Preferences. Fred Currey purchased cattle from Itano Farms, Inc As payment for the cattle, Currey gave Itano Farms worthless checks in the amount of $50,250. Currey was later convicted of passing bad checks, and the state criminal court ordered him to pay Itano Farms restitution in the amount of $50,250. About four months after this court order, Currey and his wife filed for Chapter 7 bankruptcy protection. During the ninety days prior to the filing of the petition, Currey had made three restitution payments to Itano, totaling $14,821. The Curreys sought to recover these payments as preferences.
What should the court decide? Explain.
Preferences
The court concluded that Itano Farms was a "creditor" for purposes of the preference provisions of the Bankruptcy Code, and that therefore, the payments it received under the restitution order were avoidable as preferences. The court explained that the term creditor is defined by the Code to include any "entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor." The filing of the bankruptcy petition constituted an order for relief. A claim as defined by the Code to mean a "right to payment," which includes a right to payment under a restitution order. "Therefore," the court reasoned, "on the date of the filing of the petition, as well as the date of receipt of the payments, Defendant Itano Farms had a right to payment from Debtor under the restitution order, and was accordingly a creditor as to Fred Currey." The court pointed out that a restitution order is not dischargeable in a Chapter 7 case—thus, Itano Farms must eventually be repaid. The court also noted that as a result of a discharge of the bulk of Currey's indebtedness in the bankruptcy proceedings, he might be in a better position to make future restitution payments to Itano Farms. This case was decided before the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, but the result under that act would likely have been the same.
You might also like to view...
Which of the following statements contradicts the philosophy underlying the just-in-time operating environment?
A) The work force must become multiskilled in order to operate different machines and perform other tasks in the work cell. B) A customer order triggers the purchase of materials and the activation of the production process. C) Large inventories are maintained in order to fulfill customer orders on a timely basis. D) Flexible work cells are created to increase productivity.
You have just been hired as the new Assistant Human Resources Manager at your firm, having worked your way up from the factory floor to the administrative suite. During your briefing for the new job, you are told that the firm has learned that its employees are attempting to unionize, a move which the firm has vowed to fight. As part of that effort, your boss, the HR Manager, has asked you to
privately talk to some of your former co-workers on the factory floor to see what their thinking is, to learn about how many are in favor of unionizing, who, specifically, is supporting it, and what might make them change their minds. Among the things they want to know is what would work better – threats of reprisals against those supporting a union, or promises of benefits to those who oppose it. You are eager to do well at your new job, but you see some problems with these requests. Of the following choices, what should you do? a. do as they ask; none of it is illegal b. tell them you can't do what they ask because it is illegal c. tell them you would be glad to talk informally with your former co-workers to find out their attitudes about unionization and why this has come up, but that speaking about reprisals and benefits would be an unfair labor practice
Which one of the following statements is true about a $1,000, 6% annual coupon bond that is selling for $1,012?
A) The current yield is less than 6%. B) The current yield is 6%. C) The yield-to-maturity is greater than 6%. D) The yield-to-maturity is 6%.
Fictional characters cannot be trademarked
a. True b. False Indicate whether the statement is true or false