Law Commons^™

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 …

Sare Manipulation: The Hurdles In Single-Asset Real Estate Cases, David R. Hague

Faculty Articles

Under § 1129(a)(10) of the Bankruptcy Code, a debtor's plan of reorganization cannot be confirmed unless at least one "impaired class" accepts the plan, excluding acceptance of any insider of the debtor. A class of claims accepts the plan if more than one-half in number and at least two-thirds in amount of claims voting in a class favor the plan. Thus, a debtor's composition of its classes clearly has a substantial impact upon its chances of successfully confirming its plan of reorganization over dissenting creditors. Obviously, the debtor would like to have unfettered power and full discretion to group creditors …

Defining The Limits Of Federal Court Jurisdiction Over States In Bankruptcy Court., Patricia L. Barsalou

St. Mary's Law Journal

Sovereign immunity jurisprudence has always been a confusing jumble of assumptions which seem incomprehensible. Despite the confusion, understanding sovereign immunity has become more important in the wake of the United States Supreme Court’s decision in Seminole Tribe of Florida v. Florida. The constitutional issues raised in Seminole Tribe amount to a reinterpretation of the fundamental balance of power between federal and state governments and the power of Congress to affect that balance. Not all sovereign immunity is sovereign immunity. Many courts use the term to identify both the common-law doctrine and the “immunity” granted to the states through the Eleventh …

Time Limitations For Objecting To Claims: The Interplay Between Sections 502(D) And 546(A) Of The Bankruptcy Code., Gregory G. Hesse

St. Mary's Law Journal

It is common lore among bankruptcy trustees and lawyers that a bankruptcy trustee has an unlimited time period under the Bankruptcy Code (the Code) to file objections to claims. Neither Section 502(a) of the Code nor Federal Rule of Bankruptcy Procedure 3007 contains time limitations within which an objection to a claim must be filed. Yet, creative creditor attorneys have fashioned arguments that the two-year limitations period placed on avoidance actions by Section 546(a) of the Code applies to claim objection proceedings brought under Section 502(d). Because courts have held the limitations period of Section 546(a) applies to claim objection …

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 …

Bankruptcy Policy: Toward A Moral Justification For Financial Rehabilitation For The Consumer Debtor, Richard E. Flint

Faculty Articles

The central justification for the debtor financial relief provisions of the Bankruptcy Code is founded in a natural law theory of morality. The law reflects reason and conscience, and those fundamental principles of fairness and humanitarianism form the moral dimension of the debtor relief provisions of the Bankruptcy Code. Historically, America has recognized an objective moral dimension to the bankruptcy process, and Congress has continually enacted legislation implementing its fresh start policy, which strives to obtain goals that mirror that moral fiber.

This fiber is composed of two separate but mutually dependent strands of values, intertwined into a coherent plan …