In a case of first impression in Texas, the United States Bankruptcy Court for the Southern District of Texas held that the former majority member of a chapter 11 LLC debtor had to relinquish control of the LLC's Facebook page and Twitter account because they were property of the LLC's bankruptcy estate. In re CTLI, LLC, Case No. 14-33564, 2015 WL 1588085 (Bankr. S.D. Tex. April 3, 2015). CTLI, LLC was a Texas gun store and shooting range doing business as Tactical Firearms.
In an effort to protect the property of a bankruptcy estate, Section 362(a) of the U.S. Bankruptcy Code imposes an automatic stay on most proceedings against a debtor in bankruptcy. The policy of this section is to grant relief to a debtor from creditors, and to prevent a "disorganized" dissipation of the debtor's assets. (See, e.g., U.S. Securities and Exchange Commission v. Brennan, 230 F.3d 65, 70 (2d Cir. 2000).) However, the scope of the automatic stay is not all-encompassing.
In Harrington v. Simmons (In re Simmons), 513 B.R. 161 (Bankr. D. Mass. 2014), the U.S. Bankruptcy Court for the District of Massachusetts considered the U.S. trustee's request that a Chapter 7 debtor be denied a discharge for his failure to maintain adequate financial records or satisfactorily explain the loss of his assets.
As a part of our continuing coverage of the 2012-2014 Final Report and Recommendations of the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11, we’ve reported on a number of the Commission’s proposed revisions and reforms to the Bankruptcy Code, many of which (i.e., systemically important financial institutions, cross-border cases, DIP financing, etc.) primarily impact the traditional big players i
The "American rule" is a well-defined legal principle applied by courts throughout the United States that holds each party to a dispute responsible for paying its own attorney fees. This principle is, however, subject to a number of exceptions that effectively allow a prevailing party to recover its own attorney fees from a losing party. For example, federal and state statutes increasingly authorize a prevailing party to recover costs from its adversary in certain types of actions.
Regardless of whether a creditor has a claim identified in a debtor’s schedules of assets and liabilities, generally speaking, most attorneys representing creditors in the context of a chapter 11 case will advise their clients to file a formal proof of claim with the bankruptcy court. Often this is just “belts and suspenders” and a matter of good practice but, if nothing else, a formal proof of claim will serve to protect a creditor’s rights and interests vis à vis the estate.
On April 14, in In re Free Lance-Star Publishing, 512 B.R. 798 (Bankr. E.D. Va. 2014), the U.S. Bankruptcy Court for the Eastern District of Virginia considered the objection of Chapter 11 debtors to a secured creditor's right to credit bid at a sale of the debtors' assets pursuant to 11 U.S.C. Section 363.
In the case of United States of America v. Edward P. Bond, No. 12-4803 (2d. Cir. August 13, 2014), the United States Court of Appeals for the Second Circuit (the "Second Circuit") issued a decision that could have far-reaching effects on how liquidating chapter 11 bankruptcy cases will be handled in the future.
Creditors contemplating the bold step of commencing an involuntary bankruptcy case against a putative debtor may wish to consider a recent decision of the Bankruptcy Court for the District of Minnesota Court,