CBA Asset Administration & Liquidation Flashcards
6 cards from real CBA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CBA Asset Administration & Liquidation flashcards as text
What is 'surcharge' under 11 U.S.C. § 506(c), and who may assert it?
Answer: Recovery from collateral of reasonable costs incurred to preserve or dispose of it
Section 506(c) allows the trustee to surcharge a secured creditor's collateral for the reasonable and necessary costs of preserving or disposing of that property for the creditor's benefit.
In a Chapter 7 liquidation, which waterfall correctly reflects the priority of distributions?
Answer: Secured → Administrative → Priority Unsecured → General Unsecured → Equity
Distributions flow first to secured creditors (from collateral), then administrative expenses, then priority unsecured claims, then general unsecured claims, and finally to equity holders.
What is the significance of a 'free and clear' sale under 11 U.S.C. § 363(f)?
Answer: Assets are sold without any liens, claims, or encumbrances attaching to the property
A § 363(f) sale transfers property free and clear of liens and encumbrances, which then attach to the sale proceeds rather than the property itself.
Which of the following is a valid defense to a preference action under 11 U.S.C. § 547(c)?
Answer: The payment was made in the ordinary course of business
The ordinary course of business defense under § 547(c)(2) protects transfers made consistent with prior dealings between the parties or standard industry practice.
What is the trustee's 'strong arm' power under 11 U.S.C. § 544?
Answer: Ability to assume the status of a hypothetical lien creditor to avoid unperfected security interests
The strong arm power allows the trustee to step into the shoes of a hypothetical judgment lien creditor, defeating security interests that were not properly perfected before the petition.
What must a trustee obtain before selling real property of the estate outside the ordinary course of business?
Answer: Court approval after notice and a hearing
Sales of estate property outside the ordinary course of business require court authorization after notice and a hearing to allow parties in interest to object.