Resolving Bankruptcy Claims There are surprisingly many approaches to finding ways of distributing money to bankruptcy claimants Joe Malkevitch York College Introduction New companies are born regularly They represent the optimism of their creators that they can market a product or service better than others Such companies raise capital and open their doors or at least as likely these days their cell phones and computers They might hire workers rent space and order things from other businesses If all goes well these companies thrive and are successful but all too often things turn sour and the companies suffer a cash flow problem They have too many creditors and not enough money in the bank So the company goes bust bankrupt This means that while the company may have some assets the value of these assets is exceeded by the claims against these assets This situation is handled by laws in every individual country However this situation also gives rise to very interesting mathematics It turns out there are surprisingly many approaches to finding ways of distributing money to the claimants which obey a variety of equity and fairness principles Here is a two person example where unless the problem

My current location city Find a Lawyer Use the to access a lawyer's litigation record Browse Resources Buying And Selling Claims In Bankruptcy Maximizing Returns By and of I INTRODUCTION The term bankruptcy is often misunderstood and interpreted to mean bad business or bad investments However what is less known is that bankruptcy can be laden with profitable investment opportunities and the opportunity to reduce risk Investment banks and venture capitalists have long taken advantage of the bargain deals that bankruptcies give rise to in a phenomenon called claims trading As exemplified by the recent downturn in the Asian economy many companies areattempting to restructure their finances both in and out of bankruptcy As a result investorsare frequently purchasing the claims of creditors against these companies in order to profit from the pending restructure Before discussing the advantages and limitations of claims trading in the UnitedStates this article will present a general overview of bankruptcy law in the United States and discuss some of the issues which may arise when dealing with companies in bankruptcy Finally we will discuss some of the risks and concerns which can arise when companies trade claims improperly II UNITED STATES BANKRUPTCY LAW IN

G Bankruptcy Claims February I REFERENCES Standing Orders of the Regents Section President David S Saxon's delegation of authority to Academic Vice President dated March entitled Claims against Debtors in Bankruptcy and against Estates Uniform Bankruptcy Reform Act Public Law effective October and subsequent revisions Bankruptcy Procedures Manual December Office of the President Financial Aid and Loan Collection Office Hearst Avenue nd Floor Berkeley California Loan Collection Policy Manual Office of the President Financial Aid and Loan Collection Office January II PURPOSE This revised Bulletin provides general background information on bankruptcy claims and calls attention to the established uniform procedures and detailed instructions for handling bankruptcy notices and claims contained in the Bankruptcy Procedures Manual This revision also addresses the appointment of the University wide and campus Bankruptcy Coordinators The procedures set forth in this Bulletin apply to each campus University Press Continuing Education of the Bar and other offices in the Office of the President which have receivables This Bulletin is not applicable to Lawrence Berkeley Laboratory the Lawrence Livemore National Laboratory or the Los Alamos National Laboratory since the contract with the US Department of Energy requires pursuant to Federal regulations that immediate assignment of all claims

John Stemplewicz Samuel R Maizel Commercial Litigation Branch U S Department of Justice June CREDITOR'S CLAIMS IN BANKRUPTCY PROCEEDINGS A The Debtor Creditor Relationship In Bankruptcy Bankruptcy Code Definitions a Claim is defined as right to payment whether or not reduced to judgment liquidated unliquidated fixed contingent matured unmatured disputed undisputed legal equitable secured or unsecured or right to an equitable remedy for breach of performance if such breach gives rise to a right to payment whether or not such right to an equitable remedy is reduced to judgment fixed contingent matured unmatured disputed undisputed legal equitable secured or unsecured b Debt is defined as a liability on a claim c Debtor is the subject of the case d Creditor is an entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor The Scope of Bankruptcy Claim Definition a Congress intended to adopt the broadest available definition of 'claim' Johnson v Home State Bank U S Compare Ohio v Kovacs U S with Torwico Electronics v New Jersey Dep't of Environmental Protection F d cert denied S Ct b Congress intended that the meanings of debt

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