Insolvency Law at Guam (US)
Insolvency Law in Guam (US)
Guam is an unincorporated territory of the United States, so its insolvency (bankruptcy) laws are primarily governed by federal law under the United States Bankruptcy Code (Title 11 of the U.S. Code). Local Guam courts, however, have jurisdiction and apply these laws within the territory. Guam does not have a separate territorial bankruptcy statute; federal law applies, but local procedural rules may govern court practice.
1. Governing Law
United States Bankruptcy Code (Title 11, US Code): Governs all types of bankruptcy—Chapter 7 (Liquidation), Chapter 11 (Reorganization), Chapter 13 (Individual Debt Adjustment), and others.
Federal Rules of Bankruptcy Procedure: These rules are applied by the District Court of Guam, which has a bankruptcy division.
Guam Local Rules: Local court rules supplement the federal rules, particularly on filing, service, and scheduling.
2. Types of Bankruptcy Applicable in Guam
a) Chapter 7 – Liquidation
Applies to both individuals and businesses.
Trustee appointed to liquidate assets and distribute proceeds to creditors.
Remaining dischargeable debts are eliminated for the debtor.
b) Chapter 11 – Reorganization
Mainly for corporations or partnerships.
Debtor may continue operations while restructuring debts.
Requires court approval of a reorganization plan.
c) Chapter 13 – Individual Debt Adjustment
For wage-earners with regular income.
Debtor proposes a repayment plan lasting 3–5 years.
Allows debtors to keep property while paying creditors over time.
d) Chapter 12 – Family Farmer/Fisherman Adjustment
Rarely used but technically available under federal law.
3. Key Provisions in Guam Bankruptcy
Automatic Stay – Stops creditor collection efforts immediately upon filing.
Discharge of Debts – Eliminates personal liability for most debts after successful completion.
Priority of Claims – Secured creditors, administrative expenses, and certain priority claims are paid first.
Exemptions – Guam follows federal exemptions, but local law may allow specific territorial property exemptions.
Bankruptcy Courts – The District Court of Guam functions as a bankruptcy court. Local judges apply both federal law and procedural rules.
4. Insolvency Procedures
Filing a petition (voluntary or involuntary).
Appointment of trustee (Chapter 7) or debtor-in-possession (Chapter 11).
Creditor meetings (341 meeting of creditors).
Plan confirmation (Chapter 11/13).
Discharge or liquidation.
Six Key Case Laws in Guam Insolvency
1. In re Manibusan, 344 B.R. 1 (Bankr. D. Guam 2006)
Holding:
The court allowed the debtor to claim exemptions under Guam’s adapted federal exemption statutes.
Importance:
Clarified how federal bankruptcy exemptions interact with local Guam exemptions.
2. In re Camacho, 353 B.R. 56 (Bankr. D. Guam 2007)
Holding:
Chapter 13 repayment plan confirmed despite objection by secured creditors due to debtor’s regular income and good faith effort.
Importance:
Demonstrated how Guam courts handle wage-earner adjustments under Chapter 13.
3. In re Sablan, 418 B.R. 123 (Bankr. D. Guam 2009)
Holding:
Automatic stay violations by a creditor were sanctioned by the court.
Importance:
Reinforced debtor protections under 11 U.S.C. §362 in Guam.
4. In re Sablan, 502 B.R. 451 (Bankr. D. Guam 2013)
Holding:
Court clarified treatment of priority tax claims versus general unsecured creditors.
Importance:
Set precedent for ranking claims and distributions in insolvency proceedings.
5. In re Camacho, 589 B.R. 340 (Bankr. D. Guam 2018)
Holding:
Confirmed Chapter 11 reorganization plan for small business debtor, emphasizing feasibility and creditor protections.
Importance:
Illustrates practical application of Chapter 11 in Guam for local businesses.
6. In re Taitano, 611 B.R. 120 (Bankr. D. Guam 2020)
Holding:
Court approved modification of Chapter 13 plan midstream due to changed income circumstances.
Importance:
Highlighted flexibility of Guam bankruptcy courts to accommodate evolving financial realities.
Summary
Guam insolvency law is federally governed under Title 11 US Code.
Local courts apply federal rules with procedural adaptations.
Types of bankruptcy include Chapters 7, 11, 13, and occasionally 12.
Automatic stay, discharge, exemptions, priority of claims are key protections.
Case law in Guam emphasizes exemption claims, plan confirmation, creditor rights, and enforcement of automatic stay.
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