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BANKRUPTCY LAW

AND PRACTICE

Second Edition

A Casebook Designed to

Train Lawyers for the

Practice of Bankruptcy Law

__________

Gregory Germain

Professor of Law

Syracuse University College of Law

CALI eLangdell Press 2017

i

About the Author

Gregory Germain is a professor at Syracuse University College of Law where he teaches courses in Contracts, Commercial Transactions, Corporations, Taxation and of course Bankruptcy Law. He also runs a pro bono bankruptcy program for first year law students, and a bankruptcy clinic for upper division students. The clinic represents indigent individuals in bankruptcy cases.

Professor Germain received his JD Degree Magna Cum Laude from the University of California Hastings College of Law, practiced law for 15 years in Los Angeles and San Francisco, and then obtained his LLM in Tax from the University of Florida. Following tax school, he worked as an attorney advisor for the Honorable Renato Beghe of the United States Tax Court before beginning his teaching career at Syracuse University College of Law.

Notices

This is the second edition of this casebook, updated June 2017. Visit http://elangdell.cali.org/ for the latest version and for revision history.

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Forward

This book is intended for a three credit law school course covering the fundamentals of bankruptcy law and practice. Students should recognize that this is a Code class, and that the starting place for solving most bankruptcy problems is the Bankruptcy Code itself. Students should read the materials and work through the problems by direct reference to the provisions of the Bankruptcy Code. Bankruptcy lawyers simply must be comfortable with the Code in order to be effective.

The book contains many cases interpreting the Bankruptcy Code. The cases have been stripped to the essentials to minimize reading. Most cross-citations have been deleted. Issues discussed in the cases that are not relevant to the point for which the case is included in the materials have been stricken. Bolding has been added to important language the students should focus on. The practitioner, of course, should always read full cases and not rely on the edited versions in this book or on headnotes or other secondary sources. This book contains the bones of the case, with flesh left only where essential to understanding the courts reasoning on the particular issue of relevance to the material in the book.

Much of the learning will come through working with the problems. Many students have developed the bad practice of reading the questions without trying to solve them. Dont do that. You need to try to solve the problems by reading and working through the statute. The best way to learn and be comfortable with using the statutory language is to work through the statute to solve the problems.

Some of the problems contain case references. I do not expect my students to read the cases that are merely cited in the problems, and not reprinted in the book. I discuss some of these cases with the class when covering the problems. Students interested in the problems are always free to read the cases for greater understanding, as time permits.

Table of Contents

About the AuthoriNoticesiiForwardivChapter 1: A World without Bankruptcy11.1.A Wee Bit of History11.2.Enforcing Claims11.3.The Self-Help System for Collecting Unsecured Claims21.4.Practice Problems: Fair Debt Collection Practices Act (FDCPA)21.4.1.1.Henson v. Santander Consumer USA Inc., 582 U.S. ___ (June 12, 2017)31.5.The Judicial System for Collecting Unsecured Claims: Obtaining and Enforcing a Judgment61.6.Provisional Remedies.71.7.CASES: The Sheriffs Duty to Enforce Writs81.7.1.1.DAVID J. VITALE v. HOTEL CALIFORNIA, INC., 184 N.J. Super 512, 446 A.2d 880 (1982)81.8.Property Garnishments121.9.Wage Garnishments121.10.State Wage Garnishment Exemptions131.11.Exceptions to Wage Garnishment Limits131.12.Practice Problems: Calculating Wage Garnishment Limits141.13.State Law Execution Exemptions141.14.Practice Problems: Enforcement of Judgments141.15.Other Federal and State Exemptions151.16.Federal Tax Collection151.17.State Law Avoiding Powers161.18.Practice Problems: Fraudulent Transfers161.19.The Race to the Courthouse and the Concept of Bankruptcy17Chapter 2: Secured Claims192.1.Liens and Priority192.2.Attachment of Consensual Liens192.3.Attachment of Consensual Liens on Real Property.202.4.Attachment of Consensual Liens on Personal Property202.5.Attachment of Judicial Liens212.6.Attachment of Statutory Liens.222.7.The Concept of Perfecting Liens232.8.Perfection of Consensual Personal Property Liens232.9.Priority of Consensual Liens.242.10.Practice Problems: UCC Article 9.262.11.Purchase Money Security Interests272.12.Practice Problems: Purchase Money Security Interests272.13.Perfection and Priority of Real Property Liens272.14.Practice Problems: Real Estate Priority292.15.Foreclosing the Right of Redemption292.16.Cases on Enforcement of Liens312.16.1.1.CHAPA v. TRACIERS & ASSOCIATES, 267 S.W.3d 386 (Ct. App. Tex. 2008)312.16.1.2.JORDAN v. CITIZENS & SOUTHERN NATL BANK OF SOUTH CAROLINA, 278 S.C. 449 (1982)332.16.1.3.CHERNO v. BANK OF BABYLON, 54 Misc.2d 277 (NY 1967)342.16.1.4.BIG THREE MOTORS, INC., v. RUTHERFORD, 432 So.2d 483 (Ala. 1983)352.16.1.5.WALTER KOUBA v. EAST JOLIET BANK, 135 Ill. App. 3d 264 (1985)372.17.Practice Problems: Enforcement of Liens and Claims40Chapter 3: The Bankruptcy System423.1.Purposes of Bankruptcy423.2.Structure of the Bankruptcy Code433.3.Jurisdiction and Venue of Bankruptcy Cases453.4.Cases on the Constitutional Limits of Bankruptcy Jurisdiction453.4.1.1.NORTHERN PIPELINE CO. v. MARATHON PIPE LINE CO., 458 U.S. 50 (1982)453.5.The Aftermath of Northern Pipeline493.6.Cases on the Constitutional Limits of Bankruptcy Jurisdiction after Marathon503.6.1.1.STERN v. MARSHALL, 564 U.S. 2, 131 S. Ct. 2594 (2011)503.6.1.2.WELLNESS INTERNATIONAL NETWORK, LTD., v. SHARF, 135 S. Ct. 1932 (2015)573.7.Practice Problems: Bankruptcy Court Jurisdiction613.8.Venue of Bankruptcy Cases613.9.Cases on Bankruptcy Venue623.9.1.1.IN ENRON CORP., 274 B.R. 327 (2002)623.10.Practice Problems: Filing Voluntary Petitions663.11.Voluntary Bankruptcy Petitions673.12.Involuntary Bankruptcy Petitions683.13.Practice Problems Involuntary Petitions683.14.Dismissal of Properly Filed Bankruptcy Petitions for Cause.693.15.Bad Faith Dismissals after the 2005 Amendments703.16.Dismissal of Cases Properly Filed under Other Chapters713.17.Cases on Bad Faith Dismissals713.17.1.1.IN RE JOHNS-MANVILLE CORPORATION, 36 B.R. 727 (Bankr. S.D.N.Y. 1984)713.17.1.2.IN RE SGL CARBON, 200 F.3d 154 (3d Cir. 1999)753.18.Voluntary and Involuntary Conversion a