Bankruptcy Law Commons^™

Foreign Judgments In Florida Bankruptcy Courts: Choice Of Law, Statutes Of Limitations, And Other Unresolved Issues, Michael Raudebaugh

Barry Law Review

No abstract provided.

Clarifying The Business Trust In Bankruptcy: A Proposed Restatement Test, Jared W. Speier

Pepperdine Law Review

When bankruptcy courts attempt to define the business trust, the “decisions are sharply, and perhaps hopelessly, divided.” The Bankruptcy Code, which guides the determinations of bankruptcy courts, specifically lists business trusts as eligible for protection. However, the Code does not define what a business trust is and does not list any criteria for determining when a trust is a business trust. The lack of a concrete definition has led many courts to formulate their own definitions of business trusts. While the courts hoped that they would eventually settle on a uniform test to tackle this issue, it has yet to …

What Bankruptcy Law Can And Cannot Do For Puerto Rico, John A. E. Pottow

Articles

This article is based on a February 2016 keynote address given at the University of Puerto Rico Law Review Symposium “Public Debt and the Future of Puerto Rico.” Thus, much of it remains written in the first person, and so the reader may imagine the joy of being in the audience. (Citations and footnotes have been inserted before publication ‒ sidebars that no reasonable person would ever have inflicted upon a live audience, even one interested in bankruptcy law. Rhetorical accuracy thus yields to scholarly pedantics.) The analysis explains how bankruptcy law not only can but will be required to …

Overcoming Hurdles In The Enforceability Of Make-Whole Provisions, Brian Patrick Mcbride

University of Miami Law Review

There have been recent conflicting decisions in U.S. district courts of New York, Delaware, and others states regarding to the enforceability of make-whole provisions in bankruptcy. The ambiguity created by the courts’ decisions has caused uncertainty for all parties involved in these kinds of loan documents. This comment is an analysis of the enforceability of make-whole provisions in the context of bankruptcy in light of the recent decisions. In order for a makewhole or a no-call provision to be upheld, a number of hurdles must be cleared. The provisions must be valid under both state law and bankruptcy law. Make-whole …

No Misrepresentation Needed: Excepting Discharge For Actual Fraud Under 11 U.S.C. § 523 Without Misrepresentation, Morgan Green

Fordham Law Review

Imagine buying a game from a seller and promising to repay him at a later date. However, instead of repayment, you decide to give the game to your friend, who in turn allows you to use it. Then your friend declares bankruptcy to discharge the price of the game from his debts, thus allowing you both to use it without paying. This repayment runaround is the issue that the First and Fifth Circuits were asked to decide in two recent cases. Specifically, the question was whether a debt incurred by “actual fraud” may be discharged by the recipient of the …

Up The Chute, Down The Ladder: Shifting Priorities Through Structured Dismissals In Bankruptcy, Bethany K. Smith

Fordham Law Review

In a structured dismissal of a Chapter 11 bankruptcy case, a bankruptcy court approves case dismissal alongside a stakeholder agreement as to the manner in which the estate is to be dealt with once the case has been dismissed. Such orders are controversial in that they are not explicitly authorized through the U.S. Bankruptcy Code (“the Code”) and are especially controversial where the accompanying agreement seeks to distribute estate property in contravention of the priority scheme laid out in § 507 of the Code. Where the agreement violates this so-called waterfall payment method, bankruptcy courts are faced with difficult questions: …

"No Harm, Still Foul": Unharmed Creditors And Avoidance Of A Debtor's Pre-Petition Transfer Of Exemptible Property, Alyssa Pompei

St. John's Law Review

(Excerpt)

This Note sides with the “no harm, no foul” approach in this debate, arguing that bankruptcy courts should not avoid prepetition transfers of otherwise exempt property under § 548 simply because an exemption was not actually taken and the transfer was instead the alternative path used to shield the property from collection. Part I of this Note explains the constructive fraud and exemption provisions of the Bankruptcy Code, including state opt-out provisions which are particularly applicable to this issue. Part I also discusses the legislative history of federal bankruptcy law with particular focus on the creation of the Bankruptcy …

Finding Common Ground: Resolving Assumption And Assignment Of Intellectual Property Licenses In Chapter 11 Bankruptcy Through Adoption Of The Actual Test, Courtney Marie Davis

Georgia Journal of Law & Technology

No abstract provided.

Ethics For Examiners, Daniel J. Bussel

Fordham Law Review

The inquisitorial bankruptcy examiner is sui generis in our system. He faces unique ethical quandaries and considerations, which require a code of ethics tailored to his role if he is to achieve fully the promise of improving Chapter 11 through the introduction of inquisitorial investigative methods. This Article attempts to point the way toward guidelines that will regulate the conduct of examiners to mitigate real, potential, and perceived abuses.

The Permissibility Of Bringing An Action Against Johns-Manville’S Insurers Despite Injunctive Orders, Amanda Hoffman

Bankruptcy Research Library

(Excerpt)

It is well known that bankruptcy courts have jurisdiction over all of the property of the debtor’s estate, no matter where the estate is located. Bankruptcy courts have the power to preserve that jurisdiction by enjoining proceedings that would remove property from the bankrupt estate. Title 11 of the United States Code (the “Bankruptcy Code”) has broadly defined property of the estate as “all legal or equitable interests of the debtor in property as of the commencement of the case.” Section 541(a)(1) of the Bankruptcy Code has been defined broadly to include “all kinds of property, including tangible or …

Protecting Patients Or Protecting Government Agencies: Bankruptcy Involvement In Medicare/Medicaid Termination, Anthony J. Ienna

Bankruptcy Research Library

(Excerpt)

Through Chapter 11 bankruptcy, a struggling business can preserve essential property needed to remain operational. However, when a healthcare institution is in financial disarray and becomes noncompliant with federal regulatory standards, courts may block rehabilitation through bankruptcy. Healthcare institutions such as nursing homes, which are in the process curing deficiencies, must stay in compliance with the federal regulations in order to continue to receive Medicare and Medicaid funds. Nursing homes must make the necessary changes before funds are terminated or they will be forced to abruptly close. Courts often scrutinize nursing homes’ ability to care for their patients because …

When A Priority Is Not A Priority: Structured Dismissals And The Priority Rules, Lindsay Lersner

Bankruptcy Research Library

(Excerpt)

The culmination of a chapter 11 case is typically a plan that provides for payment to creditors in accordance with the priority rules of the title 11 of the United States Code (the “Bankruptcy Code”). In In re Jevic Holding Corp., the Third Circuit held that in certain rare circumstances, bankruptcy courts have the discretion to approve structured dismissals which do not comply with section 507 and section 1129 - the priority rules - of the Bankruptcy Code. This holding highlights several issues with which courts have been grappling. The initial issue is whether structured dismissals themselves are …

Regulating The Moneychangers, Jerry W. Markham

Faculty Publications

No abstract provided.

Whether Section 327 Professional Persons’ Legal Fees Are The Cost Of Doing Business In A Chapter 11 Bankruptcy, Christopher Atlee F. Arcitio

Bankruptcy Research Library

(Excerpt)

When a debtor attempts to reorganize under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”), the debtor typically remains “in possession” and retains all the rights of the trustee, including the right to administer the bankruptcy estate “as a fiduciary for the estate’s creditors” in a chapter 11 bankruptcy case.

Importantly, a debtor-in-possession and a trustee are empowered to employ third parties to carry out their duties. Section 327 of the Bankruptcy Code deems these individuals “professional persons.” A professional person may be compensated upon submission of a fee application to the court. The …

Colder Than A Landlord's Heart? Reconciling A Debtor's Authority To Sell Property Free And Clear Of A Lease Under Bankruptcy Code Section 363(F) With The Tenant's Right To Remain In Possession On A Lease Rejection Under Bankruptcy Code Section 365(H), Bruce Grohsgal

Marquette Law Review

The question examined in this Article is a simple one—Can a tenant with a right to possession under section 365(h) of the Bankruptcy Code be ousted from possession by a free and clear sale of the real property by the debtor-landlord pursuant to section 363(f) of the Bankruptcy Code? The Seventh Circuit, the only court of appeals to have considered the issue, said “yes” in Precision Industries, Inc. v. Qualitech Steel SBQ, LLC and authorized a sale free and clear of the lease and the tenant’s right to remain in possession. Subsequent decisions from the district and bankruptcy courts are …

Sovereign Debt: Now What?, Anna Gelpern

Georgetown Law Faculty Publications and Other Works

The sovereign debt restructuring regime looks like it is coming apart. Changing patterns of capital flows, old creditors’ weakening commitment to past practices, and other stakeholders’ inability to take over, or coalesce behind a viable alternative, have challenged the regime from the moment it took shape in the mid-1990s. By 2016, its survival cannot be taken for granted. Crises in Argentina, Greece, and Ukraine since 2010 exposed the regime’s perennial failures and new shortcomings. Until an alternative emerges, there may be messier, more protracted restructurings, more demands on public resources, and more pressure on national courts to intervene in disputes …

Inside Safe Assets, Anna Gelpern, Erik F. Gerding

Publications

“Safe assets” is a catch-all term to describe financial contracts that market participants treat as if they were risk-free. These may include government debt, bank deposits, and asset-backed securities, among others. The International Monetary Fund estimated potential safe assets at more than $114 trillion worldwide in 2011, more than seven times the U.S. economic output that year.

To treat any contract as if it were risk-free seems delusional after apparently super-safe public and private debt markets collapsed overnight. Nonetheless, safe asset supply and demand have been invoked to explain shadow banking, financial crises, and prolonged economic stagnation. The economic literature …

Recent Developments In Bankruptcy Regulation: Mortgage Servicing Rules, The Fdcpa, And The Cfpb, Frederick Tung, Alane A. Becket, Sarah Bolling Mancini, Nick Wooten

Faculty Scholarship

MS. DEPPERT: Welcome back. Before we begin, I'd like to take this opportunity to introduce you to our second panel of the day, our Consumer Panel, which will discuss Recent Developments in Bankruptcy Regulation, including mortgage servicing rules, the Fair Debt Collection Practices Act (the "FDCPA"), and the Consumer Financial Protection Bureau (the "CFPB"). This afternoon we are privileged to have the following distinguished panelists join us. First we have Alane Becket, Managing Partner at Becket & Lee LLP, in Malvern, Pennsylvania, a law firm representing primarily consumer lenders in bankruptcy proceedings. Ms. Becket was elected to the Board of …

Energy Derivatives: Which Country (U.S. Or U.K.) Provides The Best Customer Asset Protections To An Energy Trading Firm If Its Brokerage Firm/Counterparty Files For Bankruptcy, Ronald H. Filler

Articles & Chapters

No abstract provided.

Treating The New European Disease Of Consumer Debt In A Post-Communist State: The Groundbreaking New Russian Personal Insolvency Law, Jason J. Kilborn

Brooklyn Journal of International Law

This article examines the tumultuous transition from restrictive Communism to the debt-fueled consumer economy of modern Russia. In particular, it surveys Russia’s legal response to severe debt distress, situating it in the context of nearly one thousand years of historical development. Effective 1 October 2015, Russia finally joined most of its European neighbors in adopting a personal bankruptcy law, with characteristics that reflect both evolving international best practices and a series of lessons not learned. This article offers the first detailed exposition in English of the two steps forward represented by this new law, as well as an evaluation of …

Taking Bankruptcy Rights Seriously, Rafael I. Pardo

Scholarship@WashULaw

Perhaps more so than any other area of law affecting individuals of low-to-moderate means, bankruptcy poignantly presents an affordability paradox: The system’s purpose is to relieve individuals from financial distress, yet it simultaneously demands a significant commitment of resources to obtain such relief. To date, no one has undertaken a comprehensive study of the complexities and costs of the litigation burden that Congress has imposed on self-represented debtors who seek a fresh start in bankruptcy. In order to explore the problems inherent in a system that sometimes necessitates litigation as the path for vindicating a debtor’s statutory right to a …

Of Progressive Property And Public Debt, Christopher K. Odinet

Faculty Scholarship

Debt is property, and, because of this, property law has a lot to say about how debts are resolved. Indeed, property law is deeply woven into the fabric of the bankruptcy process — a fact that has been woefully neglected by many scholars. The ability to provide debtors with relief and the ability of creditors to demand protections from discharge or diminished payments are both concepts that are intimately tied to property law. However, despite the doctrinal workings of property law in this context, from a theoretical standpoint property law has been underutilized. This is particularly true, as this Article …

The “Prudent Person” Standard In Esop Breach Of Duty Of Care Claims, Zien Halwani

Bankruptcy Research Library

(Excerpt)

Employee stock ownership plans (ESOPs) are a form of statutory pension program designed to invest employee retirement assets in the stock of the employer. Under the Employment Retirement and Income Securities Act of 1974 (“ERISA”), ESOP fiduciaries must discharge their duties “with the care, skill, prudence and diligence under the circumstances prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” This is to say that under ERISA, ESOP fiduciaries are liable for breaches of duty of care, …

Whether Puerto Rico’S Exclusion From Chapter 9 Is Non-Uniform Within The Meaning Of The Bankruptcy Clause Of The United States Constitution, Matthew T. Repetto

Bankruptcy Research Library

(Excerpt)

Amid the most serious fiscal crisis in its history, Puerto Rico’s public utilities are currently insolvent or at risk of becoming insolvent. In 2013, several distressed Puerto Rican public corporations had a combined deficit that totaled $800 million, and a combined debt reaching $20 billion. One avenue for Puerto Rico’s public utilities to restructure their debt, and perhaps the only avenue, is municipal bankruptcy relief. Unlike States, Puerto Rico “may not authorize its municipalities to seek Chapter 9 municipal bankruptcy relief” under title 11 of the United States Code (the “Bankruptcy Code”). An amendment to the Bankruptcy Code in …

Smoke & Mirrors: Bankruptcy Relief Remains Elusive For Marijuana Businesses And Their Creditors, Todd Plummer

Bankruptcy Research Library

(Excerpt)

Today, twenty-three states and the District of Columbia allow marijuana for medical purposes, and four of those states and the District of Columbia have legalized the drug’s recreational use. Despite this tidal shift in state laws and public opinion, marijuana remains a Schedule I substance under the Controlled Substances Act (“CSA”), meaning the federal government does not recognize its use in medical treatment, classifies the drug as having a high potential for abuse, and that no prescriptions may be written for it. Moreover, the CSA specifically makes it illegal to “rent, lease, profit from or make available for use” …

Section 510 (B) Of The Bankruptcy Code Is To Be Interpreted Broadly, James M. Kerins

Bankruptcy Research Library

(Excerpt)

One of the cornerstone principles of Chapter 11 under title 11 of the United States Code (“the Bankruptcy Code”) is section 510 (b). Under section 510 (b), a fraud claim by a purchaser of stock in a corporation that subsequently files a petition for relief under the Bankruptcy Code must be subordinated to general unsecured creditors. Although the application of section 510 (b) may seem straightforward, courts have struggled interpreting the ambiguous language of section 510 (b).

Prior to Congress enacting section 510 (b), there was significant confusion throughout the bankruptcy community regarding what claims must be subordinated. Many …

May A Foreign Company Liquidate Under The U.S. Bankruptcy Code?, Micaela D. Manley

Bankruptcy Research Library

(Excerpt)

This article discusses the ability of a foreign debtor to liquidate or reorganize under title 11 of the United States Code (the “Bankruptcy Code”). Foreign companies can address their debt in a bankruptcy case under the Bankruptcy Code if it satisfies the eligibility requirements set forth in section 109 of the Bankruptcy Code. A court may dismiss a foreign company’s bankruptcy case under section 3052 or section 1112 of the Bankruptcy Code. Part I of this article discusses the eligibility requirements under section 109 of the Bankruptcy Code. Part II analyzes the possibility of dismissal for “cause” under section …

Whether The Debtor Or Bankruptcy Estate Owns Malpractice Claims That Accrue During A Chapter 11 Bankruptcy, Anna Chen

Bankruptcy Research Library

(Excerpt)

When a debtor files for chapter 11 bankruptcy, three different time periods become important to determine whether the debtor or the estate holds certain rights and interests. The first time period is before a debtor files for bankruptcy. The second time period is after filing for bankruptcy but before conversion. The third time period is post-conversion.

If the misconduct that gives rise to the legal malpractice claim occurs after the filing of a chapter 11 case but before the conversion to a chapter 7 case, the cause of action belongs to the bankruptcy estate. In that situation, the trustee, …

Delaware Bankruptcy Court Trumps An Automatic Stay By Allowing Suit To Terminate A Trademark Licensing Agreement, Olivia Cheung

Bankruptcy Research Library

(Excerpt)

Trademark licensees that file for bankruptcy protection may encounter difficulties and uncertainties regarding their continued use of trademarks that are critical for their businesses. An issue that remains unsettled with courts is whether a licensee can assume a trademark license without the licensor’s consent. Circuits are divided on whether Section 365(c)(1) of title 11 of the United States Code (the “Bankruptcy Code”) prohibits a debtor from assuming an intellectual property license without the consent of the licensor. Courts on one side of the issue apply the “actual test,” which permits a debtor to assume a license as long as …

Procedural Due Process Requirements In Bankruptcy Cases, Bryant Churbuck

Bankruptcy Research Library

(Excerpt)

The Fifth Amendment of the United States Constitution guarantees that an individual will not be deprived “of life, liberty, or property without due process of law.” In the context of bankruptcy, procedural due process requirements are especially important because although bankruptcy tries to ensure that rights that exist outside of bankruptcy are maintained in bankruptcy, title 11 of the United States Code (the “Bankruptcy Code”) or other federal laws may require a different result. Given that the rights of an individual can be altered in bankruptcy proceedings, the adequacy of notice of the bankruptcy proceeding is of great importance. …