News
Please
go to www.uscourts.gov and
click on Newsroom. Among other things, this website
provides bankruptcy filing statistics.
The
Bankruptcy Reform Act of 1978 - usually
referred to as "the Code" -
became
effective November 6, 1979, and has since
undergone numerous amendments and
reforms. Major changes to the bankruptcy
system were enacted through the Bankruptcy
Amendments and Federal Judgeship Act
of 1984, the Bankruptcy Judges, United
States
Trustees, and Family Farmer Bankruptcy
Act of 1986, the Bankruptcy Reform Act
of 1994,
and, most recently, the Bankruptcy Abuse
Prevention and Consumer Protection Act
of
2005.
Options
for Resolution
Depending
on the particular circumstances, debtors
and creditors are provided various
options for relief and remedy by the
bankruptcy system.
Voluntary
and Involuntary Bankruptcy
A
debtor that qualifies for relief under
a specific chapter may file a voluntary
petition under chapter 7, chapter 11,
chapter 12 or chapter 13 of the Bankruptcy
Code. Involuntary cases, allowed only
under chapter 7 or chapter 11, may
be initiated (under certain circumstances)
by creditor(s) filing a petition.
Personal
Insolvency procedures
Chapter 7, the liquidation chapter,
is used primarily by individuals who
wish to free
themselves of debt. The 2005 Amendments
to the Bankruptcy Code require the application
of a "means test" to determine
whether individuals qualify for relief
under chapter 7. If the
individual's income over the six months
prior to filing for bankruptcy is in
excess of certain
thresholds, the individual may not be
eligible for chapter 7 relief. Chapter
7 may also be
used by businesses that wish to liquidate
and terminate operations. A chapter 7
trustee may gather and liquidate all
the debtor's non-exempt assets, from
which holders
of valid
claims (creditors) will receive a distribution
in accordance with the provisions of
the
Bankruptcy Code. Chapter 12 is designed
to meet the needs of financially distressed
family
farmers, allowing them to reorganize
under procedures that are more streamlined
than
those of chapter 11 (discussed in "Insolvency
Procedures - Corporate"). Chapter
13 is a
wage earner chapter, although it is available
to individuals with regular income from
any
source. It is designed for individuals
who desire to pay their debts but are
currently unable
to do so, and for individuals who are
not eligible for relief under chapter
7. Debtors may
propose and carry out a repayment plan
under which creditors are paid, in full
or in part,
over an extended period of time, usually
in installments over three to five years.
Corporate
Insolvency procedures
A
case filed under chapter 11 is referred
to as a reorganization bankruptcy.
While an individual may file under
chapter 11, it is used primarily to
reorganize a business. Chapter 11 allows
the debtor to continue its business
operations by means of a plan of reorganization,
which must meet certain statutory criteria.
Role
played by Government
The
United States Trustee Program became a
national program in 1986 in most federal
judicial districts. The Executive Office
for U.S. Trustees maintains a head office
and operates in 21 regions, each with a
U.S. trustee, who is responsible for the
overall non-judicial administration and
supervision of bankruptcy trustees and
cases. The Bankruptcy Administrator Program,
subject to Judicial Conference oversight,
presently serves the six federal judicial
districts in the States of Alabama and
North Carolina. Bankruptcy administrators
are appointed by the court of appeals and
supervise the administration of cases and
trustees in cases under chapters 7, 11,
12, and 13 of title 11 of the United States
Code.
Role
played by private sector practitioners
The
bankruptcy system relies heavily on the
private sector to handle bankruptcy cases.
Chapter 7 trustees, usually private attorneys
or accountants, are responsible for the
administration of chapter 7 cases with
oversight by U.S. trustees or bankruptcy
administrators. The trustees administer
the estates' assets and liabilities, including
collection of assets, liquidation, and
distribution of the proceeds to creditors.
Chapter 13 standing trustees administer
chapter 13 plans by collecting the periodic
payments made by debtors and by making
distributions to creditors according to
the provisions in the plans.
Role
played by the Court
Bankruptcy judges, as units of the district
courts, hear and determine bankruptcy cases
and bankruptcy proceedings arising under,
arising in, or related to title 11 (the Bankruptcy
Code). Judges are appointed by the courts
of appeals for 14-year terms. There are
currently 352 authorized bankruptcy judgeships.
Does
the insolvency system in the United
States allow
for:
1.
|
Different
procedures for the insolvency of
individuals and the insolvency
of companies? |
|
|
2.
|
Creditors
to accept an arrangement outside
of formal bankruptcy/liquidation
proceedings? |
|
|
3.
|
Priority
payment for employee creditors? |
|
|
4.
|
Priority
payment for taxation debts? |
|
|
5.
|
Automatic
disqualification of directors of
failed companies from managing
other companies? |
|
|
6.
|
Recognition
of insolvency proceedings being
conducted in another jurisdiction? |
|
|
7.
|
A
government agency to undertake
insolvency administration work? |
|
|
8.
|
Some
form of licensing of private sector
practitioners? |
|
|
9.
|
A
review of the remuneration claimed
by an insolvency practitioner by
either a court or other government
regulator? |
|
|
10.
|
A
mandatory scale of fees applicable
to insolvency practitioner remuneration? |
|
|
11.
|
Surveillance
of the work of private sector practitioners
by a government regulator? |
|
|
12.
|
Collation
of insolvency statistics by a government
regulator? |
|
|
|
