Bankruptcy Newsletters

Contested Matters

Whenever there is an actual dispute, other than an adversary proceeding, before the bankruptcy court, the litigation to resolve that dispute is a contested matter. For example, the filing of an objection to a proof of claim, to a claim of exemption, or to a disclosure statement creates a dispute that is a contested matter. Even when an objection is not formally required, there may be a dispute. If a party in interest opposes the amount of compensation sought by a professional, there is a dispute that is a contested matter.

Use, Sale, or Lease of Property

The Bankruptcy Code governs the use, sale, or lease of property in bankruptcy. The trustee may use, sell, or lease the property of the estate other than in the ordinary course of business only after notice and a hearing. If the business of the debtor is authorized to be operated under Chapter 7, Chapter 11, Chapter 12, or Chapter 13, the trustee or debtor-in-possession may, without notice or hearing, use, sell, or lease property of the estate in the ordinary course of business.

IRA Protection in Bankruptcy

Social Security benefits, company pensions, and 401(k) plans are all shielded by law and are, therefore, not lost to creditors in bankruptcy. Whether that same protection extends to an individual retirement account (IRA) is not clear. The bankruptcy law, which was drafted in the 1970's before IRAs became such an important vehicle for retirement savings, is ambiguous. This has led to contradictory rulings in federal courts around the country.

Bankruptcy Case Administration

All bankruptcy proceedings are referred to a bankruptcy judge and all related papers, including the original petition, are filed with the Clerk of the Bankruptcy Court. The United States Bankruptcy Court has its own local rules governing procedures within that court.

Introduction to Chapter 11 Bankruptcy

The Bankruptcy Code is a collection of federal laws that apply in bankruptcy cases or proceedings. The Code is made up of various "Chapters" that each apply to a different type of debtor or bankruptcy. One purpose of Chapter 11 is to "rehabilitate" or "reorganize" a business so that it can continue without folding or closing.