CBA CBA Creditor Rights & Claims 2 — Questions and Answers
Question 1: A claim is considered 'contingent' in bankruptcy when it is:
- Disputed by the debtor
- Subject to a future event that may never occur (Correct answer)
- Unliquidated in amount
- Filed after the bar date
Correct answer: Subject to a future event that may never occur
A contingent claim depends on the occurrence of a future event that may or may not happen, such as a guarantee that has not yet been called.
Question 2: Which type of creditor has the right to credit bid at a sale of their collateral under 11 U.S.C. § 363(k)?
- General unsecured creditors
- Priority creditors
- Secured creditors (Correct answer)
- Administrative claimants
Correct answer: Secured creditors
Section 363(k) grants secured creditors the right to credit bid up to the full amount of their allowed secured claim at a sale of their collateral.
Question 3: What must a creditor demonstrate to obtain relief from the automatic stay under 11 U.S.C. § 362(d)(1)?
- The debtor is insolvent
- Cause, including lack of adequate protection (Correct answer)
- The collateral is depreciating at over 10% per month
- The estate has insufficient assets to pay the claim
Correct answer: Cause, including lack of adequate protection
Under § 362(d)(1), a court may grant stay relief for 'cause,' with lack of adequate protection of the creditor's interest being the most common basis.
Question 4: Under 11 U.S.C. § 547, what is the preference period for transfers to non-insider creditors?
- 30 days before the petition date
- 60 days before the petition date
- 90 days before the petition date (Correct answer)
- 1 year before the petition date
Correct answer: 90 days before the petition date
The preference look-back period for non-insider creditors is 90 days before the petition date under § 547(b)(4)(A).
Question 5: What is 'adequate protection' in bankruptcy, and why is it required?
- Insurance on estate property required by the trustee
- Compensation to a secured creditor for value lost during the stay (Correct answer)
- A bond posted by the debtor-in-possession
- Priority given to administrative creditors
Correct answer: Compensation to a secured creditor for value lost during the stay
Adequate protection compensates secured creditors for any decline in the value of their collateral during the bankruptcy case while the automatic stay is in effect.
Question 6: Which section of the Bankruptcy Code allows a trustee to avoid fraudulent transfers?
- 11 U.S.C. § 544
- 11 U.S.C. § 547
- 11 U.S.C. § 548 (Correct answer)
- 11 U.S.C. § 550
Correct answer: 11 U.S.C. § 548
Section 548 empowers the trustee to avoid transfers made with actual fraudulent intent or for less than reasonably equivalent value within two years before the petition.
CBA CBA Creditor Rights & Claims 2
A claim is considered 'contingent' in bankruptcy when it is: