“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”

• From 11 U.S.C § 1183(b)(7)(emphasis added).

Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.

My purpose in this multi-part series is to provide observations on the facilitation role.

“Notwithstanding the court of appeals’ error, this case does not warrant this Court’s review.”

“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”

• From 11 U.S.C § 1183(b)(7)(emphasis added).

Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.

My purpose in this multi-part series is to provide observations on the facilitation role.

“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”

• From 11 U.S.C § 1183(b)(7)(emphasis added).

Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.

My purpose in this multi-part series is to provide observations on the facilitation role.

“Learn something new every day,” is a well-worn adage.

And it’s mostly true (I only question giving a literal meaning to the “every day” part).

Nevertheless, I’m embarrassed to acknowledge learning only recently of the existence of a noteworthy, bankruptcy-related statute: 28 U.S.C. § 959(a). Such statute reads in part (emphasis added):

Excluded from Subchapter V eligibility is a “single asset real estate” debtor.

We have a recent opinion on a Subchapter V debtor who beats that exclusion: In re Evergreen Site Holdings, Inc., [Fn. 1]

What follows is a summary of that opinion.

Eligibility Issue & Standards

The Evergreen issue is this:

In a mass-tort bankruptcy, when 95% of 120,000 creditors vote to accept a mediated plan paying over $7 billion to creditors, shouldn’t the plan be confirmed?

Subchapter V eligibility requires a debtor to be “engaged in” commercial/business activities.

Case Law Consensus

Case law consensus is that such activities must exist on the petition filing date. That means a debtor cannot utilize Subchapter V when:

• business assets are fully-liquidated;
• unpaid debts are the only remnant of the failed business; and
• prospects for resuming such activities are nil.

So . . . here’s the question: Is that the right eligibility standard?

I say, “No.”

A Hypothetical

Aanleiding en inhoud TWTT

Een turboliquidatie is de ontbinding op eigen initiatief van een rechtspersoon, waarbij – als de rechtspersoon op het tijdstip van ontbinding geen baten heeft – het tijdstip van de ontbinding samenvalt met de beëindiging van de rechtspersoon. In dat geval hoeft er dus niet te worden vereffend, want er zijn geen baten om te vereffenen. Let op: het voorgaande geldt dus ook als de rechtspersoon nog wel lasten heeft.

Contrasting opinions from any court, issued a month apart, are always instructive.

And we have a new such thing—from the U.S. Supreme Court, no less, and from May and June of this year. The contrast is on this subject: whether sovereign immunities of Puerto Rico and of a federally recognized tribe are abrogated in bankruptcy.