As most readers know, Subchapter V of Chapter 11 is the small business reorganization provisions enacted in the Small Business Reorganization Act (SBRA) of 2019. SBRA made major changes to how small business cases are handled in an effort to streamline the process, reduce administrative expenses and result in more confirmed Chapter 11 plans. Prior to SBRA and even continuing after enactment of SBRA, small businesses could elect treatment as a small business debtor under Chapter 11.
The Eighth Circuit recently ruled that avoidance causes of action are property of the bankruptcy estate under § 541 of the Bankruptcy Code and thus may be sold by the trustee or debtor in possession. Pitman Farms v. ARKK Food Company, LLC, et al., No. 22-2011 (8th Cir. August 21, 2023). The ruling reinforces the notion that estate causes of action are assets that can be sold under § 363 of the Code, a practice which has been increasingly used in § 363 sales.
Debtors in possession or other estate representatives are required to pay U.S. Trustee fees during the pendency of the case. It is often assumed that other entities to whom estate property is transferred must also pay such fees until the case is closed. But as a couple of recent cases illustrate, it may be possible with careful drafting to curtail the reporting and payment of such fees once assets are transferred to a liquidating trust.
On June 6, 2022, the U.S. Supreme Court released its decision in Siegel v. Fitzgerald, No. 21-441. At issue in the case was whether a temporary fee increase for funding of the U.S. Trustee (UST) program was constitutional. These fees were paid by debtors in chapter 11 cases pending or filed between 2018 to 2021. The Court ruled that the fee increase was not constitutional because the increase did not apply uniformly to all cases, thereby violating the uniformity requirement of the Bankruptcy Clause of the Constitution. According to the Executive Office of the U.S.
In the Summer 2021 edition of the Restructuring Report, I wrote about legislative efforts to reform the Bankruptcy Code to place limits on the use of third party releases in bankruptcy plans of reorganization.
One valuable tool in formulating a successful exit from chapter 11 via a confirmed plan is the use of third-party releases. Such releases can take many forms, but the basic idea is that a non-debtor third party contributes property, usually cash, to the debtor or a trust created under the plan, with the cash to be distributed to unsecured claim holders, in exchange for a release of asserted or potential claims those claim holders may assert against the third party (often where there is co-liability with debtor).
Prior to the COVID-19 pandemic, the Bankruptcy Code generally has been interpreted to require debtors to pay rent obligations on time under unassumed real property leases as those obligations arose post-filing and pre-rejection. This result was driven by 11 U.S.C. § 365(d)(3), which requires the debtor to “timely perform” all obligations until the lease is assumed or rejected, with one narrow exception. That exception permits the court to allow the debtor to extend the time of performance of any obligation within the first 60 days of the case but not beyond the 60-day period.
Introduction
The national and local publications have been full of articles recently on the emerging agricultural crisis confronting producers. By some measures, sectors of the ag economy are in the third year of declining net farm incomes, and some dairy producers in particular appear to be in dire straits. In light of these events, now might be a good time for lenders to brush up on the most significant laws affecting their loan remedies in the event it becomes necessary to seek enforcement of their loans. Below are short summaries of two important laws affecting loan enforcement:
I have been reading Storm Lake, a book by Art Cullen, the editor of the Storm Lake (Iowa) Times and a 2017 Pulitzer Prize winner for editorial writing. In his book, Cullen chronicles the ways that agriculture and his hometown of Storm Lake have been transformed over the years. What strikes me most about the book is how the business cycles of boom and bust still exist in agriculture today and are little changed from when I was growing up on a farm in Iowa decades ago. It appears that we are in or entering a new bust cycle in production agriculture.