University of Denver Sturm College of Law

Bankruptcy

University of Denver Sturm College of Law

Judge Elizabeth E. Brown

Spring 2014

I.Contact Information

For security reasons, I will give you contact information in class. Once you have my contact information, please don=t hesitate to send email or call. Sometimes that is the best way I learn if something was unclear in class.

II.Required Textbooks

1. Casebook: Elizabeth Warren and Jay Westbrook, The Law of Debtors and Creditors (6th ed. 2008). A new version will be published in early 2014, but to save you money, we will continue to use the old version until it is no longer available to purchase.

B.Statutes: MiniCode (AWHFY, L.P. 2013 ed.). If it will save you money, you may purchase any edition of the Bankruptcy Code that is older than 2005. The only significant changes after this date will be dollar amounts in a few statutes but we can clue you in on these changes during the class.

III.Class Location and Schedule

Tuesdays and Thursdaysfrom 5:40 to 7:20 in Classroom 280.

IV.Office Hours

I will be available to answer questions for 1/2 hour following classes. Admittedly, this is a short period of time, but I will also be available to you throughout the week by phone and email. In addition, when it gets close to finals, I will schedule myself to be available on campus for one or two days so that you may bring all your questions to me. Please remember that you can also ask to schedule a separate appointment.

V.Course Aims & Structure

This is a general survey course. We will not get through the entire casebook, but students will acquire a good overview of the law of bankruptcy, including both consumer and business bankruptcy. We will cover the basics of the three major types of bankruptcies: Chapter 7, Chapter 13, and Chapter 11. We will also focus on developing your advocacy skills, creative problem solving skills, and identifying the social policies that underlie all debtor-creditor laws.

VI.What to Read

Our primary source of information will be the casebook, but this text book was published in 2008. The U.S. Supreme Court has made several pivotal rulings in bankruptcy matters since then and I would be remiss if I did not include these. I will include these cases and other supplemental materials through TWEN folders and the class assignment list that follows. Where I list AWestlaw@ in the assignment list, you will be responsible for locating and reading the case or Colorado statute through Westlaw or other means. TWEN will also include some of the bankruptcy forms and other information that will help you Apicture@ what we are studying. You will not need to study these forms and you will not be tested on them. They are included for informational purposes only. Finally, the TWEN postings will sometimes include hypothetical problems that we will discuss in class.

I reserve the right to assign other readings from time to time, designed to broaden the context of the course materials. You are responsible for everything I assign, but I will endeavor to not exceed 30 or so pages for daily reading assignments. There are a few exceptions, a few days when it is a larger assignment and a few days with little or no assignment. These variations are due to the nature of the subject matter and the length of time needed to cover the subject. Finally, I will adjust the assignment list from time to time to tie our progress to the speed at which the class is able to digest the material, but rest assured that we will get through all or substantially all of the material.

The readings in the casebook frequently refer to specific statutory provisions. Make sure you look up these statutes. You will be expected to have read and understood them in class, and you will be responsible for understanding them on the exam. In furtherance of this goal, be sure to bring your Mini-Code with you to class. One of the goals of this class is to learn how to parse a statute into its various sub-parts. In addition, sometimes the syllabus will list questions that you will be expected to address in class or a chart that you will need to fill out based on your studies.

VII.Participation, Attendance, Seating and Grading

I will pass around a seating chart on the first or second day of class. Please stay in that seat for the remainder of the semester. It will help me to connect names with faces. Towards that end, I have also posted a short questionnaire on TWEN to be turned in immediately. Turning in a completed questionnaire is mandatory, but its only purpose is to allow me to get to know you better.

Your final grade for this course will be based on the following:

Final Exam 80% Class Participation 20%

By class participation, I mean that you are expected to be in class, willing and able to discuss the material assigned to date. I highly value class participation, and I will call on you without notice. I understand, however, that sometimes life gets in the way and you cannot always be as prepared as you like. Please attend class anyway, and just leave a note with your name on it on the podium before class begins, and I won=t call on you. Please submit no more than three of these passes over the course of the semester. No pre-authorization is required for submitting a pass. I will observe the University=s policy regarding 80% mandatory class attendance. Absences exceeding 20% may result in either a final grade reduction or the student being dropped from the class, at my discretion. Submitting more than three passes or being unprepared without submitting a pass may result in a final grade reduction.

The Final Examination will be a modified open book, in-class written final exam. Closer to the exam, I will let you know specifically what materials may be brought to the exam. Generally, this will include the Mini-Code, outlines and notes prepared by you or with other students in the class (no commercial outlines or “hand-me-downs” prepared by former students), a simple calculator, and the supplemental materials provided through TWEN, including the Colorado exemption statutes. It will NOT include any books, including your text book, internet sources, law review articles, and the like.The final willlikely consist of a mixture of short and long essay questions.

Finally, I may require you to submit a written answer to a hypothetical once or twice during the semester. Doing so will earn you extra class participation points. But the real benefit of doing so is that I can see whether you are understanding the concepts. I also use this as a way to give personal feedback on your answer so that you can see how you might improve your answers on an exam. This is not a writing exercise and I will not be giving you any input on writing skills. Instead it is designed for issue spotting, identifying the relevant statute, parsing the statute into its elements, applying the elements to the fact pattern, and then showing an exercise in judgment to answer the ultimate call of the question (e.g. what advice would you give? What are your chances of success?). In other words, it will mirror test taking skills and, coincidentally, the skills required in the actual practice of law!

VIII.adherence to university policies

1. Disability. If you qualify for accommodations because of a disability, whether temporary or permanent, please submit a letter to me in a timely manner so that your needs may be addressed. For exam accommodations, provide your letter at least one week prior to the exam.
2. Religious Observances. Campus policy regarding religious observances requires that faculty make every effort to deal reasonably and fairly with all students who, because of religious obligations, have conflicts with scheduled exams, assignments, or required attendance. In this class, you need only inform me of these conflicts and I will make every effort to accommodate your needs.
3. Non-Discrimination. The University is committed to maintaining a positive learning, working, and living environment. It does not discriminate on the basis of race, color, national origin, sex, age, disability, creed, religion, sexual orientation, or veteran status. This University will not tolerate acts of discrimination or harassment based upon these protected classes or related retaliation against or by any employee or student. Individuals who believe they have been discriminated against should contact either me or the Dean’s Office.
4. Honor Code. All students are responsible for knowing and adhering to the academic integrity policy of this institution. Violations of this policy may include: cheating, plagiarism, aid of academic dishonesty, fabrication, lying, bribery, and threatening behavior. All incidents of academic misconduct shall be reported immediately. Students who are found to be in violation of the academic integrity policy will be subject to both academic sanctions and non-academic sanctions (including but not limited to university probation, suspension, or expulsion).
5. Classroom Behavior. Students and faculty each have responsibility for maintaining an appropriate learning environment. Students who fail to adhere to behavioral standards may be subject to discipline. Members of the faculty have the professional responsibility to treat students with understanding, dignity and respect, to guide classroom discussion, and to set reasonable limits on the manner in which students express opinions. Disruptive students in the academic setting hinder the educational process. "Disruption," as applied to the academic setting, means behavior that a reasonable faculty member would view as interfering with normal academic functions. Examples include, but are not limited to: persistently speaking without being recognized or interrupting other speakers; behavior that distracts the class from the subject matter or discussion; or in extreme cases, physical threats, harassing behavior or personal insults, or refusal to comply with faculty direction. Civil expression of disagreement with the course instructor, during times when the instructor permits discussion, is not in itself disruptive behavior and is not prohibited.

The daily assignments follow on the next page.

1. Tuesday, January 14: Introduction to Class, Overview of State Law Remedies & Secured Transactions.

Textbook: pp. 3-10, Problem 1.2; pp. 33-42, 45-51, 54-59; Problems 2.1 and 2.2.

In addition to the reading assignment for the first class, there is a questionnaire you must complete and return. You will find the questionnaire form in a TWEN folder labeled AQuestionnaire.@You may submit a hard copy answer to me or may send it by email to the email addresses I will give you in class. Never send email to me through the TWEN address - I don’t know how to retrieve it and will never see it!

2. Thursday, January 16: Secured Transactions continued and begin Property of the Estate

Supplemental Course Materials (always in TWEN): in folder “Secured Transactions,” work the Hypothetical on Lien Rights.

Textbook: skim pp. 101-111; read with care pp. 113-130; Problems 5.1 through 5.6.

Supplemental Course Materials: in Property of Estate folder, review Form of Bankruptcy Schedules, and using Schedule B, be prepared to answer Problem 5.1.

(Please do not skip the skim reading in the text book as it will help you with background and terminology.)

Code Sections: ' § 541(a)(1) - (7), (c), (d), 542(a).

Reflections:

•In your own words, how would you define “property of the estate (POE)?”

•What are the consequences of failing to list an asset on the schedules?

•When should a license or other asset that is subject to restrictions on transfer be included in POE?

•If an asset increases in value after the bankruptcy filing, who gets the increase? The Debtor? Or the Estate?

•When an asset is included in POE, what happens to it? See § 542(a).

3.Tuesday, January 21: Property of the Estate (continued)

Supplemental Course Materials: Familiarize yourself with the two hypos in TWEN, which we will work in small groups during class.

Westlaw: In re Nichols, 491 F.3d 987 (9th Cir. 2007); In re Graves, 609 F.3d 1153 (10th Cir. 2010).

Reflections:

•What is the test for when we include a contingent interest as POE? And when don’t we include it?

•After two classes, now how would you define POE? What law applies to answer this question? Bankruptcy law? Non-bankruptcy law? Both?

4. Thursday, January 23: Exemptions

Textbook: read text only (not cases & statutes) pp. 167-168, 178-180, 184-189, 193-194.

Supplemental Course Materials: hypotheticals in Exemptions Folder.

Westlaw: locate the following Colorado statutes on TWEN and print them off to use as we work the hypotheticals in class, applying these statutes: Colo. Rev. Stat. ' 13-54-101, -102, Colo. Rev. Stat. ' 38-41-201, -207.

Code Sections: Section 522 is the federal exemption statute, but Colorado has opted out of the federal exemptions and, thus, Colorado statutes control in our jurisdiction. As far as determining what the exemptions are, you should only know the Colorado exemptions.

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5. Tuesday, January 28: Exemptions (continued)

Textbook: pp. 193-196, 198-216 (text only on 216).

Supplemental Course Materials: Hypotheticals on Exemption Planning and § 522(f).

Westlaw: Schwab v. Reilly, 130 S.Ct. 2652 (2010); In re Beaudin, 2010 WL 3748735 (Bankr. D. Colo. 2010).

Code Sections: § 522(f) & (g).

Reflections:

•What is the process in bankruptcy for claiming an exemption? (We will cover this in class because you don’t have the bankruptcy rules in your MiniCode, but you should understand this by the end of class).

•Be prepared to lay out the facts and outline the analysis of both the majority and the dissent in Schwab v. Reilly. Which do you find more persuasive? Under the majority’s holding, how long does the trustee have to seek to sell an asset that the debtor believes is fully exempt?

•When is it okay to maximize your exemptions before filing bankruptcy by converting non-exempt assets into exempt assets and when does it cross the line to become an act to defraud creditors? Work the hypo on pre-bankruptcy planning before class.

•Apply § 522(f) to the § 522(f) hypo before class. How does this statute work? What kinds of liens will it strip off? If it does strip the lien in this hypo, does it strip the entire lien? Or what portion of it?

•Can the debtor ever claim property as exempt if he didn’t own it on the date of the petition? If so, under what conditions? See § 522(g).

6.Thursday, January 30: Automatic Stay

Textbook: pp. 131-138.

Supplemental Course Materials: Auto Stay Folder, hypotheticals.

Westlaw: In re Gagliardi, 290 B.R. 808 (Bankr. D. Colo. 2003).

Code Section: ' § 362 (a), (b)(1)-(4), (10), (22), (23), (c), (k).

Reflections:

•In your own words, how would you describe the scope of the automatic stay? Is your definition broad enough to encompass the ruling in Andrews Univ. v. Merchant?

•What is the purpose behind the stay? Does it only protect the debtor?

•What is the test for liability for a stay violation per Gagliardi? What is the test for an award of punitive damages? What should creditors do to avoid liability?

•How long does the automatic stay last? What happens after it is gone? See § 362(c)(1)-(4).

7. Tuesday, February 4: Chapter 7 Eligibility - Means Testing

Textbook: text only (not cases) pp. 141-145, 150-155, 160-163; Problems 7.1, 7.3, 7.4

Supplemental Course Materials: Means Test Folder, review the form.

Code Sections: '' 101(8), 101(10A), 101(15), 101(32), 101(41), 109(a), (b), 707(b)(1) - (3), (6), (7).

8.Thursday, February 6: Chapter 7 Eligibility - Means Testing (continued)

Supplemental Course Materials: Hypotheticals/Extra Practice on Means Test.

No additional reading, except to work the hypotheticals applying the means test forumla.

Reflections:

•What purpose is being served by the means test? Should it have been included under § 109?

•Fill out this chart using § § 707(b)(1), (b)(6), and (b)(7). Who can file a motion to dismiss against a debtor under either § 707(b)(2) or (b)(3)?

Debtor / B(2) MT / B(3)(A&B) other abuse
Below median inc debtor
Above median with primarily consumer debts
Above median with primarily biz debts

•When is the means test of § 707(b)(2) applicable? What 3 requirements?

9.Tuesday, February 11: Claims & Priorities

Textbook: pp. 217-229; Problem Sets 10 & 11.Be sure to work these 2 problems before class.

Supplemental Course Materials: Proof of Claim Form

Code Sections: '' 101(5), 101(10), 101(14A), 101(37), 364 (c), (d), 501(a), 502(a), (b), 503(b)(1)(A)(i), (2), 506 (a), (b), 507(a)(1) - (5), (7), (8 in general only), (b), 726(a), (b).

Reflections:

•How do you make a claim in bankruptcy? When is it allowed or disallowed? How does it differ from making a prima facie case in a lawsuit? Can you think of any policy reasons for why it is different in bankruptcy?

•What is the test for an administrative claim against the estate? What treatment do these receive? § 507(a)(2).

•Are all claims treated alike in bankruptcy?

•Create a hierarchy of claims in bankruptcy from best position to worst. Where do secured claims fall in this hierarchy?

•For working Problem 11, use the following chart for Step 1:

Priority / Unsecureds / Subordinated / Not Paid by Estate

Step 2: We don’t know from the problem if the ex-spouse, Sue has a claim for support obligations (DSO) or a divorce property settlement debt. Work the problem both ways to see the difference that the answer to this question will make in the distribution process. Show next how the trustee will distribute funds. First, how much does he have to distribute? Who has first claim to the funds? Second? Etc. If there is not enough to go around, what will the trustee do? Pay the largest claim? First filed claim? Or something else?

10. Thursday, February 13: Discharge & Dischargeability

Textbook: pp. 229-246; Problems 12.1 through 12.4, and 12.6.

Code Sections: '' 101(14A), 523(a)(1) - (9), (15), (d), 727.

•What is the difference between a § 523 claim and a § 727 claim?

•The elements of a claim for fraud under § 523(a)(2)(A) are: (1) a false misrepresentation; (2) that is material; (3) that the debtor knew was false; (4) made with intent to deceive; (5) on which the creditor actually relied; (6) the creditor’s reliance was justifiable; and (7) the false misrepresentation was the proximate cause of the creditor’s injuries. How does this differ from a claim under § 523(a)(2)(B)? What constitutes a “statement of financial condition?” Why do you think Congress requires statements of financial condition to be made in writing? What policy is at play beneath this added requirement?

•What is the test for “undue hardship” in student loan cases under § 523(a)(8)? Does this test apply to any other kinds of debts besides student loans? When is it okay or not okay to give a “partial discharge” of student loans?