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G-34, Bankruptcy Claims
February 1, 1985
I. REFERENCES
Standing Orders of the Regents Section 100.4(bb).
President David S. Saxon's delegation of authority to Academic Vice
President, dated March 12, 1980, entitled Claims against Debtors in
Bankruptcy and against Estates.
Uniform Bankruptcy Reform Act, Public Law 95-598, effective October 1,
1979, and subsequent revisions.
Bankruptcy Procedures Manual, December, 1983, Office of the President,
Financial Aid and Loan Collection Office, 2000 Hearst Avenue, 2nd
Floor, Berkeley, California 94720.
Loan Collection Policy Manual, Office of the President, Financial
Aid and Loan Collection Office, January 1982.
II. PURPOSE
This revised Bulletin provides general background information on
bankruptcy claims, and calls attention to the established uniform
procedures and detailed instructions for handling bankruptcy notices and
claims contained in the Bankruptcy Procedures Manual. This revision also
addresses the appointment of the University-wide and campus Bankruptcy
Coordinators.
The procedures set forth in this Bulletin apply to each campus
(including University hospitals), University Press, Continuing Education
of the Bar, and other offices in the Office of the President which have
receivables. This Bulletin is not applicable to Lawrence Berkeley
Laboratory, the Lawrence Livemore National Laboratory, or the Los Alamos
National Laboratory since the contract with the US Department of Energy
requires, pursuant to Federal regulations, that immediate assignment of
all claims in bankruptcy be made to that agency.
III. INTRODUCTION
Effective October 1, 1979, Congress enacted the Uniform Bankruptcy
Reform Act, which is a consumer-oriented set of bankruptcy laws.
These laws form the basis of bankruptcy policy at the University of
California. Under this Public Law 95-598, a bankruptcy case must be
filed under one of the four chapters: Chapter 7, which deals with
liquidation of assets; Chapter 9, which deals with the debts of
municipalities; Chapter 11, which deals primarily with business
reorganizations; or Chapter 13, which deals with the adjustments of
debts of individuals with regular income.
When an individual or business owing the University files a petition in
bankruptcy, that individual or business is required by Federal law to
list the University as a creditor. The court notifies the University
that a petition in bankruptcy has been filed by the named business or
individual. Once a petition has been filed, an automatic stay is in
effect and the University can no longer bill the debtor. The court
gives the University a limited time (usually 90 days from the date of
the first meeting of creditors) to submit claims and evidence of
indebtedness incurred by the named bankrupt. Creditors must submit a
claim in order to benefit from the distribution of the bankrupt's
assets, if any. If the University fails to file its claim within the
allotted time, then no claim can be filed and the University does not
share in any distribution of funds resulting from the liquidation of the
debtor's assets or from the proposed plan, unless there is some legally
defensible exception, e.g., fraud. Furthermore, once a debt is
discharged, the law does not allow the University to continue its
efforts to collect on that debt. There are some debts, however, under
Chapter 7 or 11, that the law requires to be paid, even after
bankruptcy. These are called "exceptions to discharge" and include: 1)
taxes; 2) debts incurred through fraud; 3) debts neither listed or
scheduled; 4) debts incurred by embezzlement or larceny; 5) alimony
and child support; 6) student loans if the loan became due within
five years of the filing of the bankruptcy petition unless an "undue
hardship" would be imposed.
IV. PROCEDURES
A. Designation of University Bankruptcy Coordinator
The filing of bankruptcy claims is centralized in the University
because the court will recognize only one claim submitted on behalf
of The Regents of the University of California, and an individual
sometimes owes debts, such as student loans, to more than one
campus. The Bankruptcy Coordinator for the Office of the
President, referred to as the University-wide Bankruptcy
Coordinator, manages bankruptcy claims for campus Loan Collection
Offices, University hospitals, University Press, Continuing
Education of the Bar, and other University offices.
The University-Wide Bankruptcy Coordinator is located in the
Financial Aid and Loan Collection Office, 2000 Hearst Avenue,
2nd Floor, Berkeley, California 94720.
B. Designation of Campus Bankruptcy Coordinators
1. Each Chancellor designates one person who acts as the liaison
between the University-wide Bankruptcy Coordinator and the
various campus offices which are affected by bankruptcy
proceedings. These offices may include, but are not limited
to, the Collection Office, Main Cashier's Office, Financial Aid
Office, and Accounts Receivable Office. Chancellors of
campuses which operate hospitals and clinics have the
option of appointing two bankruptcy coordinators-one for the
general campus and another for the hospital and clinics.
2. The name, campus address, and telephone number of each campus
bankruptcy coordinator are forwarded to the University-wide
Bankruptcy Coordinator and to all campus offices and
departments concerned. Any changes in the designation of the
campus coordinator should be reported promptly.
V. RESPONSIBILITIES AND REQUIRED ACTIONS
The Bankruptcy Procedures Manual, which can be obtained from the
University-wide Bankruptcy Coordinator describes the responsibilities of
each University office with respect to centralized bankruptcy
activities. The Manual has been organized to provide information on
student loan, sundry, and medical debts for each type of bankruptcy
proceeding. The Manual further describes liaison responsibilities with
the Office of the General Counsel.
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