Here are a couple long-standing and foundational policies for the entire bankruptcy system:

• Bankruptcy laws protect the honest but unfortunate debtor; and
• Discharge exceptions are to be strictly construed against the objecting creditor and liberally construed in favor of debtor.

So, for all my decades of practice under the Bankruptcy Code, this idea has held sway: an honest debtor is entitled to a bankruptcy discharge.

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Hon. Gerald E. Rosen (Ret.) serves as mediator, arbitrator and neutral evaluator in high-level business cases for the JAMS office in Detroit.

Here’s an important rule for mediators:

• When the parties try to present you with a binary equation—“either this or that”—reject it; instead
• Get the parties involved in the process with you—try to help think your way out of the binary box they are trying to put you in.

–From Judge Gerald E. Rosen [fn. 1] in a May 2021 interview on mediation in the City of Detroit bankruptcy [fn. 2].

And here’s an illustration of how Judge Rosen faced a binary equation of huge proportions in the City of Detroit bankruptcy—from that interview.

Justice Stephen G. Breyer is set to retire from the U.S. Supreme Court in a few months.

But he’s not easing into retirement.

Instead, he’s out there swinging—fighting for his beliefs: trying to instruct / persuade current and future jurists on how the law should be applied.

Justice Breyer’s latest punch is a lone-dissent, against an eight-Justice majority, dated March 31, 2022. In this dissent, Justice Breyer explains his doctrine of statutory interpretation.

The Breyer Doctrine

Justice Breyer’s doctrine goes like this:

Does a rotten tree produce good fruit?

That’s the bankruptcy issue before the U.S. Supreme Court in Siegel v. Fitzgerald, where the Question is this:

“Whether the Bankruptcy Judgeship Act violates the uniformity requirement of the Bankruptcy Clause by increasing quarterly fees solely in U.S. Trustee districts.”

Note:

Question: What gets an attorney’s fee application allowed—or rejected—in bankruptcy?

Short answer: The services, (i) must be “necessary,” and (ii) must require legal expertise.

Two Recent Opinions

Two recent opinions address this question:

“Subchapter V is supposed to be a fast process toward plan confirmation, but I don’t see that happening!”

–Comment of a Bankruptcy Judge (as I recall the comment)

It’s true: (i) Subchapter V is supposed to go quickly, but (ii) it often doesn’t.

Here’s why it doesn’t: debtor attorneys often fail to push their cases forward.

Illustration

A bankruptcy court opinion, in a Subchapter V case, illustrates the problem.

It’s time for a uniform law on the subject of assignment for benefit of creditors.

Description

Assignment for benefit of creditors laws are commonly known by the acrostic “ABC Laws”–for obvious reasons.

Such laws are a tool for owners of a distressed business in shutting the business down.

Here’s what happens in an ABC: debtor’s assets are transferred to an assignee, who then liquidates those assets and distributes proceeds to creditors.

Various Tools

The sun has set. Yes it has.

The $7,500,000 eligibility limit for Subchapter V expired yesterday (March 28, 2022), without action by Congress to extend it.

Actually, the Subchapter V sun was set to set on March 27—but that’s a Sunday. So let’s give the benefit of the doubt and say it expired on Monday, instead.

Either way, the heightened debt limit is gone.

Hopefully, Congress can pass the heightened limit anew, after its expiration. Then, perhaps, we can be in a no-harm, no-foul mode, with no ill-effects to anyone. But that remains to be seen.

Here’s a vindication for the Small Business Administration’s discrimination against bankruptcy debtors: