Avoiding Powers of Debtor in Possession

The video tutorial explains the concept of possession in Chapter 11 bankruptcy, focusing on preferential and fraudulent payments. It details how preferential payments can be recovered if they allow creditors to receive more than they would in a Chapter 7 liquidation. The video also covers extensions for insider payments and various defenses against claims of preferential payments, such as contemporaneous exchange of value and payments in the ordinary course of business. Additionally, it defines fraudulent payments as those intended to defraud creditors or made without equivalent value.

What is the primary role of a debtor in possession in Chapter 11 bankruptcy?

• To close the business

• To pay off secured creditors first

• To recover preferential and fraudulent payments

• To liquidate all assets

Which of the following is considered a preferential payment?

• A payment made to an employee

• A payment made to a secured creditor

• A payment made within 90 days before bankruptcy that gives a creditor more than they would receive in Chapter 7

• A payment made for routine business expenses

What is an example of a defense against a claim of preferential payment?

• Payment made in the ordinary course of business

• Payment made to a family member

• Payment made to a new creditor

• Payment made after bankruptcy filing

Which of the following is NOT a defense against preferential payment claims?

• Payment to an insider

• Ordinary course of business

• Purchase money for collateral

• Contemporaneous exchange of value

What defines a fraudulent payment in the context of bankruptcy?

• A payment made to a government agency

• A payment made for routine business expenses

• A payment made with the intent to hinder, delay, or defraud creditors

• A payment made to a secured creditor

How far back can a debtor in possession look to recover fraudulent payments?

• 5 years

• 1 year

• 90 days

• 2 years

Which of the following scenarios could be considered a fraudulent transfer?

• Making a routine payroll payment

• Paying a utility bill

• Transferring an asset for significantly less than its value

• Selling equipment for its full market value