Law Commons^™

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 …

The Debtor’S Conduct At The Time Of Filing Controls In Determining Whether A Debtor Is Eligible To Convert Their Existing Case To A Case Under Subchapter V Of The Bankruptcy Code, Eric Silverstein

Bankruptcy Research Library

(Excerpt)

Congress passed the Small Business Reorganization Act of 2019 (the “SBRA”) to give small businesses a better chance to successfully reorganize under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). One of the SBRA’s most important amendments was the addition of Subchapter V to Chapter 11 of the Bankruptcy Code, which was designed to reduce the cost and complexity of a small business reorganization. Because the statute’s express terms do not address its application to existing debtors, courts have been forced to address issues of conversion and eligibility. Generally, conversion of a case is …

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 …

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 …

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 …

Mandatory Abstention Is Required When Foreign Law Claims Are Brought In Conjunction With State Law Claims, Matthew Seymour

Bankruptcy Research Library

(Excerpt)

When a case is wrongfully removed from state court, mandatory abstention provides moving parties with a way to remand their non-core claims. 28 U.S.C. § 1334(c)(2) provides the framework for a motion that would require a federal district court to abstain. Congress enacted the statute to allow a party to litigate state claims in state court when the case was only removed to federal court because of its relation to a bankruptcy case. The case law interpreting the statute has created a five-step test to determine when mandatory abstention is required. The Third Circuit in Stoe articulated that:

upon …

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 …

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 …

Towards A Principled Approach For Bailouts Of Covid-Distressed Critical/Systemic Firms, Horst Eidenmuller, Javier Paz Valbuena

South Carolina Law Review

No abstract provided.

Bankruptcy For Banks: A Tribute (And Little Plea) To Jay Westbrook, David A. Skeel Jr.

All Faculty Scholarship

In this brief essay, to be included in a book celebrating the work of Jay Westbrook, I begin by surveying Jay’s wide-ranging contributions to bankruptcy scholarship. Jay’s functional analysis has had a profound effect on scholars’ understanding of key issues in domestic bankruptcy law, and Jay has been the leading scholarly figure on cross-border insolvency. After surveying Jay’s influence, I turn to the topic at hand: a proposed reform that would facilitate the use of bankruptcy to resolve the financial distress of large financial institutions. Jay has been a strong critic of this legislation, arguing that financial institutions need to …

The Settlement Trap, Lindsey Simon

Scholarly Works

Mass tort victims often wait years for resolution of their personal injury claims, but many who successfully navigate this arduous process will not receive a single dollar of their settlement award. According to applicable bankruptcy and state law, settlement payments may be an asset of the estate that the trustee, exercising its significant authority, administers and distributes to creditors instead of a claimant who had filed for bankruptcy. This distribution power maximizes repayment, a critical counterbalance to the robust protections and benefits that debtors receive in bankruptcy.

Setting aside the perceived unfairness of taking desperately needed money from tort victims, …

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 …