Bankruptcy Law Commons^™

No Second Chances: How Courts Have Interpreted Section 109(G)(2) To Prohibit Debtors From Filing A Second Petition Within 180 Days, Brian Adelmann

Bankruptcy Research Library

(Excerpt)

In 1984, Congress enacted section 109(g)(2) of the Bankruptcy Code for the purpose of curbing the abuse of repetitive bankruptcy filings by debtors. Section 109(g)(2) provides that an individual may not be a debtor if the debtor requested and obtained a voluntary dismissal of a previous bankruptcy case at any time in the preceding 180 days. The typical scenario that section 109(g)(2) is intended to prevent a debtor from voluntarily dismissing his bankruptcy case and subsequent refiling of a new case in order to prevent a creditor from acquiring relief from the automatic stay. The statute gives secured creditors …

Repeat Bankruptcies And The Integrity Of The Canadian Bankruptcy Process, Thomas G. W. Telfer

Law Publications

One of the often-cited purposes of bankruptcy law is to permit the rehabilitationof the debtor as a citizen unfetteredby past debts. The bankruptcy regime thus allows an honest but unfortunate debtor toobtain a fresh start through the discharge. However, Canadian bankruptcy law has long taken the position that a repeat bankruptcy will preclude an order of an absolute discharge. The different treatment of repeat bankrupts suggests that there are other policy objectives at play beyond rehabilitation. While the court must consider the interests of the debtor and creditors in a contested discharge hearing an equally important consideration is the protection …

A Solution-Based Approach To Rejecting Trademark Licenses In Bankruptcy, 13 J. Marshall Rev. Intell. Prop. L. 621 (2014), Chandra J. Critchelow

UIC Review of Intellectual Property Law

The Seventh Circuit created a circuit split in bankruptcy law regarding the rejection of trademark licenses in its 2011 decision in Sunbeam Prods., Inc. v. Chi. Am. Mfg. LLC. All other courts have held that when a trademark license is rejected under 11 U.S.C. § 365 in a Chapter 11 bankruptcy proceeding, the licensee may no longer use the licensed trademark. All other forms of intellectual property are subject to § 365(n), which prevents automatic termination of the licensee’s rights. In Sunbeam, the court held that the rejection of a trademark license under § 365 does not automatically terminate the …

Securitization Of Aberrant Contract Receivables, Thomas E. Plank

Chicago-Kent Law Review

Originators of traditional receivables, such as automobile loans, use securitization and structured finance debt transactions to obtain financing at lower net costs than traditional secured financing. The typical securitization or structured finance debt transaction combines (i) a sale of receivables to a separate, bankruptcy remote, special purpose legal entity (an “SPE”) and (ii) a loan to the SPE secured by the receivables. This combination produces lower net financing costs because the SPE’s lender can obtain repayment of its loan from the receivables while avoiding the costs that the Bankruptcy Code imposes on direct secured lenders to originators that could become …

When Churches Reorganize, Pamela Foohey

Scholarly Works

This Article combines an analysis of documents submitted in connection with Chapter 11 cases filed by religious organizations with the results of in-depth interviews with these organizations’ leaders and their bankruptcy attorneys to assess whether reorganization has the potential to offer an effective solution to these debtors’ financial distress. In doing, it makes three contributions. First, it identifies a subset of organizations that seemed more likely to turn to bankruptcy: small congregationalist and non-denominational churches, often with predominately African-American membership. The Article pinpoints salient questions about these churches’ access to credit and use of bankruptcy for future study. Second, it …

Not Just Anna Nicole Smith: Cleavage In Bankruptcy, David G. Epstein

Law Faculty Publications

This is an essay about the unwarranted erosion of two basic bankruptcy principles:the cleavage effect of a debtor's filing of a bankruptcy petition and the equality of treatment of prepetition unsecured claims. These are two of the most fundamental bankruptcy concepts. First courts and then Congress have fashioned rules favoring the prepetition unsecured claims of vendors and lessors that are inconsistent with these concepts. We explore the origins of such favored treatment, question the commonly offered policy justifications, and argue that the prepetition unsecured claims of vendors and lessors generally should be afforded the same treatment in bankruptcy as other …

Curbing The Exploitation Of Passive Creditors In Chapter 11 Reorganization By Leveraging The Oversight Role Of The United States Trustee, Addison Pierce

American University Business Law Review

No abstract provided.

Swords, Shields, And Shackles: Human And Corporate "Persons" Under The Bankruptcy Abuse Prevention And Consumer Protection Act Of 2005, Linda E. Coco

Faculty Scholarship

No abstract provided.

Ice Cube Bonds: Allocating The Price Of Process In Chapter 11 Bankruptcy, Edward J. Janger, M. B. Jacoby

Faculty Scholarship

No abstract provided.

The Challenges Of The New Defalcation Standard, Jonathon S. Byington

Faculty Law Review Articles

The crux of bankruptcy law is giving debtors a fresh start by discharging their debts. Yet society has recognized that some debts should not be discharged because they either have a high level of societal importance or derive from a debtor’s culpable conduct. One of these exceptions from discharge is for defalcation while acting in a fiduciary capacity. The legal meaning of defalcation has been unclear for 172 years, ranging from a breach of trust by one who has charge of money to the misappropriation of money in one’s keeping. A three-way federal circuit split developed on whether a state …

Recent Developments In Estoppel And Preclusion Doctrines In Consumer Bancruptcy Cases; Volume I Of Ii: Estoppel, K.M. Lewis, Paul M. Lopez

Oklahoma Law Review

No abstract provided.

House Swaps: A Strategic Bankruptcy Solution To The Foreclosure Crisis, Lynn M. Lopucki

UF Law Faculty Publications

Since the price peak in 2006, home values have fallen more than 30%, leaving millions of Americans with negative equity in their homes. Until the Supreme Court’s 1993 decision in Nobelman v. American Savings Bank, the bankruptcy system would have provided many such homeowners with a remedy. They could have filed bankruptcy, discharged the negative equity, committed to pay the mortgage holders the full values of their homes, and retained those homes. In Nobelman, the Court misinterpreted reasonably clear statutory language and invented legislative history to resolve a 3-1 split of circuits in favor of the minority view. The Court …

Municipal Bankruptcy: When Doing Less Is Best, C. Scott Pryor

Scholarly Works

No abstract provided.

Bankruptcy’S Corporate Tax Loophole, Diane Lourdes Dick

Faculty Articles

Imagine you are a company with a failing business that is drowning in debt. On the bright side, you also possess a very valuable asset. This asset is unique because, unlike most assets, if you liquidate the business through a Chapter 7 bankruptcy, it will be extinguished and its value will not be realized by any shareholders or creditors. On the other hand, even if you substantially liquidate the business using Chapter 11, you can, thanks to an extraordinary ambiguity in the law, preserve this valuable asset. Even better, you can direct the value of this asset to your preferred …

Activist Investors, Distressed Companies, And Value Uncertainty, Michelle M. Harner, Jamie Marincic Griffin, Jennifer Ivey-Crickenberger

Faculty Scholarship

Hedge funds, private equity firms, and other alternative investment funds are frequently key players in corporate restructurings. Most commentators agree that the presence of a fund can change the dynamics of a chapter 11 case. They cannot agree, however, on the impact of this change—i.e., do funds create or destroy enterprise value? This essay contributes to the dialogue by analyzing data from chapter 11 cases in which funds are in a position to influence the debtor’s exit strategy. The data shed light on what such funds might achieve in chapter 11 cases and the potential implications for debtors and their …

Seeking Solutions To Financial History Discrimination, Lea Krivinskas Shepard

Faculty Publications & Other Works

Employers’ use of credit reports to evaluate prospective job applicants has generated considerable scrutiny in the popular press and academic literature, but few proposals for reform. This Article explores three possible ways of reducing the risk of financial history discrimination in the employment setting.

First, imposing inquiry limits on employers’ use of credit reports, a policy recently adopted or under consideration in the majority of states, is unlikely to be effective, since states’ inquiry limits are currently narrowly drafted and therefore advance few anti-discriminatory objectives. In addition, inquiry limits cannot prevent self-interested individuals from voluntarily revealing their credit histories and …

Goals And Governance In Municipal Bankruptcy, Juliet M. Moringiello

Washington and Lee Law Review

The years from 2011 to 2013 were remarkable in municipal bankruptcy terms. During those years, several cities and counties took the rare step of filing for bankruptcy under Chapter 9 of the Bankruptcy Code. When Detroit filed for bankruptcy in July 2013, it became the largest city measured by both population and outstanding debt to file for Chapter 9. The recent filings challenge the conventional wisdom that Chapter 9 is poorly tailored to the rehabilitation needs of larger cities and counties. Those who have written about Chapter 9 in the past twenty years have treated Chapter 9 and state intervention …

Where Do We Go Now? The Uncertain Future For 29 U.S.C. § 1301(B)(1), Private Equity Funds, And Multiemployer Pension Plans After Sun Capita, Crighton T. Allen

Georgia Law Review

The United States faces a growing problem concerning corporate indebtedness to pension plans, specifically, multi-employer pension plans (MEPPs). MEPPs are group pension plans in which a number of employers join together to contribute to a fund benefitting all employees of the participating companies. If an employer seeks to withdraw from a MEPP by ceasing to contribute into it, the company faces a withdrawal penalty-its proportionate share of the plan's vested but unfunded benefits. The recent decision by the First Circuit in Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund has the potential to greatly …

When Churches Reorganize, Pamela Foohey

Articles by Maurer Faculty

The article complements and expands the author’s prior article, Bankrupting the Faith. This article primarily relies on interviews with attorneys who represented religious organizations in chapter 11 bankruptcy to assess whether reorganization has the potential to offer an effective solution to religious organizations’ financial problems. In doing so, it makes three contributions. First, it tracks the post-bankruptcy outcomes of a portion of the debtors to find that approximately 65% remained operating post-bankruptcy; these outcomes contradict previous studies of small business bankruptcy and are important to current debates about reforming small business bankruptcy. Given this—and in keeping with the ABLJ’s …

"We Buy Houses": Market Heroes Or Criminals?, Cori Harvey

Journal Publications

The residential sale/leaseback/buyback transaction is a socially beneficial foreclosure rescue transaction that is being regulated increasingly by the criminal courts to the detriment of the homeowners, investors, and society at large. Because the transaction is being regulated more aggressively with the criminal law, peculiar outcomes arise, which include investors being sentenced, in some cases, to draconian sentences --a trend that will eviscerate the transactions rather than improving them.

In calling for a retreat from that position, this Article makes both descriptive and prescriptive claims. The first descriptive claim is that the transaction is a beneficial one and that it has …