Law Commons^™

Copyright Policy And The Problem Of Generalizing, Eva E. Subotnik

Faculty Publications

(Excerpt)

Today we have heard a variety of concerns expressed by professional authors, artists and performers. But one of the toughest aspects of determining how to make the copyright system work better is generalizing about what is and is not working. In these brief remarks, I would like to identify three areas that demonstrate this difficulty.

At the outset, a disclaimer: I took the animating theme of this Symposium to be the improvement of the financial stake of individual authors in some kind of direct way. This mode of analysis should be distinguished from other approaches, equally valid, that would …

Sub-Adviser Fee Litigation: Will Section 36(B) Acquire Teeth?, Francis J. Facciolo, Leland S. Solon

Faculty Publications

(Excerpt)

Section 36(b) of the Investment Company Act establishes a private breach of fiduciary duty cause of action for shareholders in an investment company, or mutual fund, to challenge the fees charged by the mutual fund’s investment adviser, in recognition of the fact that the adviser or one of its affiliates customarily creates the mutual fund and has a great deal of influence over the composition of the mutual fund’s board of directors or trustees, which negotiates the fees paid to the investment adviser. Under the Gartenberg standard, which was substantially adopted by the Supreme Court in Jones v. Harris …

Rule 9011 Of The Federal Rule Of Bankruptcy Procedure, Nancy Bello

Bankruptcy Research Library

(Excerpt)

Rule 9011(b) of the Federal Rules of Bankruptcy Procedure, the bankruptcy counterpart to Rule 11 of the Federal Rules of Civil Procedure (“Rule 11”), provides, that in presenting a pleading to the court, an attorney or unrepresented party is certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, that: (1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation; (2) the claims, defenses, and other legal contentions therein are warranted by …

Whether Undistributed Chapter 13 Payment Plan Funds Held By A Chapter 13 Trustee Should Be Distributed To The Debtor Or The Debtor’S Creditors After Conversion From Chapter 13 To Chapter 7, Rosa Aliberti

Bankruptcy Research Library

(Excerpt)

Qualified individuals seeking to reorganize their debts may file under Chapter 13 of the Bankruptcy Code. Under chapter 13, a debtor makes payments according to a court approved payment plan, which is administered by a chapter 13 trustee, and remains in possession of all the property of the estate. Once a debtor makes all his payments under the chapter 13 payment plan, he has a right to seek a discharge, provided that he meets certain requirements. These requirements include that the debtor: (1) certifying that he paid all domestic support obligations prior to the certification being made; (2) received …

The Earmarking Doctrine: Can It Be Used To Protect Late-Recorded Mortgages In Preference Action?, Michael Benzaki

Bankruptcy Research Library

(Excerpt)

Borrowers often seek to refinance their home loan mortgages in order to attain more favorable interest rates and other terms. Essentially, in these refinancing transactions, “the parties are looking simply to exchange one more expensive secured loan for another less expensive secured loan.” Typically, as part of the transaction, a refinancing lender will discharge the original mortgage and record a new mortgage. It is not uncommon for a delay to occur such that the new mortgage is recorded over thirty days after the lender transferred the funds to pay off the original loan. In such a case, if the …

The Enforceability Of Abatement Provisions, Shantel Castro

Bankruptcy Research Library

(Excerpt)

The moment a lease is executed, a set of obligations and rights are created between the landlord and tenant. In exchange for the payment of rent, the landlord is required to provide a space suited for the intended purpose of the rental. In addition, both parties are obligated to abide by any specific terms in the lease. Among those terms may be an abatement provision. An abatement provision is a clause in the lease that releases a lessee from the obligation to pay rent when a particular event occurs. The specific triggering event is usually listed in the lease. …

Equitable Subordination- Where Is Applies, What It Does, And The Implications That Result, Lauren Casparie

Bankruptcy Research Library

(Excerpt)

Equitable subordination, as permitted under section 510(c)(1) of the Bankruptcy Code, provides the court the ability to reorganize creditor’s debt in the light of any inequitable conduct. The code gives courts the ability to subordinate the level of priority of a creditor’s claim in light of any inequitable conduct committed by that creditor. This remedy is applied in cases where the creditor has acted in an inequitable manner, causing injury or creating unjust positions for other creditors. This remedy is remedial, not punitive, and limited only to the extent necessary to remedy the damage caused by the wrongdoing creditor. …

Does The Fdcpa Apply In Bankruptcy?, Garam Choe

Bankruptcy Research Library

(Excerpt)

In 1977, Congress enacted the Fair Debt Collection Practices Act (“FDCPA”) to remedy rampant abusive debt collection practices by debt collectors. A year later, the Bankruptcy Code was enacted under Title 11 of the United States Code. Conflicts arise as to whether which law applies when debt collectors use abusive debt collection practices while seeking to recover from a debtor in a bankruptcy case. Circuit courts are split as to whether the Bankruptcy Code displaces the FDCPA in the bankruptcy context. Some circuit courts have concluded that the Bankruptcy Code displaces the FDCPA in the bankruptcy context. Alternatively, some …

Chapter 11 Liquidations And The Termination Of Collective Bargaining Agreements, Cecilia Ehresman

Bankruptcy Research Library

(Excerpt)

Section 1113 of the Bankruptcy Code governs the modification or rejection of a collective bargaining agreement (“CBA”) by a chapter 11 trustee or debtor-in-possession. To modify or reject a CBA, a trustee or debtor-in-possession must (1) make a proposal to the union which provides the “necessary modifications in the employees benefits and protections that are necessary to permit the reorganization of the debtor”; (2) provide the union with relevant information as is necessary to evaluate the proposal; and (3) meet with the union and confer in good faith. For the modification or rejection to take place, the union must …

The Nature Of A Parent-Subsidiary Relationship Determines How To Allocate A Refund In A Tax Sharing Agreement, Samuel Cushner

Bankruptcy Research Library

(Excerpt)

Often, a parent corporation and its subsidiaries will file a consolidated tax return because it comes with many benefits, such as being able to offset gains and losses and deferring tax consequences for sales between consolidated groups. The parent corporation and the subsidiaries will often enter into a tax sharing agreement, which will determine each entity’s respective tax liability. In the event that a refund is issued, the tax sharing agreement will usually dictate how to allocate the refund amongst the parent and the subsidiaries.

A tax sharing agreement is “an agreement among members of an affiliated group of …

Professional Fee Enhancements: Determining Whether A Professional Is Entitled To A Fee Enhancement Under Section 330 Of The Bankruptcy Code, Adrianna R. Grancio

Bankruptcy Research Library

(Excerpt)

The Bankruptcy Code governs the compensation of a professional person employed under section 327 or 1103 of the Bankruptcy Code. Under section 330(a), the court may award a professional “reasonable compensation for actual [and] necessary services.” Section 330 provides a non-exclusive list of factors for a court to consider in determining whether the proposed compensation is reasonable. In addition to these statutory factors, courts also analyze the proposed fee by using two methods utilized in pre-bankruptcy code cases; (1) “Lodestar” method and (2) factors from Johnson v. Georgia Highway Express, Inc (the “Johnson Factors”).

The determination of whether the …

Student Loans Can Be Discharged (At Least Partially) In Bankruptcy After All, Carmella Gubbiotti

Bankruptcy Research Library

(Excerpt)

Section 523 of the Bankruptcy Code sets forth debts that are not dischargeable. Among the non-dischargeable debts, which a debtor will still owe after they receive a bankruptcy discharge, are debts from educational loans. As such, these student loan debts may prevent many debtors from receiving a truly fresh start following bankruptcy. Courts historically have approached the undue hardship exception to this rule narrowly, applying it only where the debtor, under the circumstances, could not reap the benefit of her education.

This Article will discuss the various tests courts use to determine whether an educational debt is dischargeable. Part …

Despite A Very High Income, Chapter 7 Debtor’S May Succeed, Pamela Frederick

Bankruptcy Research Library

(Excerpt)

Section 707 of the Bankruptcy Code governs when a court may dismiss a chapter 7 bankruptcy case. Under section 707(a), a court may dismiss a chapter 7 case “for cause.” In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) and amended section 707(b) to include the so-called “means test,” which provides a formula for determining whether “cause” exists to dismiss (or convert with the debtor’s consent) the debtor’s case. Courts split as to whether this amendment to section 707(b) permits a court to consider the debtor’s income when deciding whether to dismiss the debtor’s chapter …

Borrowers And Bankruptcy Trustees’ Unsuccessful Attempts To Avoid A Mortgage Under The “Splitting-The-Note” Theory, Alana Friedberg

Bankruptcy Research Library

(Excerpt)

In 1993, the mortgage industry created the electronic database Mortgage Electronic Registration System (“MERS”) in order to “track ownership interests in residential mortgages.” MERS “serves as the mortgagee in the land records for loans registered on the MERS System, and is a nominee (or agent) for the owner of the promissory note.” To date, MERS holds title to around 60 million home mortgages, about half of all home mortgages in the United States.

Borrowers and bankruptcy trustees have attempted unsuccessfully to argue a mortgage or deed of trust is void if a third party, such as MERS, was designated …

Whether Rejection Of A Trademark License Agreement Terminates The Licensee's Rights To Use The Trademark, Crystal Lawson

Bankruptcy Research Library

(Excerpt)

Section 365(a) of the Bankruptcy Code sets forth the basic power of a trustee in bankruptcy or a debtor in possession to assume or reject an executory contract. A debtor's ability to assume or reject an executory contract allows a debtor to keep favorable contracts and to discard burdensome contracts, subject to the bankruptcy court’s approval. The bankruptcy court will apply a two-part test to determine whether assumption or rejection should be allowed. First the court will determine whether the contract is executory. If the court determines that the contract is executory, the court will then determine whether assumption …

An Oversecured Creditor’S Post-Petition Attorneys’ Fees, Governed By State Law Or Federal Law’S 11 U.S.C. 506(B), Charles Lazo

Bankruptcy Research Library

(Excerpt)

In bankruptcy, an oversecured creditor is generally entitled to post-petition interest on their underlying claims, and post-petition reasonable fees, costs, or charges provided for under a contract or state statute. Although an oversecured creditor might be entitled to attorneys’ fees under a contract provision or a state statute, bankruptcy courts will review such fees for reasonableness. However, the Bankruptcy Code does not provide what laws govern on the issue of whether fees are reasonable. Currently, there is a three-way split among courts: (1) the majority of courts rule that federal law preempts state law as to the enforceability and …

The Exception To The Automatic Stays: Determining Whether Revenues Are Pledged Special Revenues, Debra March

Bankruptcy Research Library

(Excerpt)

The Bankruptcy Code provides two automatic stays in cases under chapter 9. These automatic stays, with limited exceptions, prevent both direct and indirect collection efforts against a municipal debtor. The first automatic stay provided by section 362(a) generally stays all direct collection efforts against the debtor. In addition, section 922(a) provides for an automatic stay that, with limited exception, also stays the commencement and continuation of claims against an officer as inhabitant of a municipal debtor, and the enforcement of a lien on or arising out of taxes or assessments of the municipal debtor. However, section 922(a) imposes a …

The Permissibility Of Chapter 11 Non-Debtor Release Provisions, Ashraf Mokbel

Bankruptcy Research Library

(Excerpt)

Generally speaking, bankruptcy proceedings do not impact non-debtor third parties liabilities. However, bankruptcy courts are courts of equity. This raises the issue of what provisions may be included in a confirmable plan. Specifically, there is the issue of whether a bankruptcy court can confirm a plan if it contains a non-debtor release provision which impacts non-debtor third party liabilities.

A non-debtor release provision shields third parties who share an identity of interest with the debtor, usually corporate officers and directors in a Chapter 11 proceeding, from any claim, obligation, cause of action, or liability to any party in interest …

Determining The Meaning Of “Instrumentality” In The Bankruptcy Code, Nicholas Panzarella

Bankruptcy Research Library

(Excerpt)

The Bankruptcy Code dictates who is eligible to be a debtor in bankruptcy. Section 109(a) generally provides that “a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor under [the Bankruptcy Code].” Although a debtor that is a “person” or a “municipality” maybe eligible to file for bankruptcy, section 109 restricts which chapters that a debtor may file under. In particular, subject to various restrictions, a “person” may be a debtor under chapter 7, 11, 12, or 13. A municipality, however, is only eligible …

Second Circuit Sets A Low Bar For Foreign Debtors Seeking Chapter 15 Relief, Samantha Ruppenthal

Bankruptcy Research Library

(Excerpt)

Continued globalization of trade and investment led Congress, through the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), to amend the Bankruptcy Code (“the Code”) in 2005 to include chapter 15. Chapter 15 adopted UNCITRAL’s Model Law on Cross-Border Insolvency —both aim to guide parties through cross-border insolvency proceedings. In addition to the policy objectives for all bankruptcies, chapter 15 specifically aspires to foster cooperation between the United States and foreign countries involved in cross-border insolvency cases and promote greater legal certainty in global trade and investment. A chapter 15 case is generally meant to supplement the plenary case …

Defining Residency Under The Federal Homestead Exemption, Sally Profeta

Bankruptcy Research Library

(Excerpt)

The homestead exemption is a longstanding doctrine in American jurisprudence that protects the interest debtors have in their dwelling when filing for bankruptcy. Section 522(d)(1) of the Bankruptcy Code’s federal exemption scheme provides debtors with the opportunity to preserve the interest they have in their residence, with outside limits on the amount that interest is valued. However, courts are divided on the interpretation of the word “residence,” and have struggled to determine whether “residence” requires actual occupancy of the claimed property at the date of filing.

There are two cannons of statutory interpretation that are used in this context, …

The Applicability Of The Eleventh Amendment In Chapter 9 Cases, Christopher J. Pedraita

Bankruptcy Research Library

(Excerpt)

The sovereign immunity of the states, or the freedom of a state from suit by its citizens, became constitutionally protected in the late eighteenth century through the passage and ratification of the Eleventh Amendment. In particular, the Eleventh Amendment protected states from suits “commenced or prosecuted…by Citizens of another State, or by Citizens or Subjects of any Foreign State.” Notwithstanding the plain language, the Supreme Court has held that the Eleventh Amendment also bars suits against a state that are commenced by citizens of its own state. Moreover, the Eleventh Amendment also bars suits by municipalities brought against the …

Same-Sex Couple Deemed “Spouses” For Purposes Of The Bankruptcy Code, Michael Rich

Bankruptcy Research Library

(Excerpt)

The Bankruptcy Code states that a legally married couple may file a joint bankruptcy petition pursuant to section 302(a). However, this right to joint filing is narrowly limited to an “individual that may be a debtor under such chapter and such individual’s spouse.” Generally, courts have rejected joint filings under section 302(a) filed by debtors who are not legally married. For example, a parent and child cannot file a joint bankruptcy petition under section 302(a). Further, a couple that is living together without being legally married may not file a joint petition. The Bankruptcy Code is silent as to …

Are Government Creditors Exempt From U.C.C. Article 9 Filing And Perfection Requirements?, Thomas Sica

Bankruptcy Research Library

(Excerpt)

Article 9 of the Uniform Commercial Code (the “UCC”) requires a creditor to perfect its security interests against its collateral in order to recover the creditor’s priority in such collateral. Former versions of the UCC that predate 2001 provided that the Article 9’s perfection requirements did not apply “[t]o a transfer by a government or a governmental unit of the state.” This exception was eliminated from the UCC in 2001. Thirty-two states, however, still have versions of the UCC that contain some version of this exception. Within the states that still enforce this exception for governmental units, there are …

Self-Employed Debtors Face A Hard Truth When Calculating Their Current Monthly Income For The Applicable Commitment Periods Under Chapter 13 Plans, Arthur Rushforth

Bankruptcy Research Library

(Excerpt)

A bankruptcy court may confirm a debtor’s chapter 13 plan of reorganization if the requirements of section 1325(a) of the Bankruptcy Code are satisfied. If the chapter 13 trustee or an unsecured creditor objects to the confirmation of the plan, however, the bankruptcy court may only confirm the plan if it either provides for the repayment in full of claims or that the debtor must devote all of his projected disposable income towards payments of his unsecured creditors during the plan’s “applicable commitment period.” The debtor’s applicable commitment period is five years if the debtor’s current monthly income exceeds …

Deeping Insolvency: A Cause Of Action, A Tool Of Measuring Damages, Or Nothing At All?, Nicholas Santoro

Bankruptcy Research Library

(Excerpt)

“Deepening Insolvency” is a rather new theory of either liability or damages in cases brought by a plaintiff (typically a bankruptcy trustee, litigation trust, or some other party “filling in” for an insolvent corporation, or debtor) against directors, officers, attorneys, or other professionals, based on their dealings with the debtor. “Deepening insolvency” has been defined as “injury to the debtors' corporate property from the fraudulent expansion of corporate debt and prolongation of corporate life.” The theory of deepening insolvency has become a highly debated by attorneys, creditors, and the courts.

The courts, both state and federal, have continued to …

The Irs Can Offset Post-Petition Tax Overpayments Against Pre-Petition Tax Liabilities, Kyle J. Tumsuden

Bankruptcy Research Library

(Excerpt)

In bankruptcy cases, creditors have the powerful right of “setoff,” i.e., the right to “net” or cancel payments. The right to set off usually arises in cases of mutual debt obligations where a debtor owes a debt to a creditor who in turn owes a unilateral debt back to the same debtor. The rationale for the right to setoff it obvious, as it allows the parties to apply their mutual debt obligations against each other, “thereby avoiding the absurdity of making A pay B when B owes A.” In other words, the court will reduce the two competing judgments …

Judicial Estoppel: Essentially Locking In Representations Made During Bankruptcy Proceeding, Sophie Tan

Bankruptcy Research Library

(Excerpt)

The Bankruptcy Code provides that a debtor is required to file with the bankruptcy, among other things, “a list of [its] creditors,” a “schedule of [its] assets and liabilities,” and “a statement of [its] financial affairs.” With the filing of its schedules, the debtor asserts a position with respect to its assets, liabilities, and financial affairs, which is relied on by the bankruptcy court, the debtor’s creditors, and the other parties in interest. Accordingly, various circuit courts have recognized that “the success of our bankruptcy laws requires a debtor’s full and honest disclosure,” and that there needs to be …

Gifting & The Absolute Priority Rule, Brianna Walsh

Bankruptcy Research Library

(Excerpt)

The absolute priority rule sets forth a hierarchical scheme for the distribution of proceeds obtained through liquidating the assets of a debtor. The scheme provides that property of an estate shall be distributed to secured creditors, then to administrative and priority unsecured creditors, then to unsecured creditors, and lastly to equity holders. Under Chapter 11, section 1129(b)(2)(B)(ii) for a dissenting class of impaired creditors, a plan is “fair and equitable” only if the allowed value of such creditors claims are paid in full, or the holder of any claim or equity that is junior to the dissenting creditors will …

The Uncertain Future Of The Unfinished Business Doctrine, Dan Teplin

Bankruptcy Research Library

(Exceprt)

It is no secret that the legal industry has experience financial difficulty following the great recession. Many law firms have been less profitable, and in some extreme circumstances, have filed for bankruptcy. The worlds largest law firms are of no exception to this recent phenomenon. The collapses of the mega-firms Dewey & LeBoeuf, Coudert Brothers LLP, Heller Ehrman LLP, Howrey LLP, Thacher Proffitt & Wood LLP, and Thelen LLP are prime examples.

Since most law firms, especially large firms, do not reorganize in bankruptcy, a bankruptcy trustee will often be appointed to administer the firm’s estate. In order to …