CBS Legal Filing & Court Procedures 2 — Questions and Answers
Question 1: Under the Bankruptcy Code, what is the effect of filing a voluntary petition on pending state court collection actions?
- They are dismissed with prejudice
- An automatic stay halts all collection actions immediately (Correct answer)
- Creditors must obtain court approval to continue within 30 days
- The state court retains jurisdiction unless the bankruptcy court intervenes
Correct answer: An automatic stay halts all collection actions immediately
Filing a voluntary petition triggers the automatic stay under 11 U.S.C. § 362, which immediately halts most collection actions against the debtor.
Question 2: A Chapter 11 debtor-in-possession fails to file its monthly operating report for two consecutive months. What is the most likely consequence?
- Automatic conversion to Chapter 7
- Dismissal or conversion of the case upon trustee's motion (Correct answer)
- The court imposes a monetary sanction only
- The DIP loses exclusivity to file a reorganization plan
Correct answer: Dismissal or conversion of the case upon trustee's motion
Failure to file required operating reports is grounds for dismissal or conversion under 11 U.S.C. § 1112(b)(4)(F).
Question 3: Which court has original and exclusive jurisdiction over all bankruptcy cases?
- U.S. District Court (Correct answer)
- U.S. Bankruptcy Court
- U.S. Court of Appeals
- State court with concurrent jurisdiction
Correct answer: U.S. District Court
Under 28 U.S.C. § 1334(a), district courts have original and exclusive jurisdiction over all bankruptcy cases, which they refer to bankruptcy courts.
Question 4: When must a creditor file a proof of claim in a Chapter 7 no-asset case to preserve its right to distribution if assets are later discovered?
- Within 90 days of the order for relief
- Within 70 days of receiving notice that assets exist
- Within 90 days after the court issues notice of assets (Correct answer)
- No deadline applies; claims are allowed automatically
Correct answer: Within 90 days after the court issues notice of assets
Under FRBP 3002(c)(5), when a no-asset case converts to an asset case, creditors have 90 days from the court's notice of assets to file proofs of claim.
Question 5: What is required for a creditor to obtain relief from the automatic stay on grounds that its interest in property is not adequately protected?
- Filing a proof of claim and waiting 30 days
- Filing a motion under 11 U.S.C. § 362(d) and demonstrating lack of adequate protection (Correct answer)
- Obtaining a state court default judgment prior to the stay
- Showing the debtor is insolvent on the petition date
Correct answer: Filing a motion under 11 U.S.C. § 362(d) and demonstrating lack of adequate protection
A creditor seeking stay relief must file a motion under § 362(d) and demonstrate cause, such as lack of adequate protection of its interest.
Question 6: Under FRBP 7004, service of a summons in an adversary proceeding on a corporation must be made by:
- Personal delivery to any employee at the principal office
- First-class mail to an officer, managing agent, or general agent (Correct answer)
- Certified mail only, return receipt requested
- Electronic service if the corporation has an email address on file
Correct answer: First-class mail to an officer, managing agent, or general agent
FRBP 7004(b)(3) permits service on a corporation by first-class mail addressed to an officer, managing agent, or general agent.
Question 7: A debtor converts a Chapter 13 case to Chapter 7. Which statement about the meeting of creditors is correct?
- No new meeting is required because one was already held
- A new § 341 meeting must be scheduled and held in the converted case (Correct answer)
- The Chapter 13 trustee conducts the Chapter 7 meeting
- The debtor may waive the meeting upon conversion
Correct answer: A new § 341 meeting must be scheduled and held in the converted case
Upon conversion, a new § 341 meeting of creditors must be held in the Chapter 7 case, typically within 40 days of conversion.
CBS Legal Filing & Court Procedures 2
Under the Bankruptcy Code, what is the effect of filing a voluntary petition on pending state court collection actions?