Law Commons^™

Subchapter V: A Product Of The Small Business Reorganization Act Of 2019, Seth Snyder

Law Student Works

The Small Business Reorganization Act of 2019 (SBRA) went into effect on February 19, 2020 to provide small businesses bankruptcy relief that was previously untenable under a traditional chapter 11 reorganization. The SBRA created subchapter V of chapter 11, codified as 11 U.S.C. §§ 1181 – 1195, that is available for small business debtors with debts less than $2,725,625. The debt limit has been temporarily increased to $7,500,000 until March 26, 2021 by the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act).

The timing of the new law could not have been better considering how small businesses have …

No Fare: Remedying The Member Business Loan Loophole, Leili A. Saber

Fordham Law Review

The member business loan exemption of the Federal Credit Union Act was the driving force behind the New York City taxi medallion loan crisis that led to over 950 bankrupt taxi drivers and eight suicides. This Note analyzes the exemption as the legislature’s balancing act to reconcile two competing policy aims: keeping lenders safe while encouraging them to lend to risky borrowers. Viewed through the lens of the taxi medallion crisis, this Note demonstrates the severe harm that this loophole creates. Exempting credit unions from regulatory limits has left vulnerable borrowers subject to the adverse designs of powerful actors. Ultimately, …

A Comprehensive Framework For Conflict Preemption In Federal Insolvency Proceedings, Robert W. Miller

West Virginia Law Review

No abstract provided.

Consent To Student Loan Bankruptcy Discharge, John P. Hunt

Indiana Law Journal

As the Department of Education reconsiders its rules governing consent to discharge of federal student loans in bankruptcy, this Article argues for the first time that the Department should approach the problem specifically as an operator of programs to promote education and benefit students, rather than as an entity interested only in debt collection. This Article shows that the Department’s rules to date have treated whether to consent to discharge primarily as a pecuniary issue, without regard to the educational goals of the student loan programs. For example, the Department apparently has never considered whether making it difficult to discharge …

Bankruptcy For Cannabis Companies: Canada’S Newest Export?, Stephanie Ben-Ishai

University of Miami International and Comparative Law Review

No abstract provided.

The Low Usage Of Bankruptcy Procedures: A Cultural Problem? Lessons From Spain, Aurelio Gurrea-Martínez

University of Miami International and Comparative Law Review

While filing for bankruptcy does not seem appealing for any debtor regardless of the jurisdiction, the reluctance to use the bankruptcy system varies across countries. This article explores the underlying reasons and economic effects of the low usage of bankruptcy procedures in Spain, where the rate of business bankruptcies is one of the lowest in the world. Some authors have argued that the low usage of bankruptcy procedures in Spain is due to a “cultural” problem faced by Spanish entrepreneurs. According to this hypothesis, the lack of a “bankruptcy culture” makes Spanish entrepreneurs afraid to use the bankruptcy system. In …

Value Tracing And Priority In Cross-Border Group Bankruptcies: Solving The Nortel Problem From The Bottom Up, Edward J. Janger, Stephan Madaus

University of Miami International and Comparative Law Review

No abstract provided.

Cryptocurrencies, Cybersecurity And Bankruptcy Law: How Global Issues Are Globalizing National Remedies, Renato Mangano

University of Miami International and Comparative Law Review

The market for cryptocurrencies is interspersed with cases of loss, theft and fraud and a new transnational practice in bankruptcy law is emerging whereby cryptocurrency exchanges compensate the injured users on a collective basis. This paper will argue: first, that this trend has transplanted into Asia and Europe the US idea according to which bankruptcy law can be employed to avoid mass litigation; secondly, that this trend has transcended the debate about the characterization of digital assets, including the concerns of those scholars who maintain that digital coins cannot be objects of property; and thirdly that – since this practice …

Resolving Corporate Insolvencies In China: The Gap Between Law And Reality, Dr. Zhang Zinian

University of Miami International and Comparative Law Review

This article examines how corporate insolvencies in China, the second largest economy, are handled under the current legislation, the China Enterprise Bankruptcy Law of 2006. Relying on the fresh empirical data arising from the first ten years on the use of China’s three insolvency procedures, reorganization, composition and liquidation, this article reveals the huge gap between the law in the books and the law in action, arguing that the implementation of this law in China perhaps has not achieved the legislative objectives. The constitutional and institutional weaknesses affecting the application of this law are analyzed

Small Business And Bankruptcy: Recent Changes In Kosovo And The United States Compared, Bruce A. Markell

University of Miami International and Comparative Law Review

United States, small businesses account for 99.7% of all employers, and about 47.3% of private sector employment.1 In the European Union (EU) non-financial business sector, SMEs accounted for 99.8% of all enterprises.2 These enterprises employed almost ninety-eight million people—66.6% of total employment—in the EU.

SMEs are variously defined. In the United States, until recently the definition of an SME was an enterprise that employed less than 500 individuals.4 In the EU, SMEs are defined as businesses which employ less than 250 staff and have an annual turnover of less than €50 million, or whose balance sheet total is less than …

Impact Of The Italian Business Crisis And Insolvency Code On Organizational Structures In Msmes, Alessandra Zanardo

University of Miami International and Comparative Law Review

In September 2021, the Italian Bankruptcy Law will be replaced by a new comprehensive Act, the so-called Business Crisis and Insolvency Code.

Two topics have immediately become the “mantra” of this important reform: a) the introduction into the domestic legal framework of early warning tools and alert procedures, along the lines of the French experience; and b) the introduction of a specific obligation on the entrepreneur or the management body of collective entities to implement suitable measures or establish appropriate organizational structures to prevent future insolvency and preserve the business continuity.

These measures are closely related, insofar as the obligation …

The New Gold Standard For Sports Psls: The Provisions That Allow The Golden State Warriors To Overpower A Bankruptcy Estate, Michael Medved

The Journal of Business, Entrepreneurship & the Law

This comment will focus on how this second key difference implemented in the Warriors’ PSL would affect an eventual bankruptcy proceeding of a purchaser into their “membership program.” In the event of a purchaser filing for bankruptcy liquidation under chapter seven of the bankruptcy code, the PSL will join the rest of the bankrupt’s assets in becoming property of the now-bankrupt purchaser’s creditors estate. Purchasers into the Warriors’ offering can be either individuals or corporations. This comment will provide an analysis of how the debtor, estate, and team will likely fare in terms of recouping the value of the PSL …

Law School News: Distinguished Research Professor: John Chung 05-24-2020, Michael M. Bowden

Life of the Law School (1993- )

No abstract provided.

Can Tax Sales Be Avoided In Bankruptcy Cases?, Zachary W. Langrehr

Saint Louis University Law Journal

No abstract provided.

Grinding Gears: Meshing Maine Mortgage Foreclosure Law And The Bankruptcy Code, Daniel L. Cummings

Maine Law Review

In Maine interesting and unresolved questions often arise when a mortgagor files for bankruptcy after a judgment of foreclosure has been entered in state court but before a foreclosure sale has occurred. Specifically, what rights does the mortgagor have in the real property? And are the mortgagee's subsequent steps to complete the sale barred by the automatic stay of the Bankruptcy Code (“Code”)? These questions are made more difficult because Maine is a title theory state and because the foreclosure sale occurs after the expiration of the statutory redemption period rather than, as in most states, before it. Because a …

Grinding Gears: Meshing Maine Mortgage Foreclosure Law And The Bankruptcy Code, Daniel L. Cummings

Maine Law Review

In Maine interesting and unresolved questions often arise when a mortgagor files for bankruptcy after a judgment of foreclosure has been entered in state court but before a foreclosure sale has occurred. Specifically, what rights does the mortgagor have in the real property? And are the mortgagee's subsequent steps to complete the sale barred by the automatic stay of the Bankruptcy Code (“Code”)? These questions are made more difficult because Maine is a title theory state and because the foreclosure sale occurs after the expiration of the statutory redemption period rather than, as in most states, before it. Because a …

The Limited Power Of Federal Bankruptcy Courts To Stay Enforcement Of State Environmental Regulations, David A. Brenningmeyer

Maine Law Review

Over the course of the past few decades, public awareness of privately created environmental hazards has risen. As a result, state and federal legislatures have been moved to enact comprehensive environmental laws that serve both to remedy past harms and to prevent future ones. Today, environmental statutes seek to correct and prevent public health hazards as diverse as groundwater contamination, toxic waste disposal, soil contamination, destruction of native plant and animal habitats, and air pollution, to name but a few. In addition, state and federal courts have permitted the invocation of common law theories, such as nuisance and trespass, to …

Financing Failure: Bankruptcy Lending, Credit Market Conditions, And The Financial Crisis, Frederick Tung

Faculty Scholarship

When contemplating Chapter 11, firms often need to seek financing for their continuing operations in bankruptcy. Because such financing would otherwise be hard to find, the Bankruptcy Code authorizes debtors to offer sweeteners to debtor-in-possession (DIP) lenders. These inducements can be effective in attracting financing, but because they are thought to come at the expense of other stakeholders, the Code permits these inducements only if no less generous a package would have been sufficient to obtain the loan.

Anecdotal evidence suggests that the use of certain controversial inducements — I focus on roll-ups and milestones — skyrocketed in recent years, …

Rejection Hurts: Trademark Licenses And The Bankruptcy Code, Amanda E. James

Vanderbilt Law Review

Section 365 of the Bankruptcy Code empowers debtors to reject burdensome executory contracts. From 1988 until May 2019, the effect of such a rejection on trademark licenses was unclear. The Supreme Court’s recent decision in Mission Product Holdings, Inc. v. Tempnology, LLC settled the matter definitively: all rejections under § 365(g) operate exactly as a breach would outside the bankruptcy context. As such, if the trademark license would allow the licensee to continue using the mark after a breach, the licensee may continue to use the mark after a rejection. While this decision comports with the language of the Code …

Express Preclusion Of The Federal Arbitration Act For All Bankruptcy-Related Matters, John R. Hardison

St. John's Law Review

(Excerpt)

This Article sets forth a more solid justification for bankruptcy courts to refuse to order arbitration of any matter related to and affecting a bankruptcy case through express preclusion. First, this Article describes the historical development of the Supreme Court’s holdings on preclusion of the FAA in general and on the courts of appeals’ current formulation of a bankruptcy exception to the FAA. Next, this Article discusses the statutory, historical, and policy-based support for reading the bankruptcy jurisdictional provisions as creating an express exception to the FAA, or alternatively as supporting an implied exception to the FAA. As discussed, …

Dankruptcy: When The Green Runs Out, Marijuana Debtors Have Few Options, Jorge J. Rodriguez

Arkansas Law Review

The legalized marijuana industry is lucrative but surrounded with uncertainties. The divergence between state and federal law has pushed this industry into a state of limbo. Furthermore, at the federal level, the lack of enforcing the prohibition has only exacerbated the uncertainty. Historically, the federal government has taken a very relaxed approach and allowed marijuana businesses to operate with minimal interference. As a result, there is a thriving legalized marijuana industry operating throughout the majority of the United States. However, there are many obstacles which plague and threaten the future of this relatively young industry. Of particular importance, and the …

A No-Contest Discharge For Uncollectible Student Loans, Brook E. Gotberg, Matthew Bruckner, Dalie Jimenez, Chrystin Ondersma

Faculty Publications

Over forty-four million Americans owe more than $1.6 trillion in student loan debt. This debt is nearly impossible to discharge in bankruptcy. Attempting to do so may require costly and contentious litigation with the Department of Education. And because the Department typically fights every case, even initial success can be followed by years of appeals. As a result, few student loan borrowers attempt to discharge their student loan debt in bankruptcy.

In this Article, we call on the Department of Education to develop a set of ten easily ascertainable and verifiable circumstances in which it will not contest a debtor’s …

The High Burden Of A “Minimal Standard Of Living” Under The First Prong Of The Brunner Test, Samantha Alfano

Bankruptcy Research Library

(Excerpt)

Under section 523(a)(8) of title 11 of the United States Code (the “Bankruptcy Code”), student loan debt is not dischargeable unless the debtor can show “undue hardship.” Courts have concluded that section 523(a)(8) creates a presumption that student loans are nondischargeable, finding that the burden of challenging this presumption rests upon the individual debtor. The United States Court of Appeals for the Second Circuit in Brunner v. New York State Higher Educ. Servs. Corp., articulated what has become the standard test (the “Brunner test”) for determining undue hardship. Subsequently, the Brunner test has been adopted by the …

Inconsistent Standards To Approve A Settlement Under Rule 9019, Zach Benaharon

Bankruptcy Research Library

(Excerpt)

“Settlements and compromises are favored in bankruptcy as they minimize costly litigation and further parties’ interests in expediting the administration of the bankruptcy estate.” In accordance with this policy, Congress promulgated Federal Rule of Bankruptcy Procedure 9019 (the “Bankruptcy Rules”), which governs settlements in a bankruptcy case. Rule 9019 gives a bankruptcy judge discretion to approve a proposed settlement and states in relevant part, that: “[o]n motion by the trustee, the court may approve a compromise or settlement.” Rule 9019 applies to both settlements brought before the court on a standalone basis as well as those presented as part …

Intangible Property Can Satisfy The Debtor Eligibility Requirement Under Section 109(A), Edward Cho-O’Leary

Bankruptcy Research Library

(Excerpt)

Section 109(a) of title 11 of the United States Code (the “Bankruptcy Code”) states that “only a person that resides or has a domicile, a place of business, or property in the United States … may be a debtor under this title.” While a “foreign entity or individual domiciled abroad but owning property or doing business in the United States is eligible to be a debtor under 11 U.S.C. § 109,” the requirement can be difficult if the foreign entity or individual domiciled abroad has no commercial connection to the US. Consequently, the property component of Section 109(a) has …

Sdny Bankruptcy Judges Have Differing Views On A Bankruptcy Court’S Jurisdiction To Issue Third-Party Releases, Brandon Auerbach

Bankruptcy Research Library

(Excerpt)

Under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”), a debtor may receive a discharge from claims under its plan of reorganization. A chapter 11 discharge functions as a release of liability for the debtor. Often debtors attempt to include releases for non-debtor parties as part of their reorganization plans to preclude creditors from asserting claims against non-debtors. However, the Bankruptcy Code does not expressly provide for such “third party releases,” except in the context of asbestos cases. Nevertheless, bankruptcy courts have approved third-party releases in other circumstances. The courts, however, are divided as …

Transfer Of Real Estate Title May Be Avoided As A Preference In Certain Jurisdictions, Aleksandra Adamska

Bankruptcy Research Library

(Exceprt)

This article addresses whether a transfer of real estate title may be avoided as a preference under section 547(b) of title 11 of the United States Code (the “Bankruptcy Code”). Section 547 permits avoidance of preferential transfers. “A preference is a ‘transfer that enables a creditor to receive payment of a greater percentage of his claim against the debtor than he would have received if the transfer had not been made and he had participated in the distribution of assets of the bankrupt estate.’” Essentially, a preference allows one creditor to receive more value than other creditors. Preferential transfers …

The Two Approaches To Center Of Main Interest Timing Determination, John Freeze

Bankruptcy Research Library

(Excerpt)

Under Chapter 15 of title 11 of the United States Code (the “Bankruptcy Code”), a bankruptcy court may grant recognition to a “foreign main proceeding.” A foreign main proceeding is “a foreign proceeding pending in the country where the debtor has the center of its main interests." The Bankruptcy Code offers little in the way of a definition of a foreign main proceeding, only that “the debtor’s registered office . . . is presumed to be the center of the debtor’s main interests.” Thus, chapter 15 provides a rebuttable presumption that a foreign debtor’s center of main interest is …

The In Pari Delicto Defense May Bar Trustees That Bring Claims Which Are Property Of The Estate Under 11 U.S.C. § 541(A), Carmine Broccole

Bankruptcy Research Library

(Excerpt)

The in pari delicto doctrine states that “[i]n a case of equal or mutual fault … the position of the [defending] party … is the better one.” This doctrine is guided by the premise that it is not within the purview of the court to resolve disputes among wrongdoers, and that denial of judicial relief in these instances effectively deters illegal activity. Within the bankruptcy context, “every Circuit to have considered the question has held that in pari delicto can be asserted against a trustee bringing a claim on behalf of a debtor in bankruptcy.”

Under Section 541(a)(1) of …

Trademarks Are “Intellectual Property” Under Bankruptcy Code Section 365(N), Emily Clark

Bankruptcy Research Library

(Excerpt)

Under section 365 of title 11 of the United States Code (the “Bankruptcy Code”) a trustee or a debtor-in-possession may reject an executory contract. Rejection has the same effect as a breach outside of bankruptcy; rejection does not rescind the rights that the contract previously granted or terminate the contract. Under section 365(n) of the Bankruptcy Code, a licensee of intellectual property may retain the right to use such intellectual property notwithstanding the rejection of such license provided it is an executory contract. A contract is executory when there is performance due, to some extent, from both parties. A …