HERE LIONS ROAM: CISG AS THE MEASURE OF A CLAIM'S
VALUE AND VALIDITY AND A DEBTOR'S
DISCHARGEABILITY
Amir Shachmurove*
INTRODUCTION ............................................ ..... 463
I. A COMEDY OF ERRORS .............. 468
II. RELEVANT BANKRUPTCY LAW: THE CODE AND THE RULES ............ 470
A. Code and Rules .......................... ......... 470
B. Determination of a Claim 's Validity and Value .............. 471
C. Temporary Valuation Pursuant to Rule 3018(a) .... ........ 475
If you have ever been a creditor concerned about a debtor not paying debts as they become due or paying other creditors while ignoring your demands, then forcing the debtor into an involuntarily bankruptcy may be an option. An involuntary petition can be filed only under Chapter 7 (liquidation) or Chapter 11 (reorganization) of the U.S. Bankruptcy Code.
Hoping that declaring bankruptcy will stay a discrimination or retaliation lawsuit against you brought by the U.S. Equal Employment Opportunity Commission (the “EEOC”) on behalf of a current or former employee? Think again.
“The right of setoff … allows entities to apply their mutual debts against each other to avoid the pointless exercise of ‘making A pay B when B owes A.’” held the Seventh Circuit on Aug. 17, 2018. Berg v. Social Security Administration, 900 F.3d 864, 868 (7th Cir. 2018). But the Bankruptcy Code (“Code”) limits “a creditor’s right of setoff during the ninety-day period prior to the” date of bankruptcy, said the court. Id.
At a time when having groceries delivered to your front door is as easy as a couple of taps and swipes on your phone, it is tempting to rely exclusively on the Internet for solutions to all of our problems. However, convenience and adequacy do not always go hand-in-hand, especially when it comes to legal representation. Such is the case with UpRight Law, LLC, a “national consumer bankruptcy law firm.” UpRight relies heavily on non-lawyer “client consultants” who dispense legal advice to clients and help to farm out the cases to local attorneys.
Among the many protections afforded creditors under the Bankruptcy Code is the estate’s ability to avoid transfers made before the petition date that benefit certain creditors at the expense of others. These so-called avoidance actions are primarily governed by Sections 544, 547 and 548 of the Bankruptcy Code, which set forth the requirements for challenging prepetition transfers as preferential or fraudulent.
In a recent decision, the Minnesota Court of Appeals affirmed a receiver’s power to pursue a creditor’s “veil piercing” claims against insiders of the company in receivership and blocked the creditor from pursuing those same claims after the receivership ended. Aaron Carlson Corp. v. Cohen, No. A18-0100 (Minn. Ct. App., October 1, 2018).
Amid the explosion of trading in claims against distressed and bankrupt entities, courts in recent years have issued numerous rulings of interest to both buyers and sellers.
In a recent decision enforcing the discharge injunction under Section 1107(d)(1)(A) of the Bankruptcy Code, the Bankruptcy Court for the Western District of Pennsylvania blocked a creditor from asserting a claim against the debtor after confirmation of the plan. The case of In re Trustees of Conneaut Lake Park, Inc.), No. 14-11277, 2018 Bankr. LEXIS 1447 (JAD) (Bankr. W.D. Pa.
A recent ruling in the bankruptcy case of RMH Franchise Holdings, Inc. (RMH), the second largest franchisee of Applebee’s restaurants with over 160 franchises, highlights the importance of using clear and unequivocal language and action to effectively terminate an agreement before the filing of a bankruptcy. Dine Brands Global Inc. et al. v. RMH Franchise Holdings Inc., et al. (In re RMH Franchise Holdings, Inc., et al.).