Question

Once a Subchapter V debtor is removed from possession under § 1185(a), what happens next?

The answer to this question seems to have evolved over the few years of Subchapter V’s existence:

  • from a low-power position for debtor, early-on;
  • to a high-power position for debtor, in a re-thought view; and
  • then back to the low-power position for debtor, when problems of the re-thought view become evident.

I’ll try to explain.

Early Answer

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The equitable mootness doctrine is before the U.S. Supreme Court on a Petition for writ of certiorari. The case is U.S. Bank National Association v. Windstream Holdings, Inc.[Fn. 1]

All who’ve seen an effort to abuse equitable mootness, from a creditor’s view, will appreciate the following information from U.S. Bank’s Petition and from a supporting Amicus Brief of law professors in U.S. Bank v. Windstream.

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“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitate the development of a consensual plan of reorganization.”

  • From 11 U.S.C § 1183(b)(7)(emphasis added).

Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.

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“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”

  • From 11 U.S.C § 1183(b)(7)(emphasis added).

Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.

My purpose in this multi-part series is to provide observations on the facilitation role.

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Notwithstanding the court of appeals’ error, this case does not warrant this Court’s review.”

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“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”

  • From 11 U.S.C § 1183(b)(7)(emphasis added).

Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.

My purpose in this multi-part series is to provide observations on the facilitation role.

Location:

“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”

  • From 11 U.S.C § 1183(b)(7)(emphasis added).

Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.

My purpose in this multi-part series is to provide observations on the facilitation role.

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“Learn something new every day,” is a well-worn adage.

And it’s mostly true (I only question giving a literal meaning to the “every day” part).

Nevertheless, I’m embarrassed to acknowledge learning only recently of the existence of a noteworthy, bankruptcy-related statute: 28 U.S.C. § 959(a). Such statute reads in part (emphasis added):

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