Bankruptcy Law Commons^™

Government Involvement In Chrysler Bankruptcy: The Least-Worst Alternative?, John A. E. Pottow

Articles

As usual, my colleague Jim White has hit many nails on many heads. Also as usual, however, I’m going to be a pain and part ways with him a bit. First, was Chrysler’s bankruptcy “suspicious” in its use of section 363 of the Bankruptcy Code? You bet. Leaving aside the proliferation of 363 sales to swallow Chapter 11 as we once knew it, Chrysler was out in left field. Not only was it a “sale” of everything meaningful in the company, it was to a seller—Fiat—that put in no money. (To be fair, Fiat agreed to contribute technological know-how on …

Chrysler's Bankruptcy: Money Laundering On A Grand Scale, James J. White

Articles

The interesting issue in Chrysler is not the lawyers’ manipulation of the law; it is the politicians’ use of the bankruptcy to launder money. Had the President simply announced that the federal government would give $4 billion to the UAW, the public, even the public in the UAW’s home state of Michigan, would have been up in arms. By laundering the money through the Chapter 11 process, the administration disguised the payment and avoided the outrage.

Panel 3: Bankruptcy & Restructuring Of Financial Institutions, Barry E. Adler, William A. Ackman, Marcia L. Goldstein, Arthur J. Gonzalez, Michael J. Krimminger, Edward R. Morrison

Faculty Scholarship

Barry Adler: Thank you all for being here. It is an honor for me to be on this panel and an honor to moderate it. Let me introduce our panel before we get started. William A. Ackman, the founder and CEO of Pershing Square Capital Management; Marsha Goldstein, a partner and chair of the business finance and restructuring department at Weil, Gotshal; the Honorable Arthur Gonzalez, a judge in the U.S. Bankruptcy Court for the Southern District of New York; and Ed Morrison, the Harvey Miller Professor of Law and Economics at Columbia Law School. Also on this panel is …

The Role Of Valuation In Federal Bankruptcy Exemption Process: The Supreme Court Reads Schedule C, David G. Carlson

Articles

In Taylor v. Freeland & Kronz, a debtor claimed a law suit was exempt. The bankruptcy trustee failed to object within the required period. Later, the law suit realized an amount that far exceeded the monetary limit to which the debtor was entitled. The Supreme Court permitted the debtor to keep all of the proceeds, even beyond the statutory limit, claiming that a deadline was a deadline. Recently, in Schwab v. Reilly, the Supreme Court overruled Taylor, holding that a claim to a monetarily limited item can only exempt the monetary limit. The Court tries and fails to "reconcile" these …

Home Foreclosures: Will Voluntary Mortgage Modification Help Families Save Their Homes? Part Ii? : Hearing Before The H. Comm. On The Judiciary Subcomm. On Commercial And Administrative Law, 111th Cong., Dec. 11, 2009 (Statement Of Associate Professor Adam J. Levitin, Geo. U. L. Center), Adam J. Levitin

Testimony Before Congress

The results to date from MHAP are deeply disappointing. Even the most optimistic view of HAMP and HARP’s potential would now project the programs as having only a minor impact on the foreclosure crisis. Until and unless the problems of unemployment; negative equity, and servicer capacity, incentives, and contract restrictions are addressed, we are unlikely to see noticeably different results. These issues cannot be addressed within the current structure of HAMP.

Unfortunately, none of the solutions for foreclosures due to unemployment are particularly satisfying, and without addressing unemployment, foreclosures will remain at elevated levels. Bankruptcy presents possible solutions to negative …

You've Got Your Mother's Laugh: What Bankruptcy Mediation Can Learn From The Her/History Of Divorce And Child Custody Mediation, Nancy A. Welsh

Faculty Scholarship

Due to our current deep economic woes, growing bankruptcy filings, and apparent legislative unwillingness to expand the number of judges, bankruptcy courts are exploring the use of mediation to help resolve adversary proceedings, negotiate elements of reorganizations, and deal with claims that cannot be heard directly in bankruptcy proceedings. In addition, mediation advocates have been consistent in urging greater use of the process to reduce debtors’ and claimants’ costs, bridge the jurisdictional and standing challenges that bankruptcies can pose, and offer claimants the opportunity to be heard and determine their own resolution of claims. At this point, the relatively few …

Bankruptcy Law, Hon. Douglas O. Tice Jr., Suzanne E. Wade, K. Elizabeth Sieg

University of Richmond Law Review

No abstract provided.

From Feudal Land Contracts To Financial Derivatives: The Treatment Of Status Through Specific Relief, John J. Chung

Law Faculty Scholarship

No abstract provided.

Modified Plans Of Reorganization And The Basic Chapter 13 Bargain, David G. Carlson

Articles

A very large number of chapter 13 plans are confirmed each year. Unlike chapter 11 plans (for non-individuals), these plans may be revised after confirmation. The modification provisions of the Bankruptcy Code, however, give very little guidance as to what constitutes a permissible modification. In contrast, confirmation of the original plan is very carefully governed. This article theorizes that modification must honor the basic chapter 13 bargain. According to this bargain, the debtor is entitled to the bankruptcy estate and the creditors are entitled to net surplus income. The article assesses whether the diffuse and disorganized caselaw of modification adheres …

The End Of The (Virtual) World, Joshua A.T. Fairfield

West Virginia Law Review

No abstract provided.

Finding The Shoes That Fit: How Derivative Is The Trustee's Power To Avoid Fraudulent Conveyances Under Section 544(B) Of The Bankruptcy Code?, Alan N. Resnick

Cardozo Law Review

Section 544(b) of the Bankruptcy Code, which enables a bankruptcy trustee to avoid transfers that an actual unsecured creditor could have avoided under state law, is a powerful tool most often used to recover assets that were fraudulently transferred several years before a debtor's bankruptcy case. This power is often described as permitting the trustee, for the benefit of the bankruptcy estate and all of the debtor's unsecured creditors, to "stand in the shoes" and assert the rights of the particular unsecured creditor. In a recent case, In re Allou Distributors, Inc., the Bankruptcy Court for the Eastern District …

Regis Ltd. V. Trabelsi, Miriam Naor, Edna Arbel, Elyakim Rubinstein

Translated Opinions

Facts: The respondent company, Dan Rolider Ltd., purchased heavy engineering equipment from the appellant, Regis Ltd., and agreed that a charge would be placed upon the equipment in favor of the appellant. The appellant failed to register the charges with the Registrar of Companies within the statutory 21 days. The appellant defaulted on its debt to the respondent, the CEO and controlling shareholder of the appellant company died, and an application was made to liquidate the company. Following the application for liquidation of the company, the respondent filed an application with the Registrar of Companies to extend the period …

Worsening Foreclosure Crisis: Is It Time To Reconsider Bankruptcy Reform?: Hearing Before The Subcomm. On Administrative Oversight And The Courts Of The S. Comm. On The Judiciary, 111th Cong., July 23, 2009 (Statement Of Adam J. Levitin, Associate Prof. Of Law, Geo. U. L. Center), Adam J. Levitin

Testimony Before Congress

The clear finding from my research is that mortgage prices are largely insensitive to bankruptcy modification risk. Permitting bankruptcy modification is unlikely to result in higher mortgage costs or lower mortgage credit availability.

The foreclosure crisis is not about to stop any time soon. Judicially-supervised restructuring of mortgages is the only tool we have left in the box. It's a tool we know can work. It's a tool that can save hundreds of thousands of families their homes and help stabilize communities, housing markets, and the economy. It's time to use it.

Demand-Side Gatekeepers In The Market For Home Loans, Edward J. Janger, Susan Block-Lieb

Faculty Scholarship

No abstract provided.

The Res Judicata Worth Of Illegal Bankruptcy Reorganization Plans, David G. Carlson

Articles

The article examines the interplay between res judicata and the confirmation of bankruptcy reorganization plans, particularly under Chapter 13. It argues that while res judicata is essential for finality, it must not compromise procedural fairness and due process. The author advocates for a balanced approach where confirmed plans are binding but also ensure that creditors' rights are protected through proper legal procedures.

Pride And Prejudice In Securitization: A Reply To Professor Plank, Kenneth C. Kettering

Cardozo Law Review

No abstract provided.

Protecting The Right To Marital Property: Ensuring A Full Equitable Distribution Award With Fraudulent Conveyance Law, Benjamin M. Ellis

Cardozo Law Review

No abstract provided.

H.R. 200, The "Helping Families Save Their Homes In Bankruptcy Act Of 2009," And H.R. 225, The "Emergency Homeownership And Equity Protection Act": Hearing Before The H. Comm. On The Judiciary, 111th Cong., Jan. 22, 2009 (Statement Of Associate Professor Adam J. Levitin, Geo. U. L. Center), Adam J. Levitin

Testimony Before Congress

Permitting modification of all mortgages in bankruptcy would create a low-cost, effective, fair, and immediately available method for resolving much of the current foreclosure crisis without imposing costs on taxpayers, creating a moral hazard for borrowers or lenders, or increasing mortgage credit costs or decreasing mortgage credit availability. As the foreclosure crisis deepens, bankruptcy modification presents the best and least invasive method of stabilizing the housing market and is a crucial step in stabilizing financial markets.

Bankruptcy Bondage, Margaret Howard

Scholarly Articles

Initially, it might seem an affront to the history of slavery in this country to suggest that similar concerns are raised by an expectation that debtors pay their debts. Nevertheless, certain aspects of the Bankruptcy Code present genuine constitutional difficulties under the Thirteenth Amendment. These difficulties have been recognized for several decades, albeit as a matter of speculation. Now, however, un- der the 2005 Amendments to the Bankruptcy Code, this issue is no longer speculative. Under the 2005 Amendments, an individual debtor may be put into a chapter 11 proceeding involuntarily, and re- quired to make payments under a plan …

Case Analysis Of In Re Atlantic Gulf Comtys. Corp., Meagan Mahar

Bankruptcy Research Library

(Excerpt)

In In re Atlantic Gulf Comtys. Corp., a Delaware Bankruptcy Court applied New York law to both equitable and legal arguments made by the debtor, holding that funds in an escrow account created by the debtor were not property of the debtor’s estate. 369 B.R. 156, 164–65 (Bankr. D. Del. 2007). First, this memo will examine the two opposing legal and equitable arguments made by the parties, with each relying on different theories of characterizing the debtor’s interest in escrow accounts as they have evolved throughout New York caselaw. Second, it will analyze the contingency argument made by the …

Defense Of In Pari Delicto Does Not Affect Trustee Standing, Elizabeth L. Anderson

Bankruptcy Research Library

(Excerpt)

Rejecting the Second Circuit’s Wagoner rule and agreeing with the First, Third, Fifth, and Eleventh Circuits, the United States Court of Appeals for the Eighth Circuit held that the collusion of corporate insiders with third parties to injure the corporation does not deprive the corporation’s trustee of standing to sue third parties, resulting in a greater rift between Second Circuit and the other Courts of Appeal on this issue. Moratzka v. Morris, 482 F.3d 997, 1004 (8th Cir. 2007). Nevertheless, the court affirmed that such a situation may give rise to the defense of in pari delicto barring the …

What Exactly Does The Term “Fair And Equitable” Mean?, Peter Doggett Jr.

Bankruptcy Research Library

(Excerpt)

In a plan of reorganization, the Bankruptcy Code outlines a priority scheme that must be strictly adhered to. 11 U.S.C. § 1129. According to the Code, “the holder of any claim or interest that is junior to the claims of such class will not receive or retain under the plan on account of such junior claim or interest any property.” 11 U.S.C. § 1129(b)(2)(B)(ii). When faced with the question of extending the codified priority rule to settlement approvals, the Fifth Circuit in United States v. AWECO Inc. (In re AWECO, Inc.), 725 F.2d 293 (5th Cir. 1984) held …

Ride Through Option For Real Property Survived Bapcpa, James Lynch

Bankruptcy Research Library

(Excerpt)

The Bankruptcy Abuse Protection Act of 2005 (“BAPCPA”) largely eliminated the so-called “ride through” option for security interests in personal property; however, for nearly two years there was no clear indication as to whether the ride through option still existed for security interests in real property. Recently, in In re Caraballo, the Connecticut Bankruptcy Court confronted this uncertainty head on and determined that the ride through option still exists for real property. 386 B.R. 398, 400 (Bankr. D. Conn. 2008). Importantly for bankrupt individuals, utilizing the ride through option allows them to “keep their property during and after bankruptcy …

Non-Claim Status Of Environmental Clean-Up Injunctions Limited To States, Klevis Peshtani

Bankruptcy Research Library

(Excerpt)

Does the equitable right of an individual, whose property has been damaged by the debtor’s pollution, to injunctive clean-up relief constitute a “claim” that may be discharged in the debtor’s Chapter 11 bankruptcy? This was the issue of first impression which the Pennsylvania Bankruptcy Court dealt with in Krafczek v. Exide Corp., No. 00-1965, 2007 WL 1199530, at *1 (E.D. Pa. Apr. 19, 2007). The Krafczek court answered the question in the affirmative, 2007 WL 1199530 at *3, setting new precedent in an already narrow area of Bankruptcy Law upon which other courts had trodden carefully.

This article …

In Re Kara Homes, Inc., Anna Drynda

Bankruptcy Research Library

(Excerpt)

Recently, the United States Bankruptcy Court for District of New Jersey held in In re Kara Homes, Inc., 363 B.R. 399 (Bankr. D.N.J. 2007) that secured construction lenders of affiliated chapter 11 debtors were entitled to expedited relief from an automatic stay of foreclosure pursuant to section 362(d)(3) of the Bankruptcy Code because the court determined each debtor constituted single asset real estate case under section 101(51B) of the Code. The significance of expedited relief under section 362(d)(3) is it imposes an “expedited time frame for filing a plan” of reorganization in chapter 11 for single asset real estate …

A Prime Brokers Good Faith Defense To Fraudulent Transfers, Michael Maffei

Bankruptcy Research Library

(Excerpt)

The exposure of Madoff Ponzi scheme, and others like it, will undoubtedly have an impact on the way that bankruptcy courts deal with fraudulent transfers to prime brokers, particularly the degree to which the prime broker on inquiry notice of fraud must act with diligence. Due to the recent economic tumult, the number of bankruptcies is continually growing. Another result of the economic decline is that a large number of investment funds have failed. After these funds failed, many prime brokers discovered that some of the funds were not operating funds at all. They were in fact Ponzi schemes. …

The Exclusive View V. The Non-Exclusive View: Can A Creditor’S Claim Be Dismissed For Failing To Provide Supporting Documentation?, Robert J. Ryan

Bankruptcy Research Library

(Excerpt)

May a creditor’s claim be dismissed simply because he failed to provide supporting documentation in violation of Federal Rule of Bankruptcy Procedure 3001? The answer depends on which jurisdiction the creditor is pursuing its claim in. Courts are currently sharply divided on the issue. If the creditor is fortunate enough to be in a jurisdiction which follows the “exclusive” view, which is the majority rule, the answer to this problem will be yes. However, if the creditor happens to be in a jurisdiction which follows the “non-exclusive” view, which is the minority rule, the answer to this problem will …

Redefining Disposable Income In Chapter 13 Plans: Moving Forward Into A "New Era In The History Of Bankruptcy Law", 42 J. Marshall L. Rev. 1107 (2009), Lauren Sylvester

UIC Law Review

No abstract provided.

Bankruptcy Law Dilemma: Appraisal Of Corporate Value And Its Distribution In Corporate Reorganization Proceedings, Jongho Kim

Northwestern Journal of International Law & Business

This article will analyze issues arising in reorganization proceedings with which the bankruptcy court has not yet grappled. If the questions arising in the remainder of this article can be clearly answered, then to a certain extent numerous arguments about Chapter 11 can be settled. This article will also analyze both Korean and U.S. bankruptcy law and will maintain a comparative approach with a critical perspective. Though Korean bankruptcy law indirectly adopted11 that of the United States in 1962, the actual application and interpretation of Korean bankruptcy law is quite different and I will accurately compare and contrast the two …

Critique Of Money Judgment (Part Two: Liens On New York Personal Property), David G. Carlson

Articles

The article critiques the New York Civil Practice Law and Rules (CPLR) for its outdated and overly complex framework governing money judgments, particularly in the creation, enforcement, and priority of judicial liens. It argues that the CPLR's inefficiencies and inconsistencies, exacerbated by conflicts with federal bankruptcy law and the Uniform Commercial Code (UCC), lead to unjust outcomes for both debtors and creditors. The article proposes modest reforms to align the CPLR with modern legal standards, simplify procedures, and eliminate unnecessary distinctions between tangible and intangible property.