The Bankruptcy Law Firm, Prof. Corp.
In re Pearl Resources LLC, ___BR___ (Bankr. S.D. Tex. Sept. 30, 2020), bankruptcy case no. 20-31585
Texas Mineral Liens May Be Modified in a Subchapter V Cramdown Plan A cramdown plan can reduce the collateral coverage for secured creditors. A debtor can confirm a cramdown plan under subchapter V of chapter 11, even though the objecting secured creditors will receive replacement collateral worth less than the collateral originally securing the claims, according to Bankruptcy Judge Eduardo V. Rodriguez. However, the substitute collateral was still worth six times more than the secured claims. Sitting in Houston, Judge Rodriguez explained why the absolute priority rule does not apply in subchapter V cases. He also found nothing sacrosanct about…
SE Property Holdings LLC v. Gaddy (In re Gaddy)
SE Property Holdings LLC v. Gaddy (In re Gaddy), ___F.3d___ (11th Cir. Sept. 29, 2020) appeal #19-11699: 11th Circuit Court of Appeals holds that for a debt to be held nondischargeable per 11 USC 523(a)(2)(A), the debtor’s fraud must have occurred before the debt arises. Therefore, fraudulent transfers that the debtor made, after the debtor incurred the debt (debt was that debtor personally guaranteed a 12 million dollar loan), did NOT make the debt nondischargeable per 11 USC 523(a)(2)(A). However, that did not leave the creditor with no remedy, in this case, because the creditor could have timely brought an…
Nearly 11 Million Households Missed Mortgage Or Rent Payments At Pandemic’s Outset
Nearly 11 million households fell behind on their mortgage or rent payments during the first three months of the COVID-19 pandemic, according to a new study by the Mortgage Bankers Association’s Research Institute for Housing America (RIHA). Meanwhile, 30 million people missed at least one student loan payment. The report contains data from an internet panel survey specially tailored to study the impact of the pandemic on rent, mortgage and student loan payment patterns. It found that the sudden onset of the pandemic led to abrupt job losses and reductions in hours worked. “However, federal government stimulus programs and employees…
Jalbert v. Gryaznova (In re Bicom NY LLC), ___BR___ (Bankr. S.D.N.Y. Sept. 21, 2020), bky case #19-1311
Fraudulent Transfer Law Doesn’t Victimize Innocent Parties, Bankruptcy Judge Wiles Says “Bare legal ownership” of a bank account isn’t enough to turn the account holder into the initial transferee of a fraudulent transfer made into the account, according to the interpretation of Second Circuit law by Bankruptcy Judge Michael E. Wiles of Manhattan. In substance, Judge Wiles said that Section 550(a)(1) is not a “gotcha” statute. “Strict liability,” he said, “is appropriate as a way of addressing wrongs, not as a way of victimizing innocent parties.” The defendant, a Russian citizen, said she needed a bank account in the U.S.…
In re Goodrich Quality Theaters Inc.
In re Goodrich Quality Theaters Inc., ___BR___ (Bankr. W.D. Mich. Sept. 16, 2020), case number 20-00759: Michigan Bankruptcy Judge Prefers Dismissal of Chapter 11 case, to conversion of Chapter 11 case to Chapter 7, if Conversion to Chapter 7 will NOT Benefit General Unsecured Creditors, even though Office of US Trustee wanted case converted to Chapter 7, instead of Chapter 11 case being dismissed. The debtor, a corporation, used the chapter 11 case to sell its assets. The debtor and secured creditors judged the chapter 11 case a success, even though unsecured creditors got ZERO, from the assets of the…
U.S. Corporate Bankruptcy Filings at 10-Year High as COVID-19 Pandemic Inflicts Economic Pain
U.S. corporate bankruptcies are on their way to hitting a decade-long high, underlining the economic pain inflicted by the COVID-19 pandemic and efforts to limit the disease’s spread, MarketWatch.com reported. Total bankruptcies announced by U.S. companies so far this year stand at 470, the most for any comparable year-to-date period since 2010, according to S&P Global Market Intelligence. S&P’s analysis took into account both public and private companies with public debt. Most of the bankruptcies were concentrated in retail, energy and manufacturing, with larger defaults such as J.C. Penney and Chesapeake Energy occurring exclusively in these industries. Analysts say many…
Bankruptcy and Social Security Income
In In re Welsh, 711 F. 3d 1120, 35 (9th Cir. 2013) the Ninth Circuit Court held: “We conclude that Congress’s adoption of the BAPCPA forecloses a court’s consideration of a debtor’s Social Security income or a debtor’s payments to secured creditors as part of the inquiry into good faith under 11 U.S.C. § 1325(a).” So in the Ninth Circuit social security income, and debtor’s monthly payments owed to secured creditors (on Notes secured by Deeds of Trust, secured vehicle loans, etc) cannot be counted in a Chapter 13 case, to determine whether or not the debtor’s proposed Chapter 13…
Serious Mortgage Delinquencies Soar To a 10-Year High, reports Credit & Collection e-newsletter on 8/24/20
Good News and Bad News – The Black Knight Mortgage Monitor for July has a bit of good news and bad. The Good News: Mortgage delinquencies continued to improve in July, falling 9% from June, with more than 340K fewer past due mortgages than the month prior. Early-stage delinquencies (30 days past due) have fallen below their pre-pandemic norms. This is a good sign that – at least for the time being – the inflow of new COVID-19-related delinquencies has subsided. Though foreclosure starts ticked up slightly for the month, COVID-19 foreclosure moratoriums are keeping both foreclosure starts and completions…
Analysis: Small Firms Die Quietly, Leaving Thousands of Failures Uncounted
American Bankruptcy Institute on 8/12/20 reports that big companies are going bankrupt at a record pace, but that’s only part of the carnage. By some accounts, small businesses are disappearing by the thousands amid the COVID-19 pandemic, and the drag on the economy from these failures could be huge, Bloomberg News reported. “Probably all you need to do is call the utilities and tell them to turn them off and close your door,” said William Dunkelberg, who runs a monthly survey as chief economist for the National Federation of Independent Business. Nevertheless, closures “are going to be well above normal…
Struggling Retailers Use Bankruptcy to Break Leases by the Thousands
Struggling Retailers Use Bankruptcy to Break Leases by the Thousands, reports the American Bankruptcy Institute, on 8/620: With the pandemic intensifying the plight of U.S. retailers, companies ranging from J. Crew Group Inc. to the owner of Ann Taylor are using chapter 11 bankruptcy filings to quickly get out of costly, long-term leases and shutter thousands of stores, Bloomberg News reported. By seeking court protection, firms like Neiman Marcus Group Inc. and the parent company of Men’s Wearhouse avoid the headache of protracted negotiations with individual landlords. But the moves threaten to upend huge swaths of the real estate market…