Bankruptcy Law Commons^™

Milking The Estate, David R. Hague

West Virginia Law Review

No abstract provided.

Check Clearing And Voidable Preference Law Under The Bankruptcy Code, David G. Carlson

Articles

Every business practice must withstand the critique of federal voidable preference law. This article surveys how well check clearing system fares under this adjunct to the principle that unsecured creditors should share equally in a bankruptcy proceeding. Check clearing involves extending short-term credit by depositary banks to their customers. Banks routinely extend unsecured and secured credit. The fate of a bank in its customer's bankruptcy differs, depending on what kind of credit is extended. In the case of an overdraft, banks have preference risk, but they also have powerful defenses to muster against liability. In the case credit is advanced …

Payments By Check As Voidable Preferences: The Impact Of Barnhill V. Johnson, Paulette J. Delk

Maine Law Review

Under the Bankruptcy Reform Act of 1978 (the Code), the trustee in bankruptcy has the duty to seek to avoid “preferential” transfers of the debtor's property made ninety days or less before the date of the filing of the bankruptcy case. Because of the delay that may occur between the time a check in payment of a debt is delivered by the debtor and when it is honored by the drawee bank, determining when the transfer was made to the payee-creditor has been a difficult issue for courts to resolve. The Supreme Court recently addressed this problem when it ruled, …

Time Bandits: The Seventh Circuit Gets It Wrong By Allowing Debt Purchasers To Escape Fdcpa Liability For Filing Time-Barred Proofs Of Claim In Chapter 13 Bankruptcies, Jeffrey Michalik

Chicago-Kent Law Review

Debt purchasers can use debtors’ bankruptcies to profit from stale, otherwise unenforceable debt. Although state statutes of limitations bar legal enforcement of this debt, predictable breakdowns of the bankruptcy process mean that the debtor might be forced to pay anyway. Courts have determined that this scheme does not violate the Fair Debt Collection Practices Act, allowing debt purchasers to continue this scheme without repercussion.

Dawn Of The Debt: The Increasing Problem Of Creditors Infecting The Discharge Injunction With Zombie Debt, Micah A. Smart

Maine Law Review

The discharge injunction is an integral aspect of the “fresh start” that bankruptcy affords to many debtors. But there has been a growing threat to the viability of the bankruptcy discharge: zombie debt! Just when honest but unfortunate debtors think they have finally laid their overdue financial obligations to rest and moved on with their lives, zombie debt comes back to life in form of outdated and misleading credit reports that some debt collectors have been using to coerce payment on debts that should have died years prior. This Article discusses the motivation behind these questionable collection tactics and potential …

Combating Professional Error In Bankruptcy Analysis Through The Design And Use Of Decision Trees In Clinical Pedagogy, Timothy R. Tarvin

St. John's Law Review

(Excerpt)

This Article will address the positive impact of using the decision tree model in four parts. Part I will provide a historical overview of the evolution of legal education and the profession’s call for more experiential education, both generally and specifically, through clinical training and the use of technology. This Section will provide context and argue that the use of decision trees in the clinical setting is the natural culmination of the legal academy’s goals of teaching analytical skills, preparing graduates for practice, and incorporating new technology into the practice of law.

Part II will describe the legal malpractice …

Protecting Valuable Estate Interests Through The Unenforceability Of Ipso Facto Clauses, Kayla Martin

Bankruptcy Research Library

(Excerpt)

A trustee or debtor-in-possession is provided with a plethora of powers under title 11 of the United States Code (the “Bankruptcy Code”). A chapter 13 debtor-in-possession, pursuant to section 1322 of the Bankruptcy Code, may assume or reject any executory contract in connection with its plan. The ability, however, to assume or reject an executory contract is limited by section 365, which in part prohibits the modification or termination of a debtor’s interest in a contractual agreement on the sole basis that the debtor filed for bankruptcy, which is commonly known as an ipso facto provision. This prohibition of …

Savings—The Missing Element In Chapter 13 Bankruptcy Cases?, David R. Jones

Duke Law Master of Judicial Studies Theses

This paper examines the effects of debtor savings on the viability of chapter 13 bankruptcy plans. The paper further examines the impact of lawyer culture, debtor participation in the bankruptcy process and judicial activism on the use of the savings program by chapter 13 debtors. Using a data set of randomly selected chapter 13 bankruptcy cases filed in the Southern District of Texas, the analysis demonstrates that while savings has a direct positive impact on the success of chapter 13 plans, the degree of that success is significantly influenced by the views held by debtors’ lawyers, chapter 13 trustees and …

Exercising Dominion And Control; An Initial Transferee’S Liability For Avoidable Transfers, Shelley Fredericks

Bankruptcy Research Library

(Excerpt)

Under section 550(a)(1) of the Bankruptcy Code, a bankruptcy trustee may collect the full amount of an avoidable transfer from the initial transferee of a fraudulent or avoidable transfer. Specifically, it provides that, “[e]xcept as otherwise provided in this section, to the extent that a transfer is avoided…the trustee may recover, for the benefit of the estate, the property transferred or…the value of such property, from the initial transferee of such transfer or the entity for whose benefit such transfer was made.” This section of the Bankruptcy Code gives power to bankruptcy trustees seeking to collect improperly transferred funds, …

Evidentiary Support Needed For Successful Proof Of Claim Against Affiliated Debtors, Madeline Mallo

Bankruptcy Research Library

(Excerpt)

According to title 11 of the United States Code (the “Bankruptcy Code) and the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), a debtor must file schedules of the debtor’s assets and liabilities. A debtor’s schedules would include a list of all known claims against the debtor and list the claims as disputed, contingent or unliquidated.

If an entity believes they have a claim against the debtor that the debtor has not included on a schedule, or the claim is disputed, contingent, or unliquidated, that party can file a proof of claim. A proof of claim in a bankruptcy …

Contractual Provider Agreement Provides For Permissible Government Recoupment, Emily Santoro

Bankruptcy Research Library

(Excerpt)

A debtor healthcare provider without significant resources is unlikely to survive any prolonged disagreement with private or government payors. This challenge may be exacerbated by a debtors’ bankruptcy filing if a payor may refuses to make certain payments owed to the debtor. Therefore, whether a payors’ withholding of funds owed to a debtor hospital is considered an impermissible setoff or a permissible equitable recoupment is crucial.

This memorandum will explore whether a Medicaid/Medicare payor can withhold payments owed to a debtor, or whether such withholding violates the automatic stay. Part A will discuss withholding in healthcare bankruptcy scenarios generally. …

Battle Of The Bayou: Placing A Receiver In The Right Position During A Bankruptcy Proceeding, Antonio M. Dinizo Jr.

St. Thomas Law Review

Investment Manager, Sam Israel, launched the Bayou Group LLC, a hedge fund, hoping to produce large returns for high net worth investors. After months of losses, it became clear to Israel that Bayou would never garner the types of returns he had promised investors. Instead of altering strategies or closing Bayou, Israel decided to convert Bayou into a Ponzi scheme. When Ponzi schemes fail, they present unique challenges for courts, regulators, creditors, and interested parties. One choice stakeholders will have to make is whether to appoint a receiver to marshal assets and seek a recovery for defrauded investors and creditors, …

Life In The Sweatbox, Pamela Foohey, Robert M. Lawless, Katherine Porter, Deborah Thorne

Articles by Maurer Faculty

The time before a person files bankruptcy is sometimes called the financial “sweatbox.” Using original data from the Consumer Bankruptcy Project, we find that people are living longer in the sweatbox before filing bankruptcy than they have in the past. We also describe the depletion of wealth and well-being that defines people’s time in the sweatbox. For those people who struggle for more than two years before filing bankruptcy—the “long strugglers”—their time in the sweatbox is particularly damaging. During their years in the sweatbox, long strugglers deal with persistent collection calls, go without healthcare, food, and utilities, lose homes and …

Midland Funding V. Johnson And The Pernicious Problem Of Stale-Debt Claims, Kara J. Bruce

Loyola of Los Angeles Law Review

No abstract provided.

The Federal Law Of Property: The Case Of Inheritance Disclaimers And Tenancy By The Entireties, David Gray Carlson

Washington and Lee Law Review

No abstract provided.

Jevic's Promise: Procedural Justice In Chapter 11, Pamela Foohey

Scholarly Works

In this Response to Jonathan Lipson's article, The Secret Life of Priority: Corporate Reorganization After Jevic, 93 Wash. L. Rev. 631 (2018)), I focus on Czyzewski v. Jevic Holding Corp.'s implications for procedural justice and corporate reorganization. In his article, Lipson explicitly links the chapter 11 process with the Bankruptcy Code’s substantive rules about priority, crafting a forceful argument about what procedural values the U.S. Supreme Court sought to uphold when it penned Jevic. In doing so, Lipson expounds on a broader truth about the co-option of corporate reorganization’s process in the name of value preservation. Procedural justice teaches that …

Commodifying Consumer Data In The Era Of The Internet Of Things, Stacy-Ann Elvy

Articles & Chapters

Internet of Things (“IOT”) products generate a wealth of data about consumers that was never before widely and easily accessible to companies. Examples include biometric and health-related data, such as fingerprint patterns, heart rates and calories burned. This Article explores the connection between the types of data generated by the IOT and the financial frameworks of Article 9 of the Uniform Commercial Code and the Bankruptcy Code. It critiques these regimes, which enable the commodification of consumer data, as well as laws aimed at protecting consumer data, such as the Bankruptcy Abuse Prevention and Consumer Protection Act, various state biometric …

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 …

Bankruptcy Law—Rethinking The Discharge Of Late Filed Taxes In Consumer Bankruptcy, Justin H. Dion, Barbara Curatolo

Faculty Scholarship

The 2005 amendments to the Bankruptcy Code, Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was enacted in order to improve bankruptcy law. However, BAPCPA has made the issue of whether late-filed taxes are dischargeable even murkier than before the amendments. After BAPCPA, some courts continued to analyze claims as they had before the amendment. Others used a “one-day-late rule” that prevented late-filed taxes from being dischargeable—even if the taxes were filed only one day late. This Article suggests a different approach. It argues that the legislature intended tax debt associated with late-filed income tax returns be dischargeable if the …

Bankrupted Slaves, Rafael I. Pardo

Scholarship@WashULaw

Responsible societies reckon with the pernicious and ugly chapters in their histories. Wherever we look, there exist ever-present reminders of how we failed as a society in permitting the enslavement of millions of black men, women, and children during the first century of this nation’s history. No corner of society remains unstained. As such, it is incumbent on institutions to confront their involvement in this horrific past to fully comprehend the kaleidoscopic nature of institutional complicity in legitimating and entrenching slavery. Only by doing so can we properly continue the march of progress, finding ways to improve society, not letting …

Documenting Bankrupted Slaves, Rafael I. Pardo

Scholarship@WashULaw

Bankrupted Slaves tells a story about institutional complicity in antebellum slavery — that is, the story of how the federal government in the 1840s and 1850s became the owner and seller of thousands of slaves belonging to financially distressed slaveowners who sought forgiveness of debt through the federal bankruptcy process. Relying on archival court records that have not been systematically analyzed by other scholars, Bankrupted Slaves analyzes how the Bankruptcy Act of 1841 and the domestic slave trade inevitably collided to create the bankruptcy slave trade, focusing the analysis through a case study of the Eastern District of Louisiana, which …

Limited Liability Property, Danielle D'Onfro

Scholarship@WashULaw

This Article offers a theory of secured credit that aims to answer fundamental questions that have long percolated in the bankruptcy and secured transactions literatures. Are security interests property rights, contract rights, or something else? Why do secured creditors enjoy a priority right that, in bankruptcy, requires them to be paid in full before other debt holders recover anything? Should we care that secured credit creates distributional unfairness when companies cannot pay their debts?

This Article argues that security interests are best understood as a form of “limited liability property.” Limited liability—the privilege of being legally shielded from liability that …

Limited Liability Property, Danielle D'Onfro

Scholarship@WashULaw

This Article offers a theory of secured credit that aims to answer fundamental questions that have long percolated in the bankruptcy and secured transactions literatures. Are security interests property rights, contract rights, or something else? Why do secured creditors enjoy a priority right that, in bankruptcy, requires them to be paid in full before other debt holders recover anything? Should we care that secured credit creates distributional unfairness when companies cannot pay their debts?

This Article argues that security interests are best understood as a form of “limited liability property.” Limited liability—the privilege of being legally shielded from liability that …

Valuation Disputes In Corporate Bankruptcy, Kenneth M. Ayotte, Edward R. Morrison

Faculty Scholarship

Prior scholarship points to disagreements about valuation and judicial valuation error as key drivers of Chapter 11 outcomes. Avoiding valuation disputes and valuation errors is also the underlying driver of most proposed reforms, from Baird’s auctions to Bebchuk’s options. In this paper, we undertake a detailed examination of bankruptcy court opinions involving valuation disputes. Our paper has two goals. The first is to understand how parties and their expert witnesses justify their opposing views to the judge, and how judges decide between them. The second is to provide practical guidance to judges in resolving valuation disputes. We document surprisingly pervasive …

A Union's Duty In Bankruptcy Cases To Fairly Represent Its Constituency, Denise Dessel

Bankruptcy Research Library

(Excerpt)

Under the National Labor Relations Act (“NLRA”), a union, as the sole representative of its workers, has a duty to fairly represent them. This duty entitles a union to fairly represent all employees, “whether members of the union or not, fairly.” A union breaches this duty when its conduct or decisions are arbitrary, discriminatory, or committed in bad faith.

The terms “arbitrary,” “discriminatory,” and “bad faith” have been interpreted through case law. Part I of this memorandum discusses the interpretation of arbitrary conduct; Part II addresses how courts have defined discriminatory conduct; and Part III analyzes how bad faith …

Effects Of Licensors’ Duty To Maintain Control Over A Trademark On Licensees’ Ability To Assert Rights Provided Under Section 365 Of The Bankruptcy Code, Arianna Clark

Bankruptcy Research Library

(Excerpt)

Under title 11 of the United States Code (the “Bankruptcy Code”), a debtor may reject or assume an executory contract, including a license for intellectual property. The definition of intellectual property does not include the term “trademark.” Consequently, it is not clear whether a non-debtor licensee can continue using a trademark if the debtor-licensor rejects it. Moreover, there appears to be a consensus forming among courts in that a debtor-licensee cannot assign a license to a third-party without the consent of the licensor. Regardless of which party initiates bankruptcy proceedings, there is a special consideration contemplated by courts– the …

Bankruptcy Schedules Will Not Be Treated As Judicial Admissions In Court, Charles Akinboyewa Jr.

Bankruptcy Research Library

(Exceprt)

When an individual debtor files for bankruptcy, it must file bankruptcy schedules listing, among other things, the creditors that hold claims against the individual. The information contained on the schedules may have ramifications on the debtor and its creditors. Specifically, often debtors unknowingly fail to list certain claims, which may affect the debtor’s right to discharge a creditor’s right to a recovery. Part I of this memo discusses bankruptcy schedules and claim dischargeability. Part II illustrates the distinction between judicial and evidentiary admissions. Part III explores cases that have held bankruptcy schedules to be admissions and others that have …

Bankruptcy Tourism: How A Comi Change Can Serve As Ammunition In Debt Wars, Taylor Anderson

Bankruptcy Research Library

(Excerpt)

In general, Chapter 15 of title 11 of the United States Code (the “Bankruptcy Code”) provides a mechanism to recognize a “foreign proceeding.” Upon recognition of a foreign proceeding, the foreign representative will be allowed to sue and be sued in the United States. However, Chapter 15 distinguishes between “foreign main proceedings” and “foreign nonmain proceedings.” Upon recognition of a “foreign main proceeding” section 1520 of the Bankruptcy Code provides for certain automatic relief, including an automatic stay of proceedings against the debtor in the United States. There is no automatic relief conferred upon recognition of a foreign nonmain …

A Chapter 7 Trustee’S Qualified Right Of Immunity May Be No Shield For Intentional, Negligent, Or Grossly Negligent Conduct: Analyzing And Applying The Three-Way Circuit Split, Nataniel E. Arabov

Bankruptcy Research Library

(Excerpt)

Quasi-judicial immunity is best understood as a blessing and a curse. A bankruptcy trustee is appointed to act as trustee through an order of the bankruptcy court. In Antoine v. Byers & Anderson, the Supreme Court provided a two-part test to analyze how far judicial immunity extends to persons who perform quasi-judicial functions in connection with their appointment. This test explains whether a judicial appointee is absolutely immune from personal liability to the estate or others. Under the test, a court (1) must decide whether the functions of the individual were historically adjudicative in nature, and (2) must …

Balancing Principles Of Cooperation And Public Policy In Applying Comity, Kristen Barone

Bankruptcy Research Library

(Excerpt)

Comity is a common law legal principle that allows U.S. courts to afford deference to foreign judgments. Comity is utilized as a basis for granting extraterritorial effect to judgments of foreign courts. This principle plays an integral role in a number of cross-border bankruptcy proceedings and has been adopted as a predominate legal principal in the Model Law on Cross-Border Insolvency (the “Model Law”), promulgated by the United Nation’s Commission on International Trade, and Chapter 15 of title 11 of the United States Code (the “Bankruptcy Code”).

Although American courts have long recognized the need to extend comity to …