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Seventh Circuit Denies Trustee a Second Bite at the Avoidance Apple

The Bottom Line

USA, Insolvency & Restructuring, Litigation, Kramer Levin Naftalis & Frankel LLP, Seventh Circuit
Haire v. Padgett (In re Padgett)

(Bankr. W.D. Ky. Sep. 1, 2017)

The bankruptcy court finds in favor of the debtor in this nondischargeability action. The creditor’s claim was based on missing restaurant equipment following the termination of a real property lease to the debtor. The court finds the creditor failed to present evidence establishing that the debtor was responsible for the loss. The elements of §§ 523(a)(2), (4), and (6) were not satisfied. Opinion below.

Judge: Fulton

Attorneys for Debtor: Farmer & Wright, PLLC, Todd A. Farmer

Attorney for Creditor: Steve Vidmer

USA, Kentucky, Insolvency & Restructuring, Litigation, Stoll Keenon Ogden PLLC
In re Penick

(Bankr. E.D. Ky. Aug. 28, 2017)

The bankruptcy court denies confirmation of the debtors’ proposed Chapter 12 plan. The court first determines that the debtors’ timber operations constitute a “farming operation” under § 101(21). Those operations are ongoing rather than a single cut of all timber at one time. The debtors are eligible to proceed under Chapter 12. However, the debtors failed to provide sufficient evidence that the proposed plan was feasible. Opinion below.

Judge: Wise

Attorney for Debtors: Michael L. Baker

USA, Kentucky, Insolvency & Restructuring, Litigation, Stoll Keenon Ogden PLLC
Setoff and Recoupment in Bankruptcy: A Brief Overview

This article provides a brief overview of the somewhat related doctrines of setoff and recoupment in the Chapter 11 context. Setoff is recognized in the Bankruptcy Code to offset the claims of creditors and the debtor in a bankruptcy proceeding. Recoupment is a common law doctrine of similar effect. Sometimes overlooked by debtors and creditors alike, these doctrines can be of critical consequence in the settling of accounts between a creditor and the bankrupt debtor.

Setoff

USA, Insolvency & Restructuring, Litigation, Kramer Levin Naftalis & Frankel LLP
Sunshine Heifers, LLC v. Citizens First Bank (In re Purdy)

(6th Cir. Aug. 31, 2017)

USA, Insolvency & Restructuring, Litigation, Stoll Keenon Ogden PLLC, Sixth Circuit
The IRS Withdraws Proposed ‘Net Value’ Regulations

The IRS announced in July that it has withdrawn proposed regulations (the net value regulations) that provided guidance regarding corporate formations, reorganizations and liquidations of insolvent corporations. Those regulations, which were proposed in 2005, required the exchange (or, in the case of the liquidation of a subsidiary into its parent, the distribution) of “net value” in order for the transaction to qualify for nonrecognition treatment under the Internal Revenue Code (the Code).

The Net Value Regulations

Net Value in 332 Liquidations

USA, Insolvency & Restructuring, Kramer Levin Naftalis & Frankel LLP, Internal Revenue Service (USA)
Illinois Case Demonstrates Need for Changes to UCC Article 9

A bankruptcy case in Illinois highlights the need for the amendments to Uniform Commercial Code Article 9 which will be effective in Indiana and many other states.

USA, Illinois, Insolvency & Restructuring, Litigation, Stoll Keenon Ogden PLLC
Third Circuit Applies More Flexible Standard for WARN Exemption

The Bottom Line:

USA, Insolvency & Restructuring, Litigation, Kramer Levin Naftalis & Frankel LLP, Worker Adjustment and Retraining Notification Act 1988 (USA), Third Circuit
In re Stapp

(Bankr. S.D. Ind. Aug. 21, 2017)

USA, Indiana, Insolvency & Restructuring, Litigation, Stoll Keenon Ogden PLLC
Springer v. RNBJ RTO LLC (In re Springer)

(Bankr. W.D. Ky. Aug. 16, 2017)

USA, Kentucky, Insolvency & Restructuring, Litigation, Stoll Keenon Ogden PLLC