Bankruptcy 101: “Talk the Talk”
At the risk of having my club membership rights revoked by my bankruptcy attorney colleagues, I thought that it might be helpful in my first column in Attorney at Law to explain a bit about our “secret language.” Like many specialized areas, bankruptcy law has its own vernacular, an understanding of which goes a long way toward understanding the process and its effects. In future columns, I’ll begin unraveling the mysteries of both consumer and business bankruptcies and discussing how a bankruptcy affects the interests of the parties involved.
The Bankruptcy Code
Our current system of bankruptcy was enacted in 1978, and is governed by the Bankruptcy Code (11 U.S.C. §§ 101-1532). The Bankruptcy Code is divided into nine chapters, certain of which contain the provisions that relate solely to the eponymous types of bankruptcies with which most people are familiar: Chapters 7, 11 and 13. There also are special (and somewhat obscure) types of bankruptcy cases for insolvent municipalities (Chapter 9), family farmers and fishermen (Chapter 12), and cross-border insolvency matters (Chapter 15). The first three chapters cover other procedural and substantive areas that apply to most if not all of the different types of bankruptcy, and are titled “General Provisions” (Chapter 1), “Case Administration” (Chapter 3), and “Creditors, Debtor and Estate” (Chapter 5). Oddly, the Bankruptcy Code does not contain chapters 2, 4, 6, 8, 10 or 14. Welcome to the intuitive world of bankruptcy! Continue reading →