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The '''[[Bankruptcy]] Code''' is an informal name for Title 11 of the [[United States]] Code (11 U.S.C. §§ 101-1330), which serves as the federal bankruptcy law. Currently there are several types of bankruptcies which are referred to by their respective chapters. All bankruptcies are filed in a federal court called the [[United States Bankruptcy Court]], which will supervise such cases to termination.
The '''[[Bankruptcy]] Code''' is an informal name for Title 11 of the [[United States]] Code (11 U.S.C. §§ 101–1330), which serves as the federal [[bankruptcy]] law. Currently there are several types of bankruptcies which are referred to by their respective chapters. All bankruptcies are filed in a federal court called the [[United States Bankruptcy Court]], which will supervise such cases to termination.
== History ==
== History ==
Each different type of bankruptcy is covered under a different Chapter of the Code.
Each different type of bankruptcy is covered under a different Chapter of the Code.
Although a bankruptcy may be filed under one chapter (either by the debtor or the creditors), the other party may seek to have the bankruptcy changed ("converted") to one under a different chapter. For example, a business may seek reorganization under Chapter 11, but its creditors (believing that the business has no chance of survival) may petition a conversion to Chapter 7.
Although a bankruptcy may be filed under one chapter (either by the debtor or the creditors), the other party may seek to have the bankruptcy changed ("converted") to one under a different chapter. For example, a business may seek reorganization under Chapter 11, but its creditors (believing that the business has no chance of survival) may petition a conversion to Chapter 7. Depending on the bankruptcy code, there may be local rules requiring a motion and adherence to certain procedures in order to convert a status from one chapter to another.
===Chapter 7===
===Chapter 7===
Chapter 7 bankruptcies are most common in the business realm, whereby a business declares total insolvency and seeks to cease doing business forever.
Chapter 7 bankruptcies are most common in the business realm, whereby a business declares total insolvency and seeks to cease doing business forever.
As of 2023, the fees are
As of 2023, the fees are "a $245 case filing fee, a $75 miscellaneous administrative fee, and a $15 trustee surcharge. Normally, the fees must be paid to the clerk of the court upon filing."<ref name="Rules"/>
===Chapter 9===
===Chapter 9===
A '''Chapter 9''' bankruptcy is limited to governmental entities such as cities, counties, school districts, and other local entities. Notably, states and territories are not permitted to file under this Chapter (as such, the ongoing [[Puerto Rico]] debt crisis cannot be resolved under this Chapter).
A '''Chapter 9''' bankruptcy is limited to governmental entities such as cities, counties, school districts, and other local entities. Notably, states and territories are not permitted to file under this Chapter.
===Chapter 11===
===Chapter 11===
Chapter 11 bankruptcies are the most common among businesses. Individuals can file under Chapter 11 as well (and must do so if their debts exceed the limits for filing under Chapter 13), but as this option is more expensive and time-consuming, individuals who can use Chapter 13 usually choose that option instead.
Chapter 11 bankruptcies are the most common among businesses. Individuals can file under Chapter 11 as well (and must do so if their debts exceed the limits for filing under Chapter 13), but as this option is more expensive and time-consuming, individuals who can use Chapter 13 usually choose that option instead.
Chapter 11 filings are more expensive than Chapter 7: "The courts are required to charge a $1,167 case filing fee and a $571 miscellaneous administrative fee." There are also additional requirements for filing documents in a Chapter 11 bankruptcy.
In Chapter 11 filings, the debtor remains in control of the assets and can institute adversary proceedings to seek recovery of additional assets:
{{cquote|Once a voluntary Chapter 11 bankruptcy petition is filed, the debtor usually assumes the role of “debtor in possession,” meaning that the debtor keeps control of its assets during the Chapter 11 proceedings. A debtor in possession has the position of a fiduciary. Most frequently, the debtor in possession operates the business, performing many of the tasks that would be performed by the trustee if another type of bankruptcy were filed. These tasks may include accounting for property, filing information reports, examining creditors’ claims and objecting to them as appropriate, filing tax reports, and filing a final accounting. The debtor [in] possession is permitted to employ professionals such as attorneys, accountants, and appraisers.<ref>https://www.justia.com/bankruptcy/chapter-11/</ref>}}
A U.S. Trustee will monitor the debtor in possession's compliance. In some cases, however, a trustee is appointed for cause, and the trustee administers the debtor's Chapter 11 case.
==== Small business ====
As explained by the US Courts website:<ref>https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics</ref>
{{cquote|The Bankruptcy Code allows small business debtors to file for relief under two different special categories of chapter 11 intended to streamline processes and reduce costs. The first, referred to as a small business case (by definition in 11 U.S.C. § 101(51C)), was created in 2005 by the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), and the second, referred to as subchapter V, was created in 2019 by the Small Business Reorganization Act (SBRA). A debtor may elect either of these two options based on certain eligibility criteria. Both ... are treated differently than a traditional chapter 11 case primarily due to accelerated deadlines and the speed with which the plan is confirmed. The two types of cases have different debt limits, defined as the total amount of noncontingent liquidated secured and unsecured debt at the time the debtor files their bankruptcy case.}}
===Chapter 12===
===Chapter 12===
===Chapter 15===
===Chapter 15===
'''Chapter 15''' deals with special cases involving cross-border [[insolvency]].
'''Chapter 15''' deals with special cases involving cross-border [[insolvency]].
== Sources ==
== Sources ==
* ''[[Cent. Va. Cmty. College v. Katz]]'', 546 U.S. 356 (2006) (Thomas, J., dissenting)
* ''[[Cent. Va. Cmty. College v. Katz]]'', 546 U.S. 356 (2006) (Thomas, J., dissenting)
* [https://www.justia.com/bankruptcy/bankruptcy-procedures/adversary-proceedings/ Adversary proceedings]
== References ==
<references/>
[[Category:Legal Terms]]
[[Category:Legal Terms]]
[[Category:Bankruptcy Law]]
[[Category:Bankruptcy Law]]