The Bankruptcy Law Firm, Prof. Corp.
U.S. Senate Bill Aims to Curb Texas Two-Step Bankruptcies
The American Bankruptcy Institute (“ABI”) reports that on 7/23/24, U.S. Senators introduced a bipartisan bill yesterday that would deter so-called Texas two-step bankruptcies, saying that wealthy companies should not be able to stop lawsuits by dumping their liabilities into a bankrupt shell company, Reuters reported. Sens. Sheldon Whitehouse (D-R.I.) and Josh Hawley (R-Mo.) introduced the “Ending Corporate Bankruptcy Abuse Act of 2024” that would prevent financially healthy companies from evading “responsibility for injuries they caused” or bog down consumers in lengthy bankruptcy proceedings, they said in a statement. “Large corporations on solid financial footing — like Johnson & Johnson and…
Two Bankruptcy Court Decisions
Two Bankruptcy Court decisions– Parlement Technologies Inc., 24-10755, 2024 BL 240417, 2024 WL 3417084 (Bankr. D. Del. July 15, 2024), and Coast to Coast Leasing LLC v. M&T Equipment Finance Corp. (In re Coast to Coast Leasing LLC), 24-00172 (Bankr. N.D. Ill. July 17, 2024) hold that the US Supreme Court Harrington v Purdue Pharma, LP (“Purdue”) decision–which holds that the Bankruptcy Code does NOT allow a Bankruptcy Court to confirm (approve) a Chapter 11 bankruptcy plan which grants nonconsensual releases to non-debtors—does NOT prohibit a Bankruptcy Judge from granting a preliminary injunction stopping lawsuits against nondebtors from proceeding. Both…
Wike v. State Bar of Nevada (In re Wike), __ BR__ (9th Cir. BAP 7/3/24), case 23-1179, about Dischargeability of Disciplinary Costs.
Wike v. State Bar of Nevada (In re Wike), __ BR__ (9th Cir. BAP 7/3/24), case 23-1179, about Dischargeability of Disciplinary Costs. But though the 9th Circuit BAP can complain about the US Supreme Court Kelly v. Robinson decision–which held criminal restitution is nondischargeable per 11 USC 523(a)(7)—complaining is all BAP, or even Circuit Courts, can do, because US Supreme Court decisions are binding on all Courts in the United States A decision from the Ninth Circuit Bankruptcy Appellate Panel is emblematic of courts inveighing against Kelly v. Robinson, 479 U.S. 36 (1986), where the Supreme Court held that criminal…
Henry v. Collection Professionals Inc., 23-00721 (N.D. Ill. June 17, 2024)
Harvey v. Collection Professionals Inc., __ F.Supp.4th__ (US District Ct, N.D. Ill 6/1724): Another case in the “Circuit Split” about whether claims by a debtor, pursuant to Bankruptcy Code section 11 USC 524(a) (violation of bankruptcy discharge by creditor), which seek to have a creditor held in contempt, because the creditor allegedly violated the debtor’s bankruptcy discharge, can be brought in US District Court, or whether such contempt claims, alleging violation of the debtor’s bankruptcy discharge, can only be brought in bankruptcy court. Claims. Circuits are split on whether claims for contempt of the discharge injunction must be brought in…
Ivanov v. Van’s Aircraft Inc. (In re Van’s ARicraft Inc.) , ___ BR (Bankruptcy Court Oregon 6/11/24)
Ivanov v. Van’s Aircraft Inc. (In re Van’s ARicraft Inc.) , ___ BR (Bankruptcy Court Oregon 6/11/24): An additional bankruptcy judge holds that in a Sub V Chapter 11 case filed by a corporation, that creditors can bring adversary proceedings seeking to hold corporate debts nondischargeable. Bankruptcy Judge refusted to follow the 9th Circuit BAP (Bankruptcy Appellate Panel) which had previously ruled that when a corporation files Sub V Chapter 11 bankruptcy, that debts of the corporation cannot be held nondischargable, even if those debts were for the corporation debtor having committed fraud, intentional misrepresentation, larceny, breach of fiduciary duty…
Sub V Chapter 11 bankruptcy case Debt ‘Cap’ in Peril of Reverting from present 7.5 million cap, to About $3 Million and Chapter 13 bankruptcy case debt ‘Cap’ Will Revert to Old (lower) limits, unless Congress passes extension bill by 6/21/24
The debt limits for Subchapter V and chapter 13 will expire on June 21, 2024, but a bill to extend the existing caps for two more years is being blocked by one senator. In April, a bipartisan group of senators from the Senate Judiciary Committee (consisting of Sens. Richard Durbin (D-Ill.), Lindsey Graham (R-S.C.), Sheldon Whitehouse (D-R.I.), Charles Grassley (R-Iowa), Christopher Coons (D-Del.) and John Cornyn (R-Texas)) introduced S. 4150, the Bankruptcy Threshold Adjustment Extension Act, to push the sunset dates out to 2026. It is a one-sentence bill. Due to its simplicity and perceived lack of opposition, the sponsors…
City of Phoenix v. Haley (In re Bercy), ___F.4th____ (9th Circuit Court of Appeals, May 30, 2024)
City of Phoenix v. Haley (In re Bercy), ___F.4th____ (9th Circuit Court of Appeals, May 30, 2024), appeal number 22-16463. Debtor had not standing to sue on, or collect on, debtor’s claim that debtor was subjected to racial harassment at her employment, before she filed bankruptcy, and after she filed bankruptcy, because debtor did NOT schedule her claim for racial discrimination in bky schedules. As a result, the Chapter 7 Trustee got the claim, and settled it, and debtor got ZERO. The lesson to learn from this case is that a debtor MUST accurately schedule all assets, in the debtor’s…
Truck Insurance Exchange v. Kaiser Gypsum Co. Inc., 22-1079 (Sup. Ct. June 6, 2024)
In Truck Insurance Exchange v. Kaiser Gypsum Co. Inc., 22-1079 (Sup. Ct. June 6, 2024) the US Supreme Court unanimously ruled that an Insurer for the bankruptcy debtor is a party in interest under 11 USC 1109(b) of the Bankruptcy code, and therefore has standing to object to a proposed Chapter 11 plan. Reversing the Fourth Circuit today, the Supreme Court held that a chapter 11 plan that is “insurance neutral” does not deprive the insurer of standing to raise objections to the plan. For a unanimous Court, Justice Sonia Sotomayor said, “Courts must determine on a case-by-case basis whether…
In re Cummings,___ BR___ (Bankr. Court D.N.M. May 22, 2024) case no, 23-10321
In re Cummings,___ BR___ (Bankr. Court D.N.M. May 22, 2024) case no, 23-10321: This Bankruptcy Court Decision discusses 6 different theories (with 6 different outcomes) that other cases have used, to determine whether a Chapter 7 Trustee can be paid any trustee fee, and if so, what dollar amount of trustee fee, when a Chapter 7 debtor converts the debtor’s Chapter 7 bankruptcy case to Chapter 13, after the Chapter 7 trustee discovers assets that the debtor concealed/failed to schedule, but before Chapter 7 Trustee can sell those assets: In re Cummings decision discusses that Courts have used at least…
American Bankruptcy Institute (“ABI”) 5/23/24 e-newsletter reports that Borrowers, especially the young, struggle with credit card debt in potentially bad sign for economy
NEW YORK (AP) — Consumers are increasingly struggling to pay their credit card bills, raising concerns about severe delinquencies spiraling and sapping consumer spending. The share of credit card debt that’s more than 90 days overdue rose to 10.7% during the first quarter, a 14-year high, according to the Federal Reserve Bank of New York’s report on first-quarter household debt. A year ago severe delinquencies totaled only 8.2% of credit card debt. The first-quarter jump in severe delinquencies was the biggest since 2011. Meanwhile total credit card debt rose to $1.12 trillion from just under $1 trillion a year ago.…