Law Commons^™

Exceptions To The Rule: When Non-Debtor Entities Are Protected By The Automatic Stay, Isabella Benchetrit

Bankruptcy Research Library

(Excerpt)

In most cases, the automatic stay, under section 362 of title 11 of the United States Code (the "Bankruptcy Code"), stays all creditors from pursuing litigation against debtors. Nonetheless, non-debtor entities can obtain the protection afforded to debtors by the automatic stay in limited circumstances. There are two primary ways of staying litigation against a non-debtor. First, through demonstrating that there are exceptional circumstances to extend section 362 to a non-debtor. Second, through satisfying the standard for an injunction pursuant to section 105 of the Bankruptcy Code.

This Article considers the circumstances by which a non-debtor entity may receive …

Bankruptcy, Taxes, And The Primacy Of Irs Refund Offsets: Copley V. United States, Michelle Lyon Drumbl

Scholarly Articles

The Bankruptcy Code and the Internal Revenue Code (I.R.C.) are statutory labyrinths of federal law. Copley v. United States called on the Fourth Circuit to resolve a question that arose when respective provisions of each collided. At the heart of Copley was a married couple seeking a fresh start with an expected $3,208 income tax refund. The Copleys wished to resolve their outstanding debts in bankruptcy and maximize the relief afforded to them under the Virginia homestead exemption provision, as permitted by the Bankruptcy Code. On the other side of the proverbial table was the Internal Revenue Service (IRS) armed …

The Bankruptcy Of Refusing To Hire Persons Who Have Filed Bankruptcy, Terrence Cain

Faculty Scholarship

In 1978, Congress made it illegal for government employers to deny employment to, terminate the employment of, or discriminate with respect to employment against a person who has filed bankruptcy. In 1984, Congress extended this prohibition to private employers by making it illegal for such employers to terminate the employment of, or discriminate with respect to employment against a person who has filed bankruptcy. Under the law as it currently exists, private employers can refuse to hire a person who has filed bankruptcy solely because that person has filed for bankruptcy. Meanwhile, employers have substantially increased their use of credit …

Who Gets Paid? Section 365(N) Royalty Payments Under "Zombie Licenses" After A Sale Of Ip, Christopher G. Bradley

Law Faculty Popular Media

This short article discusses the Bankruptcy Code's unusual treatment of certain intellectual property licenses. First, it gives a brief overview of § 365(n) of the Bankruptcy Code. It then provides a short analysis of a difficult but important question: If a licensee of a debtor’s intellectual property opts to retain its license rights under § 365(n), who should receive the stream of licensing payments in the event that the IP is sold: the buyer of the IP, or the debtor in bankruptcy? The answer that has emerged in some of the case law is somewhat surprising -- after providing nuanced …

Health Savings Accounts And The Bankruptcy Estate, Michelle Nicotera

Bankruptcy Research Library

(Excerpt)

Section 541 of the Bankruptcy Code defines “property of the estate” to include “all legal or equitable interests of the debtor in property as of the commencement of the estate.” Consistent with a policy of expanding the bankruptcy estate, the property listed under section 541 is available to the trustee to satisfy the estate’s creditors once a petition has been filed. This aggregation provides the debtor an opportunity for a fresh start and ensures effective distribution among creditors and thus “promotes the fundamental purpose of the Bankruptcy Code.” Although section 541(a) defines “property of the estate” broadly, section 541(b) …

Turnover Actions And The “Floating Check” Controversy, David R. Hague

Faculty Articles

When a debtor files for Chapter 7 bankruptcy, a Chapter 7 trustee is appointed and is charged with collecting and reducing to money the property of the bankruptcy estate. One of the most basic collection methods a trustee possesses is its turnover power under § 542(a) of the Bankruptcy Code. Pursuant to § 542(a), an entity in possession, custody, or control, during the bankruptcy case, of property that the trustee may use, sell, or lease, must deliver to the trustee, and account for, such property or the value of such property.

An interesting issue has arisen that is placing debtors …

Behind Closed Doors: The Influence Of Creditors In Business Reorganizations, Michelle M. Harner, Jamie Marincic

Faculty Scholarship

General corporate law delegates the power to manage a corporation to the board of directors. The board in turn acts as a fiduciary and generally owes its duties to the corporation and its shareholders. Many courts and commentators summarize the board’s primary objective as maximizing shareholder wealth. Accordingly, one would expect a board’s conduct to be governed largely by the interests of the corporation and its shareholders. Yet, anecdotal and increasing empirical evidence suggest that large creditors wield significant influence over their corporate debtors. Although this influence is most apparent as the corporation approaches insolvency, the strength of the creditors’ …

Panel 3: Bankruptcy & Restructuring Of Financial Institutions, Barry E. Adler, William A. Ackman, Marcia L. Goldstein, Arthur J. Gonzalez, Michael J. Krimminger, Edward R. Morrison

Faculty Scholarship

Barry Adler: Thank you all for being here. It is an honor for me to be on this panel and an honor to moderate it. Let me introduce our panel before we get started. William A. Ackman, the founder and CEO of Pershing Square Capital Management; Marsha Goldstein, a partner and chair of the business finance and restructuring department at Weil, Gotshal; the Honorable Arthur Gonzalez, a judge in the U.S. Bankruptcy Court for the Southern District of New York; and Ed Morrison, the Harvey Miller Professor of Law and Economics at Columbia Law School. Also on this panel is …

Forward: Symposium On Interdisciplinary Perspectives On Bankruptcy Reform, Michelle A. Cecil

Faculty Publications

In 2003, over 1.6 million consumers filed for bankruptcy protection, surpassing the previous record of 1.5 million bankruptcy filings set just one year earlier. In an effort to reverse the spiraling upward trend of consumer bankruptcies, and to prevent abusive debtors from using the bankruptcy system to avoid paying their debts, in April, 2005, Congress voted overwhelmingly in favor of passing the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Widely heralded as the most sweeping bankruptcy reform legislation in over a quarter of a century, BAPCPA was designed in large part to force debtors with the ability …

Debtors Beware: The Expanding Universe Of Non-Assumable/Non-Assignable Contracts In Bankruptcy, Michelle M. Harner, Carl E. Black, Eric R. Goodman

Faculty Scholarship

No abstract provided.

Derivatives And The Bankruptcy Code: Why The Special Treatment?, Franklin R. Edwards, Edward R. Morrison

Faculty Scholarship

The collapse of Long Term Capital Management (LTCM) in Fall 1998 and the Federal Reserve Bank's subsequent efforts to orchestrate a bailout raise important questions about the structure of the Bankruptcy Code. The Code contains numerous provisions affording special treatment to financial derivatives contracts, the most important of which exempts these contracts from the "automatic stay" and permits counterparties to terminate derivatives contracts with a debtor in bankruptcy and seize underlying collateral. No other counterparty or creditor of the debtor has such freedom; to the contrary, the automatic stay prohibits them from undertaking any act that threatens the debtor's assets. …

Interpreting The Bankruptcy Code: An Empirical Study Of The Supreme Court's Bankruptcy Decisions, Karen Gebbia

Publications

The Supreme Court has issued forty-eight bankruptcy decisionsin the two decades since the Bankruptcy Code became law. In at least thirty of these cases, the Supreme Court granted certiorari to mediate conflicts among the circuit courts of appeal.

This article studies the Court's interpretive methods. Studies of lower court bankruptcy decisions might also provide valuable information concerning interpretive method, particularly if such studies examine whether conflicting decisions arise from conflicting interpretive methods, whether appellate courts and bankruptcy courts apply divergent interpretive methods, and whether textual or non-textual decisions are more frequently overruled by higher courts or legislative action.

Thin Red Line: An Analysis Of The Role Of Legal Assistants In The Chapter 13 Bankruptcy Process, David G. Epstein

Law Faculty Publications

The delegation by a lawyer of substantial amounts of non-ministerial functions to legal assistants raises various unauthorized practice of law issues. This Article provides an overview of the Chapter 13 bankruptcy process and state law rules regarding the unauthorized practice of law. We then discus~ these rules in the context of a typical Chapter 13 debtor practice.

Don't Go And Do Something Rash About Cram Down Interest Rates, David G. Epstein

Law Faculty Publications

This Article considers the second and different question of how to value the proposed payments under the plan. While the question of how to value the proposed payments under the plan is different from the question of how to value the creditor's security interest in property, there is a connection between the answers to the questions. The value of the payments must at least equal the value of the security interest.

Postpetition Lending Under Section 364: Current Issues - Incentives To Lenders To Provide Financing To Borrowers Who Are The Subject Of Bankruptcy Cases, David G. Epstein

Law Faculty Publications

A bankruptcy debtor is not viewed by most lenders as a desirable customer. Most lenders arc understandably reluctant to extend credit to such a borrower. This reluctance compounds the difficulties of a bankruptcy debtor. Without new financing, the cash needs of a debtor often will cause the debtor's assets to be liquidated, thereby foreclosing any hope of reorganization and defeating the rehabilitative purposes of the Bankruptcy Code. To counter the understandable reluctance of financial institutions to lend to bankruptcy debtors, section 364 of the Bankruptcy Code provides incentives to lenders to provide financing to borrowers who are the subject of …

The Attack On Chapter 11, Douglass G. Boshkoff

Articles by Maurer Faculty

No abstract provided.

Including Retirement Benefits In A Debtor's Bankruptcy Estate: A Proposal For Harmonizing Erisa And The Bankruptcy Code, Michelle A. Cecil

Faculty Publications

This Article first examines the conflicting policies of ERISA and the Bankruptcy Code. It then explores how the various courts have attempted to reconcile these policies when faced with the issue of whether a debtor's interest in retirement plan assets should be available for distribution to creditors in bankruptcy. In analyzing the relevant case law, the Article examines cases addressing the exclusion issue (whether pension plans should be excluded from the bankruptcy estate entirely). It also evaluates cases addressing the exemption issue (whether plan assets, once included in the bankruptcy estate, can be exempted out of the estate by the …

Federal Oil Price Controls In Bankruptcy Cases: Government Claims For Repayment Of Illegal Overcharges Should Not Be Subordinated And “Penalties” Under 11 Usc §726(A)(4), Thomas A. Schweitzer

Scholarly Works

No abstract provided.

(Part 1) Chapter 7 Cases: Do Erisa And The Bankruptcy Code Conflict As To Whether A Debtor's Interest In Or Rights Under A Qualified Plan Can Be Used To Pay Claims, Donna Litman

Faculty Scholarship

No abstract provided.

(Part 2) Chapter 7 Cases: Do Erisa And The Bankruptcy Code Conflict As To Whether A Debtor's Interest In Or Rights Under A Qualified Plan Can Be Used To Pay Claims, Donna Litman

Faculty Scholarship

No abstract provided.