Your Interview With The Official Receiver
If your bankruptcy is approved, youll have an interview with the official receiver. If youve presented your own bankruptcy petition, this may happen directly after the bankruptcy order is made. Alternatively, your letter from the official receiver may invite you to an interview either in person or by telephone. If offered a telephone interview you can ask to be interviewed in person if you prefer.
If you have been made bankrupt by one of your creditors the official receiver may also contact you by telephone to find out if there is anything that needs to be sorted out urgently.
You must attend the interview and cooperate with the official receiver. If you dont, your bankruptcy could be extended beyond the normal 12 months and you could face an examination in court. The more organised you are, the more straightforward the process will be.
Before the interview, telephone the official receiver to confirm or rearrange the appointment let them know if:
- you require special facilities
- there is anything that needs to be sorted out urgently
- you need more time to gather the paperwork for the meeting
If you have been sent a questionnaire, fill it in, noting anything you dont understand .
Collect together all the paperwork you have been asked to take to the interview or have with you during the telephone call.
Face-to-face interviews may take 2 to 3 hours.
After you arrive:
Telephone interviews take at least 30 minutes.
The examiner will:
When Your Bankruptcy Will End
You will be freed from bankruptcy after 12 months. This ends the bankruptcy restrictions and releases you from most of the debts you had when the bankruptcy order was made.
Youll normally be discharged automatically, even if:
- no payments have been made to your creditors
- youre still paying an IPA or IPO
- some assets havent been sold yet
Assets you had during bankruptcy can still be used to pay your debts once your bankruptcy has ended.
Your bankruptcy can be extended for longer than 12 months if you dont co-operate with your trustee. Check your discharge date using the Individual Insolvency Register on our website. If your discharge status is suspended indefinitely you need to contact the official receiver for an update.
What Happens To Your Credit Rating After Discharge
The official receiver wont tell the credit agencies when your bankruptcy ends. You may need to ask the credit agencies to update their records to include details of your discharge.
The bankruptcy can stay on your record for 6 years after the date of the bankruptcy order.
Read more on this in the Information Commissioners Office Credit explained document.
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How Does Bankruptcy Work
Bankruptcy is a method to eliminate or at least reduce your debt when bills pile up beyond your ability to repay them. It should be viewed as a last resort to be considered only when all other potential courses of action to get back on track have been exhausted.
Individuals filing for bankruptcy mostly use either Chapter 7 or Chapter 13. The biggest difference between the two is what happens to your property:
- Chapter 7, which is known as liquidation bankruptcy, involves selling some or all of your property to pay off your debts. This is often the choice if you don’t own a home and have a limited income.
- Chapter 13, also known as a reorganization bankruptcy, gives you the chance to keep your property if you successfully complete a court-mandated repayment plan that lasts between three and five years.
Depending on where you live and your marital status, some of your property may be exempt from being sold when you file Chapter 7 because of state-specific and federal exemptions. With exemptions, whether they be your home equity, retirement accounts or even personal possessions such as jewelry, you receive the allowed exemption amounts, and the rest of the proceeds will be used to pay off debts. You can read more about potential exemptions, and check out this chart for a quick rundown on the two types:
| Chapter 7 |
|---|
- Child support or alimony
- Student loans
A Guide To Venture Capital Financings For Startups
Startups seeking financing often turn to venture capital firms. These firms can provide capital strategic assistance introductions to potential customers, partners, and employees and much more.
Venture capital financings are not easy to obtain or close. Entrepreneurs will be better prepared to obtain venture capital financing if they understand the process, the anticipated deal terms, and the potential issues that will arise. In this article we provide an overview of venture capital financings.
Entrepreneurs will be better prepared to obtain VC financing if they understand the process, the… anticipated deal terms, and the potential issues that will arise.
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Being Discharged From Bankruptcy
When a debtor receives a discharge order, they are no longer legally required to pay the debts specified in the order. What’s more, any creditor listed on the discharge order cannot legally undertake any type of collection activity against the debtor once the discharge order is in force.
However, not all debts qualify to be discharged. Some of these include tax claims, anything that was not listed by the debtor, child support or alimony payments, personal injury debts, and debts to the government. In addition, any secured creditor can still enforce a lien against property owned by the debtor, provided that the lien is still valid.
Debtors do not necessarily have the right to a discharge. When a petition for bankruptcy has been filed in court, creditors receive a notice and can object if they choose to do so. If they do, they will need to file a complaint in the court before the deadline. This leads to the filing of an adversary proceeding to recover money owed or enforce a lien.
The discharge from Chapter 7 is usually granted about four months after the debtor files to petition for bankruptcy. For any other type of bankruptcy, the discharge can occur when it becomes practical.
Standing To Assert The Rights Of Others
Usually, one may assert only ones interest in the litigation and not challenge the constitutionality of a statute or a governmental action because it infringes the protectable rights of someone else.472 In Tileston v. Ullman,473 an early round in the attack on a state anti-contraceptive law, a doctor sued, charging that he was prevented from giving his patients needed birth control advice. The Court held that he had no standing no right of his was infringed, and he could not represent the interests of his patients.
A variant of the general rule is that one may not assert the unconstitutionality of a statute in other respects when the statute is constitutional as to him.484 Again, the exceptions may be more important than the rule. Thus, an overly broad statute, especially one that regulates speech and press, may be considered on its face rather than as applied, and a defendant to whom the statute constitutionally applies may thereby be enabled to assert its unconstitutionality.485
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Standing To Challenge Lawfulness Of Governmental Action
Standing to challenge governmental action on statutory or other non-constitutional grounds has a constitutional content to the degree that Article III requires a case or controversy, necessitating a litigant who has sustained or will sustain an injury so that he will be moved to present the issue in an adversary context and in a form historically viewed as capable of judicial resolution.521 Liberalization of standing in the administrative law field has been notable.
Much debate has occurred in recent years with respect to the validity of citizen suit provisions in the environmental laws, especially in light of the Courts retrenchment in constitutional standing cases. The Court in insisting on injury in fact as well as causation and redressability has curbed access to citizen suits,531 but that Congress may expansively confer substantial degrees of standing through statutory creations of interests remains true.
Rights To Use Surface Of Land
8.1 Does the holder of a right to conduct reconnaissance, exploration or mining automatically own the right to use the surface of land?
Upon making a discovery of valuable minerals, the locator of a federal mining claim receives the exclusive right of possession and enjoyment of all veins, lodes, and ledges throughout their entire depth which have apexes within the mining claim. The locator also receives the exclusive right to possess all surface areas within the claim formining purposes, but the United States retains the right to manage the surface of the property for other purposes. A locators possessory rights are considered vested property rights in real property with full attributes and benefits of ownership exercisable against third parties, and these rights may be sold, transferred and mortgaged.
Holders of federal and state mineral leases and contracts may obtain surface access rights under the terms of the instrument, but in some instances additional access rights may have to be obtained through rights-of-way regulations.
8.2 What obligations does the holder of a reconnaissance right, exploration right or mining right have vis-à-vis the landowner or lawful occupier?
8.3 What rights of expropriation exist?
There is little risk of expropriation of mining operations by Government seizure or political unrest. Rights may only be expropriated following due process and payment of due compensation to the holder.
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The Chapter 7 Discharge
A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case generally, 60 to 90 days after the date first set for the meeting of creditors. Fed. R. Bankr. P. 4004.
The grounds for denying an individual debtor a discharge in a chapter 7 case are narrow and are construed against the moving party. Among other reasons, the court may deny the debtor a discharge if it finds that the debtor: failed to keep or produce adequate books or financial records failed to explain satisfactorily any loss of assets committed a bankruptcy crime such as perjury failed to obey a lawful order of the bankruptcy court fraudulently transferred, concealed, or destroyed property that would have become property of the estate or failed to complete an approved instructional course concerning financial management. 11 U.S.C. § 727 Fed. R. Bankr. P. 4005.
The Company’s Debts Were Too Much To Bear
Toys R Us was saddled with heavy debt acquired when Bain Capital and other firms took the company private in 2005.
Those debt payments turned out to be a metaphorical anchor around mascot Geoffrey the Giraffe’s long neck.
Toys R Us was “starting at an inherent disadvantage because of the debt load,” said Douglas C. Bernstein, a Plunkett Cooney bankruptcy attorney who was not involved in the case.
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Role Of The Case Trustee
When a chapter 7 petition is filed, the U.S. trustee appoints an impartial case trustee to administer the case and liquidate the debtor’s nonexempt assets. 11 U.S.C. §§ 701, 704. If all the debtor’s assets are exempt or subject to valid liens, the trustee will normally file a “no asset” report with the court, and there will be no distribution to unsecured creditors. Most chapter 7 cases involving individual debtors are no asset cases. But if the case appears to be an “asset” case at the outset, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors. Fed. R. Bankr. P. 3002. A governmental unit, however, has 180 days from the date the case is filed to file a claim. 11 U.S.C. § 502. In the typical no asset chapter 7 case, there is no need for creditors to file proofs of claim because there will be no distribution. If the trustee later recovers assets for distribution to unsecured creditors, the Bankruptcy Court will provide notice to creditors and will allow additional time to file proofs of claim. Although a secured creditor does not need to file a proof of claim in a chapter 7 case to preserve its security interest or lien, there may be other reasons to file a claim. A creditor in a chapter 7 case who has a lien on the debtor’s property should consult an attorney for advice.
Right To Participate In Future Financings
Investors will normally receive a right to purchase more stock in connection with future equity issuances, to maintain their percentage interest in the company. These participation rights often go only to so-called Major Investors who own a certain amount of stock, and typically terminate on a public offering. As with anti-dilution protection, these rights are typically designed to apply only to bona fide financings, and usually are drafted not to apply to employee equity, equity issued in acquisitions, or equity kickers issued to lenders, landlords, or equipment lessors.
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Composition Of The Board Of Directors
The makeup of the Board of Directors of the company is important to venture capital investors as well as to the founders. VCs, especially if they are the lead investor in a round of financing, will often want the right to appoint a designated number of directors to be able to monitor their investment and have a meaningful say in the running of the business. From the founders perspective, they will want to maintain control of the company for as long as possible. Although circumstances vary, in general Board seat allocation usually follows share ownership, so if the investors have 25% or less of the companys stock, they will usually accept a minority of the Board seats, and if after multiple rounds the investors own most of the companys stock, they will often control the Board.
After a Series A financing round, typical Board scenarios might include:
- A three-person Board, with two chosen by the founders, and one chosen by the investors
- A three-member Board, one chosen by the founders, one chosen by the investors, and one independent director mutually agreed upon or
- A five-member Board, two chosen by the founders, two chosen by the investors, and one independent director mutually agreed upon.
In lieu of a Board seat, some investors may request Board observer rights, granting the investor the right to attend Board meetings in a non-voting capacity with the right to receive financial and other information provided to Board members.
What Happens To Your Information
Any previous name included in the bankruptcy petition will appear on the bankruptcy order, and in the:
- notice of your bankruptcy, which is permanently recorded in the Gazette but excluded from search engine results one year and three months after publication
- Individual Insolvency Register which will be removed within three months of your discharge
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Payments From Your Income
If you can afford it, the trustee will ask you to make regular payments towards your debts from your income through an income payment agreement . You enter an IPA voluntarily, but theres a written binding agreement between you and the trustee.
If your main or only income is state benefits, the trustee will not normally try to get an IPA.
If you cant agree on payment amounts for an IPA, the trustee can apply for an income payment order . If you dont meet these payments, the trustee can then apply to extend your bankruptcy.
The payments will come from surplus income .This is money you have left after paying your living expenses. Normally you will have to pay all of this surplus income as your IPA payment.
Payments normally last for 3 years . The court wont make an IPO if it leaves you without enough money to meet everyday needs.
The official receiver may use private debt collection agencies to collect the payments.
A fee will be charged in all bankruptcy cases where an IPA or IPO is set up. The fee is set at £150 which will cover the specific costs incurred by the Official Receiver of arranging and setting up your IPA / IPO and will be collected from the first payments you make into the arrangement. This fee is only chargeable on cases where a bankruptcy application was made or a petition presented on or after the 21 July 2016.
Types Of Bankruptcy Filings
Bankruptcy filings in the United States fall under one of several chapters of the Bankruptcy Code, including Chapter 7, which involves the liquidation of assets Chapter 11, which deals with company or individual reorganizations and Chapter 13, which arranges for debt repayment with lowered debt covenants or specific payment plans. Bankruptcy filing costs vary, depending on the type of bankruptcy, the complexity of the case, and other factors.
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Coronavirus Could Create A ‘bankruptcy Pandemic’
Stuart Gilson
With a pandemic temporarily closing many businesses and stifling consumer demand, whole industries, especially those that recently leveraged their balance sheets to take advantage of near-zero interest rates, are seeing their profits disappear virtually overnight, leaving too little cash flow to cover debt payments owed to creditors.
This could set up the perfect storm for a huge wave of bankruptcies in the weeks and months ahead, says Stuart C. Gilson, the Steven R. Fenster Professor of Business Administration at Harvard Business School.
There is a realistic probability that we could indeed see a pandemic of bankruptcy filings in the near future, Gilson says. The pandemic analogy is particularly apt, in that if the number of new filings is sufficiently high, the bankruptcy courts, like hospitals treating COVID-19 patients, could be overwhelmed.
Several US businesses have already filed since the coronavirus started rocking the US economy in mid-March, including Neiman Marcus, J. Crew, Dean & DeLuca, CMX Cinemas, and Golds Gym. The latest: JCPenney on May 15 filed for Chapter 11 bankruptcy protection after 118 years in business.
As Gilson explains in this Q& A, bankruptcy doesnt necessarily mean the death of a company, and in fact, it can actually be the very thing that saves a business, assuming the courts can handle the flood that is likely coming.
THE CORONAVIRUS CRISIS
