Bankruptcy Law Commons^™

Loopholes For The Affluent Bankrupt, David R. Hague

Faculty Articles

Recent bankruptcy cases are exposing a problem. Affluent individuals filing for bankruptcy are treated more favorably under the Bankruptcy Code than those debtors with little to no means of financial sustenance or income. Did Congress intend this result? The legislative history is unclear. But one thing seems certain: The United States Bankruptcy Code contains a set of loopholes that appear to be designed for the well-to-do segment of society. Courts throughout the United States are either overlooking these provisions or simply condoning their utilization under the defensible conviction that the Bankruptcy Code permits it.

In this Article, I argue that …

Milking The Estate, David R. Hague

Faculty Articles

Recent Chapter 7 bankruptcy cases are exposing a widespread problem. Chapter 7 trustees are retaining their own law firms to represent them and then in clear breach of their fiduciary duties to creditors-requesting illegitimate legal fees to be paid by the estate. This practice is immoral and particularly harmful to creditors. Indeed, every dollar paid to the trustee and his firm is a dollar that will not be distributed to creditors. The Bankruptcy Code, remarkably, allows a trustee to retain his own law firm to represent him in his capacity as a trustee. But this inherently conflicted arrangement is not …

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 …

Erisa: Anti-Alienation Superiority In Bankruptcy, George Lee Flint Jr

Faculty Articles

Both ERISA and the Bankruptcy Code consider the issue of debtor-participant’s interest in certain pension trusts when an action has been undertaken against the bankrupt debtor participant’s estate. Many jurisdictions have offered conflicting views on the handling of the interest. These conflicts create litigious interpretation and choice of law problems and place plan administrators at risk for breach of fiduciary duty depending on jurisdictional interpretation. Paying-out a bankruptcy trustee’s turnover demand could affect the tax qualified status of the pension plan, thereby hurting all plan participants. ERISA’s preemption provision was drafted to create uniformity among the states in interpreting employee …