One of the first things creditors ask after filing a proof of claim is, “when do I get paid?” As with so many other legal questions, the answer is, “it depends.” Although many different factors govern payment in a bankruptcy proceeding, there are four key elements to payment: proof, allowance priority, and timing.

Bankruptcy is primarily about “claims.” The debtor seeks to discharge personal liability on claims, while creditors seek payment on their claims. In basic terms, a bankruptcy “claim” is a right to payment. The claim does not need to be fixed, settled, undisputed, or due at the time the debtor files his bankruptcy petition. The official proof of claim form is discussed in more detail here.

You just heard that a customer has filed for bankruptcy — what do you do now? One of the first steps is to determine whether you should file a proof of claim.

How will I be alerted about the bankruptcy?

Recently, in Artesanias Hacienda Real S.A. De C.V. v. North Mill Capital, LLC; Leisawitz Heller, the Third Circuit held that creditors can pursue claims of the bankruptcy estate that have been abandoned by the trustee.

In a potentially ground-breaking decision, Judge David R. Jones of the United States Bankruptcy Court for the Southern District of Texas temporarily enjoined the Small Business Administration (SBA) from denying a Paycheck Protection Program (PPP) loan to Hidalgo County Emergency Service Foundation due solely to its status as a Chapter 11 debtor in bankruptcy. While the order will expire on May 8, 2020, and only applies to Hidalgo, the order could mark a significant change in the SBA’s administering of the PPP.

Federal law has long excepted student loans from discharge in bankruptcy in all but the rarest instances, recognizing the problems (and costs) associated with allowing borrowers to wipe out defaulted debts through a bankruptcy filing. However, as the issues of access to college and affordability become frequent topics in political discourse, new ideas for radical changes to the treatment of student loan debt in bankruptcy have been proposed. Lenders and servicers need to be up to speed on those proposals and ready to adjust their operations if any become law.

A recent decision by a federal appeals court appears to open the doors of United States Bankruptcy Courts nationwide… or does it? The Ninth Circuit’s decision from Garvin v. Cook Investments provides a helpful roadmap for understanding the challenges and opportunities for marijuana-related businesses considering their access to bankruptcy courts.

Marijuana Businesses Generally Violate Federal Law

The American Bankruptcy Institute’s Commission on Consumer Bankruptcy released its Final Report and recommendations on April 12, 2019. The commission was created in 2016 to research

and develop recommendations to improve the consumer bankruptcy system. During its review, the commission focused on new trends regarding how Americans are incurring debt. At the conclusion of its review, the commission created a Final Report which includes recommendations for amendments to the Bankruptcy Code and Rules to make the bankruptcy system more approachable and efficient.