USA Law and Practice Contributed by: Davis Lee Wright, Natalie D. Ramsey, Katherine M. Fix and Rachel Jaffe Mauceri, Robinson & Cole LLP
Robinson & Cole LLP 1201 N. Market Street
Suite 1406 Wilmington Delaware 19801 USA
Tel: +1 302 516 1700 Fax: +1 302 516 1699 Web: www.rc.com
1. Overview of Legal and Regulatory System for Insolvency/Restructuring/ Liquidation 1.1 Legal Framework As federal law, Title 11 of the United States Code (the “Bankruptcy Code”) pre-empts any conflicting state laws regarding insolvencies, restructurings and liqui - dations and, as a result, is the United States’ primary insolvency scheme. Chapters 1 and 3 of the Bankrupt - cy Code outline general provisions and terms applica - ble to the administration of all cases filed pursuant to it. Chapter 5 generally addresses creditor obligations and priorities, the debtor’s duties and the bankruptcy estate (as further discussed herein). Chapters 7 to 15 (Chapter 12 is the only even-num - bered chapter in the Code) address specific proceed - ings, which are further discussed below. (Unless oth - erwise indicated, all citations and statutory references herein are to the Bankruptcy Code.) The Federal Rules of Bankruptcy Procedure provide additional guidance with respect to the administration of, and procedures used in, cases pending under the Bankruptcy Code. State-level laws provide the legal frameworks for receiverships, assignments for the benefit of credi - tors (ABCs), dissolutions and other types of business restructurings that serve as an alternative to a filing under the Bankruptcy Code.
1.2 Types of Insolvency Federal Bankruptcy Code
Business bankruptcy cases filed in the United States generally are governed by either Chapter 7 or 11 of the Bankruptcy Code. Chapter 7 provides procedures for gathering all the business’s assets and property into an “estate” that is then liquidated under the over - sight of a court-appointed trustee. Chapter 7 contains special rules for stock and commodity brokers and clearing banks. Chapter 11 provides procedures for businesses looking to reorganise their business or operations or restructure their debts via a court-approved reorgani - sation plan. Chapter 11 includes special rules for small business and domestic railroad bankruptcies. A busi - ness may also liquidate its assets pursuant to Chapter 11 using a court-approved liquidation plan. Chapter 9 provides procedures for adjusting the debts of a US-domestic political subdivision. Chapter 12 addresses bankruptcies related to family farming or fishing operations (including family businesses). Chapter 15 recognises cross-border business insol - vency cases. State Statutory or Common Law State-level insolvency laws are not necessarily uni - form among the 50 states and may vary significantly, especially with respect to businesses that are primar - ily regulated by state law (eg, insurance). State law- based proceedings include: • assignment for the benefit of creditors (ABCs) and receiverships (see 1.3 Statutory Officers , 5.1 The
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