From television commercials to naming rights for arenas, the topic of cryptocurrency has been hard to avoid. While cryptocurrency may be virtual, its creation or ’mining’ occurs in the real world. This mining poses a credit risk for utility companies, given the incredible amount of electricity required to operate a “mining” facility. For example, crypto mining company Core Scientific, Inc. and its related companies, recently filed Chapter 11 bankruptcy cases where they reported their average monthly utility bills were more than $24.5 million dollars.
Just weeks after the “implosion” of cryptocurrency exchange FTX, credit services provider BlockFi filed for Chapter 11 protection with the United States Bankruptcy Court for the District of New Jersey, indicating that it is burdened with billions of dollars of estimated liabilities and more than 100,000 creditors.
In many corporate Chapter 11 cases, unsecured creditors of the debtor have few, if any, assets they may use to satisfy their claims. A debtor’s hard assets, cash and cash equivalents are almost always subject to liens in favor of secured creditors, leaving no tangible assets for unsecured creditors. If unsecured creditors are to receive any value in return for their claims, this value usually must be realized from the debtor’s causes of action.
Federal appeals courts have been split on whether filing a proof of claim in bankruptcy on old debt, or obligations that have expired under a statute of limitations, violates the Fair Debt Collection Practices Act. In a victory for debt collectors and the debt buying industry, the Supreme Court clarified this issue on May 15, 2017 with its decision in Midland Funding, LLC v. Johnson, No. 16-348.
Now that the American Land Title Association ("ALTA") has withdrawn the ALTA Form 21-06 Creditor's Rights Endorsement, what steps can a lender take to protect itself?
To recap, the Creditors' Rights Endorsement provided protection against loss or damage sustained by the lender in the event that the lender's mortgage was set aside due to a fraudulent conveyance or preference under the U.S. Bankruptcy Code, state insolvency statutes or other creditor's rights laws.
Bill could significantly alter medical and financial disclosures in asbestos cases
West Virginia State Senate passes SB 411, creating the Asbestos Bankruptcy Trust claims Transparency Act and the Asbestos and Silica Priorities Act. Next, the bill goes to the House of Delegates for review and likely passage.
A recent bankruptcy decision from the Southern District of New York should caution business partners about the risks presented if the partnership becomes bankrupt. Limited liability partnerships present advantages such as flexibility in the operation of the business and tax advantages. LLPs also provide protection for partners from the business’ debts. As a result, LLPs are popular among professionals, including attorneys.
The “discharge injunction” of Section 524 of the Bankruptcy Code is one of the most, if not the most, important features of United States bankruptcy law. Debtors in bankruptcy must complete detailed paperwork regarding their assets and liabilities and either turn over their non-exempt assets to a bankruptcy trustee or execute a payment plan that repays all or a portion of their debt.