Arthur C. Clarke famously observed: “Any sufficiently advanced technology is indistinguishable from magic.” Our regulatory, legislative, and judicial systems illustrate this principle whenever new technology exceeds the limits of our existing legal framework and collective legal imagination. Cryptocurrency, such as bitcoin, has proven particularly “magical” in the existing framework of bankruptcy law, which has not yet determined quite what bitcoin is—a currency, an intangible asset, a commodity contract, or something else entirely.
Arthur C. Clarke famously observed: “Any sufficiently advanced technology is indistinguishable from magic.” Our regulatory, legislative, and judicial systems illustrate this principle whenever new technology exceeds the limits of our existing legal framework and collective legal imagination. Cryptocurrency, such as bitcoin, has proven particularly “magical” in the existing framework of bankruptcy law, which has not yet determined quite what bitcoin is—a currency, an intangible asset, a commodity contract, or something else entirely.
While significant energy here at the Bankruptcy Cave is devoted to substantive bankruptcy matters, not all aspects of a general insolvency practice are always fun and litigation. Oftentimes insolvency lawyers add the most value by helping clients avoid a bankruptcy filing, or by successfully resolving a case through a consensual transactional restructuring.
In a recent ruling, the U.S. Court of Appeals for the Eleventh Circuit examined whether circuit courts have jurisdiction to hear direct appeals of unauthorized bankruptcy court orders that have not been reviewed by a district court. This was an issue of first impression in the Eleventh Circuit. The appellate court held that a bankruptcy court’s ruling in a non-core proceeding that has not been reviewed by the district court carries no adjudicative authority and is therefore not directly appealable to the circuit court.
The Third Circuit Court of Appeals, in an opinion authored by Judge Thomas Ambro, has reversed two district court opinions and refused to allow a company to use a Chapter 11 bankruptcy filing as a means to reduce interest on its debt obligations. Specifically, the court held that filing for bankruptcy would not excuse a debtor from its obligation for a “make-whole” payment otherwise due to its lenders.
Individual debtors with old tax debts relating to late-filed tax returns may be surprised to find that those tax debts may not be dischargeable under section 523(a) of the Bankruptcy Code due to the lateness of the tax filing. There is a current Circuit split regarding whether a late tax filing constitutes a “return” at all, which is critical to the dischargeability inquiry. The Ninth Circuit weighed in last week in In re Smith, 2016 WL 3749156 (9th Cir. July 13, 2016), further cementing the split.
On May 4, 2016, the Court of Appeals for the Third Circuit held that a bankruptcy settlement in the form of a tender offer did not violate the principles of the bankruptcy process. See opinion here.
On March 1, 2016, the U.S. Supreme Court heard argument on the seemingly simple question of what “actual fraud” means. The Court’s decision will have a significant impact on the reach of the exception to discharge under Section 523(a)(2)(A) of the Bankruptcy Code.
A district court judge in the Middle District of Pennsylvania recently vacated a bankruptcy court’s decision allowing rejection of an oil and gas lease under section 365 of the Bankruptcy Code. The District Court held that a debtor’s oil and gas lease was a conveyance of an interest in real property and not an executory contract or unexpired lease that could be rejected in bankruptcy under Section 365 of the Bankruptcy Code.
A recent Second Circuit Court of Appeals decision, Franklin v. McHugh, 2015 WL 6602023 (2d Cir. 2015), illustrates the dire consequences of failing to comply fully with all electronic filing requirements for a notice of appeal.