The Uniform Commercial Code was established to provide predictability and conformity in commercial transactions. Certain states have adopted nonstandard UCC provisions, which create an unreliable and unpredictable market for secured creditors. In addition, statutory liens, which are liens arising under federal and state statute, may disrupt the priority of secured creditors’ interest in a debtor’s assets. In re First River Energy, L.L.C. (986 F.3d 914, 917 (5th Cir.
On April 29, 2021, the United States Court of Appeals for the Fourth Circuit issued its decision in Siegel v. Fitzgerald (In re Circuit City Stores, Inc.), Case No. 19-2240 (4th Cir. Apr. 29, 2021), upholding the constitutionality of a 2017 law that substantially increased the quarterly fees debtors are required to pay to the Office of the United States Trustee (the “US Trustee”) in chapter 11 bankruptcy cases.
On March 19, in a matter of first impression, the Third Circuit Court of Appeals (Court) held that triangular setoff is not permissible in bankruptcy due to Bankruptcy Code Section 553(a)’s mutuality requirement, and that parties cannot evade that requirement by contracting around it. See In re Orexigen Therapeutics, Inc., 990 F.3d 748 (3d Cir. 2021).
On March 31, 2021, the United States Bankruptcy Court for the District of Nevada awarded attorney’s fees to a debtor under a Nevada fee-shifting statute for objecting to a time-barred proof of claim.1 The opinion serves as a warning that filing a proof of claim for time-barred debt may carry consequences other than claim disallowance despite the Supreme Court’s recent holding in Midland Fu
When is a loan not a loan? The SDNY Bankruptcy Court in In Re: Live Primary, LLC[1] held that a $6 million start-up loan was actually an equity contribution after analyzing the terms of the transaction and the intent of the parties. The court recharacterized the loan as equity given the alleged loan functioned as an equity investment would be expected to function.
A year ago, many predicted that the COVID-19 stay-at-home orders and social distancing guidelines and their impact on the economy would result in a deluge of bankruptcy filings that could rival the Great Recession of 2008-2009. However, as we approach the one-year anniversary of former President Trump declaring the SARS-CoV-2 novel coronavirus a national emergency, that prediction has not come to pass.
2020 was a transformative year for the consumer financial services world. As we navigated an unprecedented volume of industry regulation, Troutman Pepper leveraged our decades of experience and legal know how to help clients find successful resolutions and stay ahead of the compliance curve.
A bill introduced by Democratic U.S. senators looks to make it easier for Americans to discharge student loans and medical debt. If passed as currently written, the Medical Bankruptcy Fairness Act of 2021 would drastically change the U.S. bankruptcy system by removing certain procedural hurdles that make the bankruptcy process complex and by creating a clearer path to discharging debts that impact millions of Americans.
On January 14, the Supreme Court ruled that more than a mere retention of estate property is needed for a party to violate the automatic stay, vacating and remanding a decision by the U.S. Court of Appeals for the Seventh Circuit (In re Fulton, 926 F.3d 916 (7th Cir. 2019)) that held that the City of Chicago (City) violated the automatic stay by retaining vehicles that were impounded before the filing of the owners’ bankruptcy petitions. See City of Chi. v. Fulton, 141 S. Ct. 585 (2021). The decision resolved a split among several circuit courts.
On January 14, 2021, the U.S. Supreme Court issued its decision in City of Chicago, Illinois v. Fulton, __ U.S. __, 2021 WL 125106 (Jan. 14, 2021), which addresses issues related to the automatic stay and a creditor’s ability to retain property of a debtor’s estate upon the commencement of a bankruptcy case. The Fulton decision is a consolidation of four similar cases where the City of Chicago impounded debtor cars pre-petition in response to unpaid traffic tickets and fines. After filing for bankruptcy, each debtor requested that the City return the respective vehicles.