“[T]he appellant would not have acquired priority over other creditors by the sheriff’s levy, for the obvious reason that the right of property in the goods seized under the execution had previously passed” to the assignee under Debtor’s ABC.
- Reed v McIntyre, 98 U.S. 507, 512 (1878).
Facts
The Debtor, in the U.S. Supreme Court’s Reed v. McIntyre opinion, is a merchant.
Before 1998, (i) all student loans from for-profit lenders were dischargeable in bankruptcy, but (ii) student loans backed by the federal government or from non-profits were dischargeable in only these circumstances:
The common law of assignments for benefit of creditors (“ABCs”) has been around for a very long time as an out-of-court process under the law of trusts: debtor is trustor, assignee is trustee, and debtor’s creditors are beneficiaries.
And the common law of ABCs had already been well-established, when the U.S. Constitution was ratified.
The Federal Court of Australia has recently delivered judgment in the case of Deputy Commissioner of Taxation v ACN 152 259 839 Pty Ltd [2024] FCA 1489. The Court held that in some circumstances, a statutory demand can be validly served on a perceived temporarily empty company office.
On 20 May 2024, an ATO officer purported to serve ACN 152 259 839 Pty Ltd (the Company) with a statutory demand and an accompanying affidavit by leaving the documents at the Company’s registered office.
The intersection of state escrow laws and federal bankruptcy laws can create confusion and surprise for contracting parties.
The Problem & Four Examples
The problem creating such confusion and surprise is this. State escrow laws:
- are, typically, defined by the common law;
- lack precise details; and
- are often applied in bankruptcy to the detriment of the party who believes a valid escrow exists.
Here are four examples of the escrow / bankruptcy problem.
Two-years prospective relief from the automatic bankruptcy stay is a remedy granted for serial bankruptcy filings, under § 362(d)(4)(B), in In re Karpuleon, Case No. 24-80647 in Central Illinois Bankruptcy Court (entered 12/6/2024; Doc. 48).
Facts
Here’s what happened.
Debtor files a Chapter 13 petition on August 22, 2024—this is Debtor’s fourth such petition in the past four years.
The opinion is Samson v. The LCF Group, Inc. (In re Bridger Steele, Inc.), Adv. No. 2:24-ap-2003 in the Montana Bankruptcy Court (decided September 30, 2024; Doc. 10).
Background
Debtor is a fabricator and seller of metal roofing and siding products.
Two recent Supreme Court of Canada decisions demonstrate that the corporate attribution doctrine is not a one-size-fits-all approach.
The common law of assignments for benefit of creditors (“ABC”) has been around for centuries.
ABC is a business debtor’s voluntary liquidation tool—typically utilized in cooperation with a major secured creditor.
Historically, ABCs are attractive to debtors and creditors alike as an efficient, mostly out-of-court tool for maximizing the liquidation value of a business—for the benefit of creditors.
Does a Chapter 7 debtor have appellate standing to protect the homestead exemption?
That’s an issue addressed (sort of) in Karamoussayan v Massachusetts Department of Revenue (In re Karamoussayan), Case No. 22-041, First Circuit Bankruptcy Appellate Panel (decided April 11, 2024).
Chronology
Here’s a chronology.
September 9, 2022 — Debtor files a voluntary Chapter 13 petition