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.
In a non-precedential ruling, the Court of Appeals for the Third Circuit upheld a district court decision to grant summary judgment in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act.
It has long been the law that creditors are rarely entitled to contractually prohibit a debtor from filing for bankruptcy, whether such restriction is contained in the debt instruments or in the corporate governance documents. In contrast, governance provisions which condition a bankruptcy filing on the vote or consent of certain equity holders that are unaffiliated with any creditor are frequently enforced. Many equity sponsors, for example, wear two hats: they are both shareholders and lenders to their portfolio companies.
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.
In French v. Linn Energy, L.L.C. (In re Linn Energy, L.L.C.), the United States Court of Appeals for the Fifth Circuit addressed the scope of Bankruptcy Code Section 510(b), settling on an expansive reading of the Section, holding that a claim for “deemed dividends” should be subordinated.
On August 23, 2019, President Trump signed into law the “Small Business Reorganization Act of 2019.” The primary effect of the “SBRA” is the creation of a subchapter to Chapter 11 for small business debtors, i.e. those with no more than $2,725,625 in secured and unsecured debts combined, to address the unique issues faced by those companies in the bankruptcy process.
Transfers and transactions up to ten years old may be scrutinized, unwound and recovered by a trustee, the bankruptcy court sitting in Massachusetts recently held in the NECCO (think chalky wafer candy) bankruptcy case. The ruling, in a case of first impression in Massachusetts, expands the reach back period from the typical four-year period for fraudulent transfer recovery, so long as the IRS is a creditor in the case.
This past May, in a highly-anticipated decision, the Supreme Court held in Mission Product Holdings, Inc. v. Tempnology, LLC that a debtor’s rejection of an executory contract under Section 365 of the Bankruptcy Code has the same effect as a breach of contract outside of bankruptcy.