKRUPTCY: A bankruptcy in which the debtor is a business or an individual involved in business and the debts were incurred primarily for business purposes. [Source: Bankruptcy Court, District of New Jersey; printed here as “Fair Use” under the US Code]
BANKRUPTCY TRUSTEE: A private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases to represent the interests of the bankruptcy estate and the debtor’s creditors. [Source: Bankruptcy Court, District of New Jersey; printed here as “Fair Use” under the US Code]
BANKRUPTCY LAW (Expansiveness of Automatic Stay): Automatic stay of 11 USC Sec. 362 applies to bar actions against debtor and against the bankruptcy estate. This automatic stay protects the debtor, as well as the assets of the estate, and creditors. Actions that are barred include religious actions, such as a Jewish tribunal set up as a cross-complaint against the debtor, filed in an adversary action. The synagogue could not pursue its religious action against the debtor as long as the stay was in place.
In re Congregation of Birchos Yosef, 535 BR 629 (2015); Bankruptcy Court, Southern District of New York
Photo Credit: Beth Din of Benghazi, 1930,
BANKRUPTCY LAW (Preferential Transfer): The bankruptcy court abhors, and will seek to undo, what it considers a preferential transfer.
A debtor who paid off serial overdrafts to his bank within 90 days of filing bankruptcy made preferential transfers. The court reasoned that the bank already had the deposits, and was effectively receiving extra money, that it would have been barred from receiving HAD the bankruptcy already been filed. The trustee was entitled to receive reimbursement for the amount of the overdraft payments.
In re Agriprocessors, Inc., 859 F.3d 599, 8th Circuit 2017
BANKRUPTCY LAW (Preferential Transfer): A preferential transfer is a payment made within 90 days before the filing of bankruptcy, which is not made in the ordinary course of business. WHEN the trustee or Court finds that the debtor has made such a transfer, the transfer may be unwound, and the money ordered returned to the bankruptcy estate. The creditor who received the money will have to dig into its pockets and return the funds to the court.
In determining whether a payment is a preference, the court can conduct a hypothetical payment analysis to determine whether that payment would have been made had bankruptcy had not been filed. If the creditor received more via the questioned transaction than it would have received in the bankruptcy, then the payment is a preference (“preferential transfer”). In re Tenderloin Health 849 F 3rd 1231, 9th Circuit 2017