Legal and Bankruptcy Framework Flashcards

What is the Official Committee of Unsecured Creditors (UCC) in a Chapter 11 case?

Answer: A committee appointed by the US Trustee to represent general unsecured creditors' interests

The UCC is appointed by the US Trustee from among the largest unsecured creditors to represent that class's collective interests in plan negotiations and case administration.

What does 'preference payment' mean under bankruptcy law?

Answer: Payments made to creditors within 90 days before filing that may be recoverable by the estate

A preference payment is a transfer made to a creditor within 90 days before bankruptcy (or one year for insiders) that the trustee can seek to recover to ensure equitable treatment of all creditors.

What is a 'fraudulent transfer' in the context of bankruptcy law?

Answer: Transferring assets at less than fair value or with intent to defraud creditors, which can be avoided

A fraudulent transfer occurs when a debtor transfers assets for less than fair value or to hinder creditors; the bankruptcy estate can avoid (reverse) such transfers to recover value.

What is 'Section 363' commonly used for in bankruptcy?

Answer: Selling assets of the bankruptcy estate outside the ordinary course of business with court approval

Section 363 of the Bankruptcy Code allows a debtor to sell assets free and clear of liens and encumbrances with court approval, often used for quick asset sales to maximize value.

What is 'adequate protection' in the context of secured creditors during bankruptcy?

Answer: Compensation provided to secured creditors for any decline in the value of their collateral during the case

Adequate protection ensures secured creditors are compensated for any erosion in their collateral value during the bankruptcy — typically through cash payments, additional liens, or replacement collateral.

Under Chapter 15 of the US Bankruptcy Code, what is addressed?

Answer: Cross-border insolvency and cooperation with foreign courts

Chapter 15 implements the UNCITRAL Model Law on Cross-Border Insolvency, providing a framework for US courts to cooperate with foreign insolvency proceedings involving multinational debtors.