News
9th and 4th Circuit Both Hold: Old Bankruptcies Aren’t Grounds for Removal to Federal Court
This month, two circuits found no ‘related to’ bankruptcy jurisdiction for climate-change lawsuits against energy companies, and therefore held those climate change suits could NOT properly be removed to Bankruptcy Court. On 4/19/22 the Ninth Circuit Court of Appeals held, in County of San Mateo v. Chevron Corp., ___F.4th___ (9th Cir. April 19, 2022), appeal No. 18-15499, that a climate change suit was not properly removed from nonbky court to bankruptcy court. That was the second time in 12 days, a circuit court has held that a chapter 11 plan confirmed by an energy company doesn’t permit multinational oil companies…
DC Solar owner Jeff Carpoff was sentenced to 30 years in federal prison in connection with defrauding investors
American Bankruptcy Institute (“ABI”) reports that In the fall of 2021, DC Solar owner Jeff Carpoff was sentenced to 30 years in federal prison in connection with defrauding investors (and taxpayers) out of over $2B through a Ponzi scheme involving favorable tax credits that incentivize investments in sustainable energy. The fraud, described by the Department of Justice as “the largest criminal fraud scheme in the history of the Eastern District of California” was uncovered shortly after a Christmas 2018 government raid on DC Solar’s headquarters which caused the company to file a Chapter 11 bankruptcy case, in Bankruptcy Court, Eastern…
Biden Aims to Expand Access to Student-Loan Debt Forgiveness for Millions of People
The Biden administration said it plans to make it easier for lower-income student-loan borrowers to get debt forgiveness through an existing program that has enrolled millions of people, but provided few with relief, the Wall Street Journal reported. The move, announced by the Education Department on Tuesday, is part of a politically sensitive debate on the forgiveness of student-loan debt and attempts to more broadly overhaul how the student-loan repayment system works. President Biden earlier this month extended to Aug. 31 a pandemic-related pause on payments of federal student loans and faces pressure from progressive members of his own party…
Democrats Press Biden to Extend Freeze on Student Loan Payments
American Bankruptcy Institute on 03/25/22 reports: Democrats in Congress are pressing the Biden administration to extend the suspension of student loan payments before it’s set to expire May 1 as they seek to avoid cutting off a pandemic-induced benefit in the middle of an election year, The Hill reported. The federal student loan payments suspension has already been extended five times throughout the COVID-19 pandemic since it began under former President Trump in March 2020. That means millions of people who owe student loans to the federal government haven’t been required to make payments on their debt in two years,…
American Bankruptcy Institute reports that a Bill has been introduced in the US Senate on 3/14/22, called “Bankruptcy Threshold Adjustment and Technical Corrections Act”
Introduced by Senator Charles Grassley (R-Iowa). The Bill, S. 3823, if it was passed by Senate, and by House, and if signed into law by President Biden, would permanently set the debt limit at $7.5 million for small businesses electing to file for bankruptcy under subchapter V of chapter 11. Consistent with the recommendations of ABI’s Commission on Consumer Bankruptcy, the bill also would raise the debt limit for individual chapter 13 filings to $2.75 million and remove the distinction between secured and unsecured debt for that calculation.
ABI Analysis: The $1.7 Billion Student Loan Deal that Was Too Good to Be True
ABI Analysis: The $1.7 Billion Student Loan Deal that Was Too Good to Be True, because hundreds of thousands of borrowers still have to pay back the predatory, high interest rate, educational loans: Even though prosecutors said Navient had made predatory loans to hundreds of thousands of borrowers it knew couldn’t afford them, the $1.7 billion settlement the lender made last month with 39 states covered only about 66,000 who were in default. Those who managed to make the payments on their deceptive, high-interest debt — mostly to attend for-profit schools that left them with worthless degrees — would just…
Article reports Landlords finding ways to evict tenants, after the landlord receives government rental aid
A day before she was due to be evicted in November 2021 from her Atlanta home, Shanelle King heard that she had been awarded about $15,000 in rental assistance. She could breathe again. But then the 43-year-old hairdresser got a letter last month from her landlord saying the company was canceling her lease in March —- seven months early — without any explanation. “I’m really pissed about it. I thought I would be comfortable again back in my home,” said King, whose work dried up during the pandemic and who now worries about finding another apartment she can afford. “Here…
California Adopts New Debt Collection Regulations (as reported in 2/11/22 Credit & Collection E-Newsletter)
New regulations from the California Department of Financial Protection and Innovation (Department) affecting licensure of debt collectors became effective as of January 1, 2022. The regulations provide the process and requirements to apply for a license as a debt collector, including application through the NMLS, and specify the acts that constitute grounds for license denial. The California Debt Collection Licensing Act (the Act) prohibits any person from engaging in the business of consumer debt collection without a license from the Department and authorizes the Department to adopt rules to administer the Act. Among other provisions, the recently effective rules require…
Senate Judiciary Subcommittee Hearing, held in February 2022, Takes Aim at “Texas Two-Step” Strategy to Shift Liabilities in Bankruptcy
American Bankruptcy Institute Reports that US Senate Judiciary Subcommittee Hearing, held in February 2022, Takes Aim at “Texas Two-Step” Strategy to Shift Liabilities in Bankruptcy: The Senate Judiciary Subcommittee on Federal Courts, Oversight, Agency Action and Federal Rights held a hearing last week titled, “Abusing Chapter 11: Corporate Efforts to Side-Step Accountability Through Bankruptcy.” The “abuse” being discussed in corporations, setting up a new corporation, putting product liability claims into the new corporation, and then having the new corporation file bankruptcy, to try to use bankruptcy to stay product liability litigation (like the J& J talc cancer litigation) and to…
Provisions in the CARES Act
On March 28, 2022, certain provisions in the CARES Act expire. Importantly for insolvency practitioners, the amount of eligible debt permissible for a debtor to file under Subchapter V of Chapter 11-the simpler, faster, less expensive, better for debtors kind of chapter 11 bankruptcy case–decreases from $7,500,000, back to the original amount of $2,725,625. It is uncertain whether Congress will extend this provision before it expires. If Congress does not pass legislation extending the $7,500,000 amount, or President Biden does not sign such legislation passed by Congress into law, before March 28, 2022, then the maximum allowable debt amount, for…