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Questions and Answers
What is the purpose of avoiding a transfer according to the text?
What is the purpose of avoiding a transfer according to the text?
What is the statute of limitations (SOL) for the transfer to be avoided?
What is the statute of limitations (SOL) for the transfer to be avoided?
What does the 70% Rule refer to?
What does the 70% Rule refer to?
Under §550(a), who may the trustee recover the value of the property from?
Under §550(a), who may the trustee recover the value of the property from?
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What does the Earmark Doctrine exempt from being considered preferences in bankruptcy?
What does the Earmark Doctrine exempt from being considered preferences in bankruptcy?
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What is the insolvency calculation based on in bankruptcy?
What is the insolvency calculation based on in bankruptcy?
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What is the rationale for avoiding certain pre-petition liens that are not recorded or otherwise perfected in bankruptcy?
What is the rationale for avoiding certain pre-petition liens that are not recorded or otherwise perfected in bankruptcy?
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What type of liability is preference in bankruptcy?
What type of liability is preference in bankruptcy?
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What conditions must be met for a bankruptcy trustee to void a transfer of property?
What conditions must be met for a bankruptcy trustee to void a transfer of property?
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What test is used to determine if a transfer in bankruptcy enabled the creditor to receive more than they would have in a Chapter 7 liquidation?
What test is used to determine if a transfer in bankruptcy enabled the creditor to receive more than they would have in a Chapter 7 liquidation?
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What can the bankruptcy trustee do with the strongarm power in bankruptcy?
What can the bankruptcy trustee do with the strongarm power in bankruptcy?
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What is the timeframe for a preference in bankruptcy involving insiders?
What is the timeframe for a preference in bankruptcy involving insiders?
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What can the trustee request if the return of preferential payments is denied in bankruptcy?
What can the trustee request if the return of preferential payments is denied in bankruptcy?
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What is the focus of the avoidance power of a bankruptcy trustee?
What is the focus of the avoidance power of a bankruptcy trustee?
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What is the basis for the avoidance of pre-petition liens that are not recorded or otherwise perfected in bankruptcy?
What is the basis for the avoidance of pre-petition liens that are not recorded or otherwise perfected in bankruptcy?
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What does the trustee have to show before the recipient can show one of the exceptions in a preference in bankruptcy?
What does the trustee have to show before the recipient can show one of the exceptions in a preference in bankruptcy?
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When is a security interest considered perfected in the context of bankruptcy?
When is a security interest considered perfected in the context of bankruptcy?
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Under what circumstance can a security interest recorded the day before bankruptcy not be avoided by the trustee in bankruptcy?
Under what circumstance can a security interest recorded the day before bankruptcy not be avoided by the trustee in bankruptcy?
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What is the 547(c)(1) exception to a preference transfer in bankruptcy?
What is the 547(c)(1) exception to a preference transfer in bankruptcy?
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Under what condition can a transfer be considered a preference in bankruptcy?
Under what condition can a transfer be considered a preference in bankruptcy?
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What is the purpose of 547(c) in the context of preference transfers in bankruptcy?
What is the purpose of 547(c) in the context of preference transfers in bankruptcy?
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What is the significance of recording a security interest within 30 days of the bankruptcy petition?
What is the significance of recording a security interest within 30 days of the bankruptcy petition?
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Which exception under 547(c) involves ongoing accounts and netting payments against charges over a period of time?
Which exception under 547(c) involves ongoing accounts and netting payments against charges over a period of time?
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What is the 547(c)(3) exception to a preference transfer in bankruptcy?
What is the 547(c)(3) exception to a preference transfer in bankruptcy?
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When can a transfer be considered an avoidable preference in bankruptcy?
When can a transfer be considered an avoidable preference in bankruptcy?
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What is the significance of the 20-day rule under state law in the context of recording a security interest?
What is the significance of the 20-day rule under state law in the context of recording a security interest?
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In the context of ordinary course payments, when are these payments not considered preferences?
In the context of ordinary course payments, when are these payments not considered preferences?
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What is the focus of the avoidance power of a bankruptcy trustee?
What is the focus of the avoidance power of a bankruptcy trustee?
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Under what condition can a transfer be considered a preference in bankruptcy?
Under what condition can a transfer be considered a preference in bankruptcy?
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What is the significance of the 20-day rule under state law in the context of recording a security interest?
What is the significance of the 20-day rule under state law in the context of recording a security interest?
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What does the Earmark Doctrine exempt from being considered preferences in bankruptcy?
What does the Earmark Doctrine exempt from being considered preferences in bankruptcy?
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Under §550(a), who may the trustee recover the value of the property from?
Under §550(a), who may the trustee recover the value of the property from?
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What is the purpose of avoiding a transfer according to the text?
What is the purpose of avoiding a transfer according to the text?
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What is the basis for the avoidance of pre-petition liens that are not recorded or otherwise perfected in bankruptcy?
What is the basis for the avoidance of pre-petition liens that are not recorded or otherwise perfected in bankruptcy?
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What is the timeframe for a preference in bankruptcy involving insiders?
What is the timeframe for a preference in bankruptcy involving insiders?
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When can a transfer be considered an avoidable preference in bankruptcy?
When can a transfer be considered an avoidable preference in bankruptcy?
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What is the focus of 547(c) in the context of preference transfers in bankruptcy?
What is the focus of 547(c) in the context of preference transfers in bankruptcy?
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What can the bankruptcy trustee do with the strongarm power in bankruptcy?
What can the bankruptcy trustee do with the strongarm power in bankruptcy?
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Study Notes
Bankruptcy Trustee's Powers and Preferences
- A debtor treating a creditor preferentially is considered a preference, which goes against the policy of treating creditors fairly in bankruptcy.
- The trustee can request the return of preferential payments, and if denied, an adversary proceeding can be initiated.
- Elements of a preference include benefiting a creditor, coming from an antecedent debt, debtor's insolvency at the time, and the time frame of 90 days or 1 year for insiders.
- The trustee has to show a preference, and then the recipient has to show it fits one of the exceptions.
- Preference can be voluntary or involuntary, and it is strict liability, not intent-based.
- Insolvency calculation involves adding up all assets and deducting exemptions, considering only nonexempt assets.
- The Earmark Doctrine exempts certain payments made by a third party on behalf of the debtor from being considered preferences.
- A bankruptcy trustee may void a transfer of property if specific conditions are met, including the transfer benefiting a creditor and increasing the amount the transferee would receive in a Chapter 7 case.
- The greater amount test is used to determine if the transfer enabled the creditor to receive more than they would have in a Chapter 7 liquidation.
- Strongarm power allows a bankruptcy trustee to avoid pre-petition liens that are not recorded or otherwise perfected.
- There are two types of recording statutes in Wisconsin for real estate records and security interests.
- A bankruptcy trustee can avoid certain pre-petition liens that are not recorded or otherwise perfected, and the rationale for avoidance is to protect other creditors from the lack of public notice.
Bankruptcy Trustee Powers and Fraudulent Transfers
- Section 544(a) grants the bankruptcy trustee the authority to invalidate certain transfers, including those that are subordinate under non-bankruptcy law to a creditor with a judicial lien, or voidable as to a bona fide purchaser of real property.
- The Uniform Fraudulent Transfers Act (UFTA) and the Uniform Voidable Transfer Act (UVTA) aim to prevent fraudulent transfers, with the intent to defraud typically proven through badges of fraud.
- The transfer is considered fraudulent regardless of the intent to harm creditors if reasonably equivalent value was not paid.
- Fraudulent conveyance law, under 548(a), allows the trustee to avoid transfers made with actual intent to hinder, delay, or defraud creditors, or constructively fraudulent transfers where the debtor received less than reasonably equivalent value and met specific criteria.
- Various problems, such as gifts to relatives, gifts to charity, and sales for less than reasonably equivalent value, illustrate the trustee's ability to avoid certain transactions in bankruptcy.
- Judicial sales are not avoidable by the trustee if the reasonably equivalent value was received at the time of the sale, based on state foreclosure laws.
- The casino won in a gambling and reasonably equivalent value scenario as the gambler and the casino were not dealing "at arm's length".
- Using state avoidance laws, the trustee can avoid transfers that an actual unsecured creditor might avoid under state law, with different time periods for avoidance under federal and state laws.
- Preferential transfers, avoidable under section 547, involve transferring property to a creditor to pay a prior debt, resulting in one creditor receiving more than others.
- In a preference case, it's creditors vs creditors instead of creditors vs the debtor.
- Section 544(a)(1) gives the bankruptcy trustee the rights and powers of a creditor that obtained a lien on the date of bankruptcy.
- The text covers various scenarios and laws related to the bankruptcy trustee's powers and fraudulent transfers, illustrating the complexity and implications of such transactions in bankruptcy proceedings.
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Description
Test your knowledge of bankruptcy trustee powers and fraudulent transfers with this quiz. Explore the trustee's ability to avoid preferential payments, void transfers, and exercise strongarm powers, as well as the laws governing fraudulent transfers. This quiz covers the complexities and implications of these transactions in bankruptcy proceedings.
