The Bankruptcy Protector

On June 6, 2022, the Supreme Court issued a unanimous ruling in Siegel v. Fitzgerald, 142 S. Ct. 1770 (U.S. June 6, 2022) that the increase in fees payable to the U.S. Trustee system in 2018 violated the uniformity aspect of the Bankruptcy Clause of the Constitution because it was not immediately applicable in the two states with Bankruptcy Administrators rather than U.S. Trustees.

Overview

The Bankruptcy Protector

The Bankruptcy Protector

Back in July, Craig Eller wrote in The Bankruptcy Protector about the continuing confusion amongst courts and litigants regarding the applicability of a 2018 increase in fees payable to the Office of the United States Trustee in chapter 11 cases.

In response to the COVID-19 pandemic, legislation was introduced during 2020 to prevent creditors filing statutory demands and winding up petitions on the basis of their debtor's inability to pay its debts, unless it could be shown that non-payment was not a result of the pandemic. These temporary measures had been extended a number of times during the pandemic as businesses continued to suffer the effects of multiple lockdowns and trading restrictions, but are now gradually being phased out.

The UK Government has announced a further extension to certain protective measures for businesses which are currently in place in response to the COVID-19 pandemic.

During the pandemic, the UK Government has put legislative measures in place to protect commercial tenants by preventing landlords from using certain remedies such as forfeiture and winding up petitions. However, the legislation does not specifically prevent a landlord from issuing debt claims against its tenants for arrears of rent and other amounts due under a lease (see the recent case of Commerz Real Investmentgesellschaft mbh v TFS Stores Limited [2021] EWHC 863 (Ch)).

The Bankruptcy Protector

In City of Chicago, Illinois v. Fulton, No. 19-357, 2021 WL 125106, at *1 (U.S. Jan. 14, 2021), the United States Supreme Court considered the issue of whether the mere retention of estate property after the filing of a bankruptcy petition violates section 362(a)(3) of the Bankruptcy Code. Reversing the Seventh Circuit and resolving a split among the circuits, the Supreme Court ruled unanimously on January 14, 2021 “that mere retention of property does not violate the [automatic stay in] § 362(a)(3).”

Bankruptcy experts are applauding a proposed change to the Paycheck Protection Program that will allow small business debtors to access loans under federal COVID-19 relief packages, correcting what they say was a mistake in early versions of the aid program that left bankrupt companies without a valuable tool for surviving the pandemic.