Erick Ombati

Running head: Commercial 4 (bankruptcy) Title: Commercial 4 (Bankruptcy Report) 1 Commercial 4 (bankruptcy) 2 Date 26th march 2020 Introduction In this report we are going to look at what bankruptcy is all about and how it comes about for someone to be declared bankrupt for future reference. Bankruptcy can be referring as the legal process that includes an individual or company that is not able to pay back its outstanding debt due to financial difficulties. For an individual or a firm to be declared bank it has to undergo different processes, and once of the process starts with petition being filed by the debtor which is most experienced in most situations or on another case it can be on the behalf of the creditors which in most cases it is not that common. In the case after bankruptcy all the assets of the debtor will be measured by the authorities in charge and the assets are going to be evaluated what their worth is and after the evaluation those assets are going to be sold or be used as legal means of payment to pay the outstanding debts owed by the individual or the company. After clearing the outstanding debt, bankruptcy tends to offer an individual or a company a second chance so as to start again and try to establish the new business and this is through forgiving debt to individuals or company. In some countries such United Kingdom individuals are limited when it comes to bankruptcy because some cases such as insolvency proceedings involving liquidation and administration tend to be implied to firms or companies. For instance, in United States bankruptcy can be implemented more widely in a linear form of insolvency proceedings. Commercial 4 (bankruptcy) 3 During ancient period in Greece, bankruptcy did not exist at all in that time. What was there was that if a person owed anything that was in agreement that the person is going to pay in due time and could not pay at the moment, what happened was that the person’s wife and children were debt into slavery where the creditor regain his or her losses through physical labour. But in Athens they had a law of solon that did forbid debt slavery. And due to civilization and improvement of technology it came to formation of bankruptcy and some measures were put into place to ensure that the creditors did not experience any losses. If an individual or a company want to declare bankruptcy, it has to follow the following processes depending on the timescale: The first step is to make sure that there is no other option for individual or a company to pay the creditor and the only option is to declare bankruptcy. For you to declare bankruptcy you have to exploit all option and make sure that the decision you are going to make is the best one for you so that it doesn’t affect your day to day activities. Step two is to make sure an individual or a company finish filling the bankruptcy form and pay the required amount stated. After filling the bankruptcy form you will need to pay a total of $680 for someone to apply bankruptcy. And after that you can’t be able to cancel the submission. An individual can pay bankruptcy fee online by using credit or debit card which you pay in installments with a minimum of $5. Step three if it is an individual he or she needs to withdraw some cash for their own living cost because there might delays as the application is being processed since some of the accounts might be frozen thereafter. Commercial 4 (bankruptcy) 4 Step four is submission of the application forms and in this case if an individual or a company has filled false information in the form it will be a criminal offense and also when filling the form an individual is not supposed to include his or her own property. In another case hiding property and documentary evidence can also be classified as criminal offense. Step five is to waiting for the report of the adjudicator where the decision is going to be made in 28days time where the adjudicator is going to accept the application of bankruptcy or reject it. Step six is where the order of bankruptcy is made officially and declared bankrupt. Step seven is cooperating with the official receiver in charge where an individual will hear from them after two weeks. Step eight is the opening of the bank account where an individual or a company can earn any benefits if there is any. The last step is an individual or a company involved being discharged from bankruptcy and this happens after a year provided there is cooperation with the official receiver and trustees. Bankruptcy falls into different types where the goal is to clear the debt where not all the bankruptcies are equal. In this case there are seven types of bankruptcies: Chapter 7 which is liquidation or straight bankruptcy that is common for individual bankruptcy. Chapter 13 which is repayment plan that forgive the debt of an individual Chapter 11 which is large re-organization for businesses or corporations. Chapter 12 which is family farmers that are allowed to avoid selling of their properties. Chapter 15 which is used foreign cases that give foreign debtors access to U.S bankruptcy courts. Commercial 4 (bankruptcy) 5 Chapter 9 which is municipalities that allow towns and cities to pay what they owe. The chapter that are most interrelated is chapter 7 and 13. The following requirements have to be followed registering for bankruptcy which includes: The current creditor; it has to be mention while filling the form if the individual is the creditor or if the individual is representing the creditor. In the form application an individual has to include if the claim of bankruptcy has been acquired from someone else. If so an individual has to identify that individual or the company. An individual or the company must include where the notices and payments to the creditors to be sent through filling of personal details in the appropriate section within the application form. While filling the form an individual should claim whether the amend has already been filed since the court registry will check if the application had already been filed. When filling the application form of bankruptcy should include if there is someone else who have filed the same claim of bankruptcy and individual should make sure he or she record name of the creditors. An individual or company should ensure that there is supporting documents while they want to claim bankruptcy which in this case may include the contracts, promissory notes, invoices and security agreements and on the other cases individuals must include monthly statements, ledgers and pay records. In the supporting documents should show legal debts and balanced owed on the debt. Commercial 4 (bankruptcy) 6 Bankrupt proceedings are opened through a written proposal to the authorized person by the court. In this case the authorization for submitting the written proposal is sent to the debtor and at this moment all creditors that have legal interest are given a chance to show their claim. Through all that during the opening of the court authorization, the court is supposed to consider the proposal of bankruptcy within 15 days of the submission to the court. The court at this time will advise the proposer between 15days of the submission on whether the documentation submitted is complete. After all this the court will finally make decision on the amount of deposit supposed to manage the preliminary proceedings within 15 days of the submission of an acceptable proposal. On the content about the statement of claim it includes: It can also be referred as the proof of claim in bankruptcy where documents are filed with the court such that the court can register the claim against the asset of the bankruptcy property. The statement of claim does set out about the amount which is owed by the creditor as of the date of bankruptcy filing depending on any of the priority status. During the claim receipt of a claim where the trustee in the bankruptcy stated must notify the claimant who is the creditor on whether the property is going to object the claim as if is the default case that is going to allow the claim. The following are provisional measures prior to approving the opening of bankruptcy proceedings: In this case debtors with their legal representatives and witnesses are responsible to the bankruptcy court to the appointed expert and to the bankruptcy trustee through giving full and correct information. Another provisional measure is the enforced appearance at the court where Commercial 4 (bankruptcy) 7 the debtors has to attend full court sessions. There is imposing of cash penalty which can be amounting between 500 and 1700 km where in this case can be caused due to unsuccessful enforced appearance at the court. In other words, the decision that orders the enforced appearance at the court where at the same moment issue a warning about cash charges that can be implemented as the provisional measure. After the proceedings, the affiliated individuals might have the right to appeal against the decision which orders a measure enforcement where the appeal doesn’t have to affect the postponing the implementation of a decision stated. On matters that may require not require for court approval is as follows: In some cases, there are some matters that may require court approvals where some of them might be as follows; Meeting of creditors when filing of chapter 7 or chapter 13 of bankruptcy, the court is required to assign trustees who are going to administer the case which may take a month of filing. This is when the trustee uses meeting with the creditors to disclose the information that was done during the paperwork for bankruptcy. The meeting is always about 15 minutes of discussion of the information. Motion to extend the automatic stay this when there is filing of new case where an individual or a company declaring bankruptcy may require to ask permission from the court not to allow creditors to collect they debt for 30 days. At this state the judge may need explanation so as to dismiss the prior case. Confirmation of chapter 13 plan. This is where by the judge is required to approve any mode of repayment for the purpose of the plan that are going to be in place. Commercial 4 (bankruptcy) Motion to lift the automatic stay. In this case the automatic stay tends to prevent the creditor from making a collection action during individual or company bankruptcy case. Motion to approve additional debt. When an individual or a company is in a state of bankruptcy may not be allowed for additional debt loan but when someone is classified to be in chapter 13, one might be considered for three to five years. Meeting with an Attorney. In most of the bankruptcy cases may proceed forward without requiring court approvals other than just meeting with the creditors. At this moment an individual or a company may require serious consultation with the lecturer to determine the degree of accuracy on the matter at hand to declare bankruptcy Measures on procedures on the need of prior notice on the case of bankruptcy may include: Bankruptcy discharge which is the release of debtors from personal liability for some types of debts. For prior notice, creditors are not permitted in this case to contact or in other wards try to reach out to debtors for the remaining debt they gave them. Another prior notice is that debt is not a subject on the discharge which includes child support, alimony, debt for injuries to someone or property, some certain retirement plan debt and some student loans. The procedure for bankruptcy trustee appointment, duties and powers may include: There is petitioning of the creditors, debt and other creditors prior to the hearing of the bankruptcy appointment trustee. On the powers and duties, the hearing petition itself has some kind of orders which at times might be made during the time of hearing. In this case it may include adjournment, substitution of the petitioning creditors and change of the carriage of the bankruptcy appointment petition that includes the withdrawal of the bankruptcy petiti 8 Commercial 4 (bankruptcy) 9