CBS Bankruptcy Laws & Regulations 3 — Questions and Answers
Question 1: Under 11 U.S.C. § 341, the meeting of creditors must generally be held:
- Within 10 days of filing
- Between 21 and 50 days after the order for relief (Correct answer)
- Within 90 days of the petition date
- At the discretion of the bankruptcy judge
Correct answer: Between 21 and 50 days after the order for relief
Section 341 requires that the U.S. Trustee convene a meeting of creditors between 21 and 50 days after the order for relief in a Chapter 7 case.
Question 2: A 'cramdown' in Chapter 11 allows a plan to be confirmed over the objection of a dissenting class if:
- A majority of all creditors vote to approve
- At least one impaired accepting class exists and the plan is fair and equitable (Correct answer)
- The debtor demonstrates insolvency at the time of filing
- Administrative creditors consent to deferred payment
Correct answer: At least one impaired accepting class exists and the plan is fair and equitable
Under § 1129(b), a court may confirm a plan over dissenting classes if at least one impaired class accepts and the plan does not discriminate unfairly and is fair and equitable.
Question 3: Which of the following transfers is MOST likely to be avoidable as a preferential transfer under § 547?
- Payment made 100 days before filing to a non-insider creditor
- Payment made 85 days before filing to an unrelated supplier owed $8,000
- Payment made 80 days before filing to a non-insider enabling a new value advance
- Payment made 85 days before filing enabling the creditor to obtain a perfected lien (Correct answer)
Correct answer: Payment made 85 days before filing enabling the creditor to obtain a perfected lien
A transfer enabling a creditor to receive more than they would in Chapter 7 liquidation, made within 90 days of filing, constitutes a preferential transfer under § 547(b).
Question 4: Under 11 U.S.C. § 506(a), a secured creditor's claim is bifurcated so that:
- The claim is treated as fully secured regardless of collateral value
- The secured portion equals collateral value and the remainder is unsecured (Correct answer)
- Both portions receive equal priority in distribution
- The unsecured deficiency is automatically discharged
Correct answer: The secured portion equals collateral value and the remainder is unsecured
Section 506(a) bifurcates an undersecured creditor's claim into a secured claim equal to the collateral's value and an unsecured deficiency claim.
Question 5: The 'two-year lookback period' in 11 U.S.C. § 548 applies to which type of avoidance action?
- Preferential transfers to insiders
- Fraudulent transfers or obligations (Correct answer)
- Post-petition transfers of estate property
- Setoffs made within 90 days of filing
Correct answer: Fraudulent transfers or obligations
Section 548 allows a trustee to avoid fraudulent transfers or obligations made within two years before the petition date.
Question 6: A debtor's right to convert a Chapter 7 case to Chapter 13 is governed by:
- 11 U.S.C. § 706 (Correct answer)
- 11 U.S.C. § 1307
- 11 U.S.C. § 348
- 11 U.S.C. § 727
Correct answer: 11 U.S.C. § 706
Section 706 governs conversion of a Chapter 7 case to Chapter 11, 12, or 13, and provides the debtor with a one-time right to convert.
Question 7: Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), a debtor must complete credit counseling:
- Within 30 days after filing the petition
- Within 180 days before filing the petition (Correct answer)
- At any time during the pendency of the case
- Only if the U.S. Trustee requests it
Correct answer: Within 180 days before filing the petition
BAPCPA requires individual debtors to complete credit counseling from an approved agency within 180 days before filing a bankruptcy petition.
CBS Bankruptcy Laws & Regulations 3
Under 11 U.S.C. § 341, the meeting of creditors must generally be held: