Law Commons^™

Do Parents Receive Reasonably Equivalent Value For Paying College Tuition For Their Children Making Such Payments Avoidable, Alexandria Stiteler

Bankruptcy Research Library

(Excerpt)

Under section 548 of title 11 of the United States Code (the “Bankruptcy Code”), a trustee may avoid a transfer by a debtor that was an actual or constructive fraud. An actual fraudulent transfer is a transfer made with actual intent to hinder, delay, or defraud creditors. In general, a constructive fraudulent transfer is a transfer or the incurrence of an obligation by a debtor that was made within two years before the date of filing the bankruptcy petition, for less than reasonably equivalent value, at a time when the debtor was insolvent and could not pay its debts …

City’S Retention Of Impounded Vehicle Not Violation Of Automatic Stay, Alexis Zobeideh

Bankruptcy Research Library

(Excerpt)

Upon the filing of a petition under title 11 of the United States Code (the “Bankruptcy Code”), creditors and other parties in interest are generally automatically stayed from taking any action against a debtor or property of the estate. The estate includes “all legal or equitable interests of the debtor in property as the commencement of the case,” with some exceptions. The automatic stay is “one of the most important protections and powerful tools available to a debtor in a bankruptcy.”

It is well established that a creditor cannot take affirmative steps against a debtor or estate property. Prior …

Are Settlement Agreements Executory Contracts? Courts That Say “No” Give More Power To Creditors In Bankruptcy Actions, Kevin Murray

Bankruptcy Research Library

(Excerpt)

In order to provide for quick and efficient resolutions in bankruptcy cases, courts will often encourage settlement agreements. Settlement agreements are so common that it is unusual for there not to be a settlement between adversaries. Additionally, settlement agreements are favored by law to allow the parties to avoid the expense and burdens that are associated with litigating claims.

Courts have taken two approaches when analyzing disputes that involve settlement agreements. Some courts have held that a settlement agreement is a court approved contract between two adversarial parties and its interpretation is governed by the general provisions of contract …

The Differing Standards To Obtain A Student Loan Debt Discharge, Nicholas Bonelli

Bankruptcy Research Library

(Excerpt)

Discharging student loans in a bankruptcy case is often an uphill battle. Under section 523 of title 11 of the United States Code (the “Bankruptcy Code”), student loans are presumed nondischargeable. Thus, a discharge is generally unavailable for student loans “[u]nless excepting such debt from discharge . . . would impose an undue hardship on the debtor and the debtor's dependents.” To obtain a discharge, a debtor bears the burden of showing “undue hardship” by a preponderance of the evidence. In determining “undue hardship,” a majority of courts use the Brunner Test. A minority of courts use the more …

The Debtor’S Absolute Right To Dismiss A Chapter 13 Case, Jared Brady

Bankruptcy Research Library

(Excerpt)

Under section 1307(b) of title 11 of the United States Code (the “Bankruptcy Code”), a debtor has an absolute right to dismiss a Chapter 13 bankruptcy case. A bankruptcy case may be voluntarily filed under any chapter so long as the individual is eligible to be a debtor under the chapter selected. Section 1307(b) requires the court, on request of the debtor, to dismiss a Chapter 13 case if the case has not already been converted from Chapter 7 or Chapter 11.

This memorandum addresses a debtor’s right to dismiss a Chapter 13 case in three sections. Section one …

Standing To Challenge Bankruptcy Court’S Approval Of Retiree Benefits Settlement, Inkook Choi

Bankruptcy Research Library

(Excerpt)

Section 1114 of title 11 of the United States Code (the “Bankruptcy Code”) provides in relevant part that: “the debtor in possession shall timely pay and shall not modify any retiree benefits” unless “the court, on the motion of the [debtor] or authorized representative [of the retirees,]” orders or the debtor and the authorized representative agree to the modification of such benefits. A bankruptcy court may, after notice and hearing, approve a settlement, including a settlement of retiree benefit claims, under Federal Rule of Bankruptcy Procedure 9019. Consequently, creditors and other parties in interest may voice their views on …

Financial Advisory Firms Whose Affiliate’S Employees Served As Independent Officers Or Directors Of The Debtor Prepetition Should Be Retained Under Section 327(A) Of The Bankruptcy Code, Lauren Jusas

Bankruptcy Research Library

(Excerpt)

The retention of financial advisors by chapter 11 debtors must be approved by a bankruptcy court. Currently, debtors may file employment applications for financial advisors, whose affiliate’s employees, prepetition, served as a chief restructuring officer (“CRO”), under two different sections of title 11 of the United States Code (the “Bankruptcy Code”). Under section 327(a), financial advisors must satisfy a stringent two-part test to be approved. Alternatively, financial advisors may seek approval under section 363(b) pursuant to the J. Alix Protocol, a national settlement protocol developed by the United States Trustee Program (the “USTP”). Since its inception, the J. Alix …

A Bankruptcy Court May Temporarily Suspend Rent Obligation, Matthew Kipnis

Bankruptcy Research Library

(Excerpt)

Section 365(d)(3) of title 11 of the United States Code (the “Bankruptcy Code”) authorizes a court to “extend, for cause, the time for performance of any [rent] obligation[‘s] [on unexpired leases of nonresidential real property] that arise[] within 60 days after the date of the order for relief[.]” Historically, courts have recognized that under § 365(d)(3), there is a statutory obligation on debtors to pay rent on unexpired leases. Courts have also recognized that if a debtor’s rent obligation is deferred, lessors are entitled to adequate protection. However, courts are divided on the exact timing of when a debtor’s …

A Receiver Lacks Standing To Recover Fraudulent Transfers Under Ufta When Corporation Has Not Been Adequately Cleansed From Fraudulent Actions Of Ponzi Schemers, Chelsea Mcgee

Bankruptcy Research Library

(Excerpt)

A court-appointed receiver is charged with collecting the assets of an entity for the benefit of creditors. A receiver, however, only has standing to bring claims that the party in the receivership possessed. In determining whether a receiver has standing to bring a claim, it is necessary to differentiate between the types of claims that can be asserted on behalf of a corporation. First, there are actions that a receiver may bring directly against the principals of a corporation or the recipients of fraudulent transfers. Second, are common law tort claims that can be brought against a third party, …

Bankruptcy Debtor Eligibility For Federal Coronavirus Aid Under The Cares Act, Meghan Paola

Bankruptcy Research Library

(Excerpt)

In March of 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to provide assistance to individuals and businesses affected by the Covid-19 pandemic. The Paycheck Protection Program (the “PPP”) was established under section 7(a)(36) of the Small Business Act to provide economic relief in the form of loans to small businesses negatively impacted by Covid-19. The CARES Act tasks the Small Business Administration (the “SBA”) with administering the PPP loans.

The PPP application form provides that a loan will not be approved if an applicant is “presently involved in any bankruptcy.” However, debtors …

Section 1112(B) Of The Bankruptcy Code Allows A Bankruptcy Court To Dismiss A Case Filed In Bad Faith, Antonio Sciarrotta

Bankruptcy Research Library

(Excerpt)

The United States Bankruptcy Code (the “Bankruptcy Code”) offers a wide range of instances where a bankruptcy court can dismiss a case. Section 1112(b) of the Bankruptcy Code provides that “the court shall convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause . . . .” Section 1112(b)(4) lists different scenarios that constitute “for cause.” Although not explicitly within the statutory scheme, a requirement that the debtor files his bankruptcy petition in good faith is one …

Timing And Location Of Comi Determined At The Timing Of Filing Chapter 15 Petition, Priya Suresh

Bankruptcy Research Library

(Excerpt)

A debtor’s center of main interest (“COMI”) is not defined under title of 11 of the United States Code (the “Bankruptcy Code”). As a result, bankruptcy courts have taken a number of different approaches to determining a debtor’s COMI. The starting place for determining COMI is the statutory rebuttable presumption that a debtor’s registered office, or habitual residence is the debtor’s COMI. If the presumption is rebutted, the party seeking recognition as a foreign main proceeding must prove by a preponderance of the evidence that the debtor's COMI is in the jurisdiction where the proceeding is pending. Under chapter …

How Courts In The Second Circuit Decide On A Stay Pending Appeal In Bankruptcy Actions, Valerie Timmerman

Bankruptcy Research Library

(Excerpt)

Absent a stay, an appeal may be mooted by actions taken while the appeal is pending. The Federal Rules of Bankruptcy Procedure permit a court to grant “a stay of a judgment, order, or decree” pending an appeal. The purpose of a stay “is to preserve the status quo pending appeal and to protect the rights of all parties in interest.” The standard for a grant or denial of a stay under Bankruptcy Rule 8007 has historically differed among courts, with some favoring the “judicial discretion” test and others opting for the “preliminary injunction” test, depending on the nature …

On Bankruptcy’S Promethean Gap: Building Enslaving Capacity Into The Antebellum Administrative State, Rafael I. Pardo

Scholarship@WashULaw

As the United States contends with the economic crisis triggered by the COVID-19 pandemic, federal bankruptcy law is one tool that can be used to resolve the financial distress suffered by individuals and businesses. When implementing this remedy, the question arises whether the law’s application should be viewed as limited to addressing private debt matters, without regard for the public interest. This Article answers the question by looking to modern U.S. bankruptcy law’s first forebear, the 1841 Bankruptcy Act, which Congress enacted in response to the depressed economic conditions following the Panic of 1837. That legislation created a judicially administered …

Racialized Bankruptcy Federalism, Rafael I. Pardo

Scholarship@WashULaw

Notwithstanding the robust national power conferred by the U.S. Constitution’s Bankruptcy Clause, the design and administration of federal bankruptcy law entails choices about the extent to which non-bankruptcy-law entitlements will remain un-displaced. When such entitlements sound in domestic nonfederal law (i.e., state or local law), displacing them triggers federalism concerns. Considerations regarding the relationship between the federal government and the nation’s smaller political subdivisions might warrant preserving nonfederal-law entitlements even though their displacement would be authorized pursuant to the bankruptcy power. But such considerations might also suggest replacing those entitlements with bankruptcy-specific ones. Some scholarship has theorized about the principles …