On October 22, the Court of Appeals for the Fifth Circuit issued a ruling in Crocker v. Navient Solutions that could have mixed consequences for student loan borrowers and creditors alike. The Court determined that a bankruptcy court lacks the authority to enforce discharge injunctions issued by bankruptcy courts in other districts.
In Kinnick v. Med-1 Solutions, LLC, the District Court for the Southern District of Indiana found that sending a collection letter to a bankruptcy debtor provided that debtor with standing to file a claim based on the Fair Debt Collection Practices Act against the creditor outside of the bankruptcy case.
On October 7, California Governor Gavin Newsome signed SB 616 into law. This new law, which goes into effect on September 1, 2020, includes changes to California law regarding garnishments.
The Consumer Financial Protection Bureau published its quarterly consumer credit trends report on September 25. In the Report, the CFPB gave an in-depth look at bankruptcy trends and the impact of filing for the period 2001-2018, which includes the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) and the Great Recession.
Key Points
A binding contract by exchange of email did not arise where parties were simply exploring a potential deal.
Sale by auction is often appropriate where an asset is difficult to value.
Where no differential treatment of creditors, unfair harm requires that a decision does not withstand logical analysis.
The Facts
Investors may, for reasons outside of their control, find themselves with a financially distressed company in their portfolio and possibly in unfamiliar territory. Consequently, it is not just those investors who actively seek out opportunities within the distressed space who should be mindful of the implications of insolvency processes (most commonly administration which can often also be used as part of a wider restructuring).
Key points
Failure to comply with sections 333 and 363 of the Insolvency Act constitutes contempt of court for which a committal order may be obtained.
A trustee in bankruptcy should not usually require permission to apply for a committal order.
Correct procedure for application confirmed by the court.
Key points
Information obtained by compulsion can be shared between officeholders of connected estates (parent/subsidiary)
There must, however, be a possibility that there will be a surplus in the subsidiary estate
The prospect must be real as opposed to fanciful
The facts
Key points
Court reiterated circumstances in which it will sanction a proposed course of action by administrators
Requirement that the course of action be “particularly momentous”
Court sanctioned proposed settlement in the circumstances
The Facts