Insolvency Law at Guam (US)
Guam's insolvency law is codified in Title 7, Division 3, Chapter 50 of the Guam Code Annotated (GCA). This chapter outlines the procedures for both voluntary and involuntary insolvency proceedings, including the appointment of assignees, the treatment of creditors, and the discharge of debts. The law is modeled after the U.S. Bankruptcy Code but is adapted to Guam's local legal framework. (Guam Code Title 7, Division 3, Chapter 50 - Insolvency Law (2024) :: 2024 Guam Code :: U.S. Codes and Statutes :: U.S. Law :: Justia)
Key Provisions of Guam's Insolvency Law
Voluntary Insolvency
Eligibility: Debtors owing more than $1,000 may petition for voluntary insolvency.
Requirements: The petition must include a schedule of debts, an inventory of assets, and an affidavit of the debtor's inability to pay.
Process: Upon filing, the court may appoint a receiver and publish the petition to notify creditors. (Guam Code Title 7, Division 3, Chapter 50 - Insolvency Law (2024) :: 2024 Guam Code :: U.S. Codes and Statutes :: U.S. Law :: Justia)
Involuntary Insolvency
Initiation: Two or more creditors with claims totaling at least $1,000 can file a petition for involuntary insolvency.
Grounds: Acts of insolvency include the debtor departing Guam to defraud creditors or concealing assets.
Procedure: The court may issue orders to prevent asset transfers and appoint an assignee or receiver. (Guam Code Title 7, Division 3, Chapter 50 - Insolvency Law (2024) :: 2024 Guam Code :: U.S. Codes and Statutes :: U.S. Law :: Justia)
Assignees and Creditors
Assignee's Role: The assignee takes possession of the debtor's estate, sells assets, and distributes proceeds to creditors.
Creditor Claims: Claims are paid pro rata, with certain claims, such as legal expenses and government debts, given priority. (Guam Code Title 7, Division 3, Chapter 50 - Insolvency Law (2024) :: 2024 Guam Code :: U.S. Codes and Statutes :: U.S. Law :: Justia)
Discharge and Fraudulent Transfers
Discharge: Debtors may apply for a discharge of debts after three months but within one year of adjudication.
Exceptions: Discharge may be denied if the debtor has committed fraud or concealed assets.
Fraudulent Transfers: Transfers made to defraud creditors within 30 days before insolvency proceedings are void and may be reversed. (Guam Code Title 7, Division 3, Chapter 50 - Insolvency Law (2024) :: 2024 Guam Code :: U.S. Codes and Statutes :: U.S. Law :: Justia)
Compositions
Definition: A composition is an agreement between the debtor and creditors to settle debts for less than the full amount.
Approval: Requires acceptance by a majority in number and amount of creditors and court confirmation.
Effect: Upon confirmation, the debtor's property is returned, and the case is dismissed. (Guam Code Title 7, Division 3, Chapter 50 - Insolvency Law (2024) :: 2024 Guam Code :: U.S. Codes and Statutes :: U.S. Law :: Justia)
Federal Bankruptcy Court in Guam
In addition to local insolvency proceedings, Guam is also subject to federal bankruptcy law. The District Court of Guam serves as a U.S. Bankruptcy Court under 48 U.S.C. § 1424(b), with its Chief Judge acting as the bankruptcy judge. This court handles cases under Chapters 7, 11, and 13 of the U.S. Bankruptcy Code. (Bankruptcy Division | District Court of Guam | the Federal Court for Guam)
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