The Bankruptcy Law Firm, Prof. Corp.
American Bankruptcy Institute February 2024 Analysis: The Brutal Reality of Plunging Office Values Is Here
The shakeout in the $20 trillion U.S. commercial real estate market has long been delayed for a simple reason: No one could figure out just how much properties were worth. More crucially, few wanted to, according to a Bloomberg News analysis. Since the COVID-19 pandemic upended the use of real estate around the world, lenders have had little incentive to get tough on borrowers squeezed by soaring interest rates and take on loans that have lost value.
Raymond James & Associates Inc. v. Jalbert (In re German Pellets Louisiana LLC), 23-30040 (5th Cir. Jan. 30, 2024)
Raymond James & Associates Inc. v. Jalbert (In re German Pellets Louisiana LLC), 23-30040 (5th Cir. Jan. 30, 2024): US court of appeals for the 5th Circuit rules, in a published decision, that a creditor that does not file a proof of claim, and does not file any pleadings in Ch11 case, is still bound by the Ch11 plan, if the BkyCt confirms that plan. This 5th Circuit Court of Appeals decision holds that knowledge of existence of a chapter 11 bankruptcy case is enough to bind a creditor to the terms of a plan, if the Bankruptcy Court confirms…
American Bankruptcy Institute Reports that SPAC Companies Accounted for at Least 21 Bankruptcies this Year (2023) and $46 Billion in Lost Investor Value
Wall Street’s affair with blank-check firms, the finance fad that pushed companies onto the stock market during the COVID-19 pandemic, ended this year with a string of big bankruptcies and even bigger losses for shareholders, Fortune reported. At least 21 firms that went public by merging with special purpose acquisition companies, or SPACs, went bankrupt this year, according to data compiled by Bloomberg. Measured from their peak market capitalizations, the insolvencies bookend the loss of more than $46 billion of total equity value. The failures span money-losing electric vehicle startups and forward-thinking farming companies. Blank-check firms were good at propelling…
In re McIntosh, ___BR___ (Bankruptcy Court, SD Fla 01/12/24: Bankruptcy Court ordered Debt Purchaser to pay Debtor $65,000 (including $21,500 punitive damages, plus $10,000 emotional distress damages) for violating debtor’s bankruptcy Discharge, by debt purchaser trying to collect a debt from debtor, that had been discharged in debtor’s bankruptcy
Bankruptcy Judge Scott M. Grossman of Fort Lauderdale, Fla., explained why “merely selling a debt to another holder” does not “somehow immunize a creditor and create a fair ground of doubt as to whether that debt was discharged.” Taggart decision doesn’t give more protection to a purchaser of debt than it does to the original creditor, Judge Scott Grossman says. Finding that the conduct of the purchaser of discharged debt was “reckless, reprehensible, and egregious,” Judge Grossman awarded the debtor almost $65,000, including $10,000 for emotional distress and some $21,500 in punitive damages. The Chapter 7 Discharge in 2002 The…
“National Guard and Reservists Debt Relief Extension Act of 2023” Signed into Law
The “National Guard and Reservists Debt Relief Extension Act of 2023” (H.R. 3315) was signed into law yesterday by President Biden after passing the Senate on Monday and the House of Representatives on Dec. 11.
Supreme Court Seems Dubious About Purdue’s Nonconsensual, Nondebtor Releases
At oral argument, by the US Supreme Court, on 12/4/23, of the Harrington v. Purdue Pharma LP appeal, which is an appeal about whether nonconsensual, releases of non-debtors, are allowed to be contained in a Chapter 11 plan, the Supreme Court justices seemed skeptical. The justices were focused on whether the word “appropriate” in Section 1123(b)(6) allows chapter 11 plans to include nonconsensual, nondebtor third-party releases. The justices were not unreceptive to the argument that creditors with claims related to opioid addiction may receive nothing if the Court reverses the Second Circuit and sets aside confirmation of Purdue’s chapter 11…
Amendments to Federal Bankruptcy Rules and Forms Effective 12/1/22
The following amended and new Bankruptcy Rules and Forms became effective on 12/1/22, in bankruptcy cases, motions, and adversary proceedings, nationwide: Bankruptcy Rules 1007, 1020, 2009, 2012, 2015, 3002, 3010, 3011, 3014, 3016, 3017.1, 3018, 3019, 5005, 7004 and 8023; new Rule 3017.2; and Official Forms 101, 309E1 and 309E2. The Judicial Conference of the United States on Sept. 28, 2021, approved the proposed amendments to the Federal Rules of Bankruptcy Procedure Bankruptcy Rules and official Bankruptcy Forms. The proposed amendments were transmitted to the Supreme Court on October 18, 2021. The Supreme Court adopted these proposed amendments and transmitted…
ABI Releases Preliminary Report Recommending Congress Maintain the $7.5 Million Debt Eligibility Limit for Small Businesses Looking to Reorganize Under Subchapter V
The American Bankruptcy Institute (ABI) Subchapter V Task Force today released its “Preliminary Report of ABI’s Subchapter V Task Force on Maintaining the $7,500,000 Debt Cap for Subchapter V Eligibility” with findings to support permanently maintaining the eligibility limit of $7.5 million in aggregate noncontingent, liquidated debt for small businesses looking to reorganize under subchapter V.
Courts Are Split on Counting Future Rent Toward the $7.5 Million Debt Cap in Sub V Chapter 11
If future liability on unexpired leases and executory contracts is counted, many companies will be ineligible for Subchapter V of chapter 11. Courts disagree on whether future liability on a lease counts toward the $7.5 million eligibility limit for Subchapter V. See In re Zhang Medical PC, 23-10678 (Bankr. S.D.N.Y. Nov. 30, 2023) Not counting future rent liability, Bankruptcy Judge Philip Bentley of New York disagreed with Bankruptcy Judge Klinette H. Kindred of Alexandria, Va., who knocked a debtor out of Subchapter V solely as a result of liability on a long-term lease. See In re Macedon Consulting Inc., 652…
It Is Very Difficult to Discharge Student Loans In Bankruptcy
Credit & Collection e-newsletter reports that on 11/16/22, the Biden administration on Thursday unveiled unprecedented policy changes designed to make it easier for federal student loan borrowers to discharge their student debt in bankruptcy. Here are the details, as reported in the Article: It Is Very Difficult to Discharge Student Loans In Bankruptcy While it is by no means impossible for borrowers to discharge their student loans in bankruptcy, it can be quite difficult. Student loans are treated differently in bankruptcy from other consumer debts, like medical bills and credit card debts. Under the bankruptcy code, student loan borrowers generally…