Executive Summary
Once a Chapter 7 debtor receives a discharge of personal debts, creditors are enjoined from taking action to collect, recover, or offset such debts. However, unlike personal debts, liens held by secured creditors “ride through” bankruptcy. The underlying debt secured by the lien may be extinguished, but as long as the lien is valid it survives the bankruptcy.
A Chapter 13 bankruptcy plan requires a debtor to satisfy unsecured debts by paying all “projected disposable income” to unsecured creditors over a five-year period. In a recent case before the U.S.
One of the objectives of the Bankruptcy Code is to ensure that each class of creditors is treated equally. And one of the ways that is accomplished is to allow the debtor’s estate to claw back certain pre-petition payments made to creditors. Accordingly, creditors of a debtor who files for bankruptcy are often unpleasantly surprised to learn that they may be forced to relinquish “preferential” payments they received before the bankruptcy filing.
Executive Summary
In any bankruptcy, there are inevitably winners and losers. The winners do not always do virtuous acts to win and the losers are not necessarily evil. Rather, dividing up a limited pie, the bankruptcy courts must leave some creditors short-changed. A good example is the recent 7th Circuit case involving a supplier and a lender. (hhgregg, Inc. et al. (Debtor). Whirlpool Corporation v. Wells Fargo Bank, National Association, and GACP Finance Co., LLC, 7th Circuit Court of Appeals, No. 18-3363, February 11, 2020) |
A party who believes that a bankruptcy court erred in either granting or denying relief from the automatic stay needs to act fast to appeal such a decision. In the recently decided case of Ritzen Group, Inc. v. Jackson Masonry, LLC, the U.S. Supreme Court held that: “[A]djudication of a motion for relief from the automatic stay forms a discrete procedural unit within the embracive bankruptcy case” which “yields a final, appealable order when the bankruptcy court unreservedly grants or denies relief.”
On August 23, 2019, the Small Business Reorganization Act of 2019 (the “Act”) was signed into law. The Act, which goes into effect in February of 2020, creates a new Subchapter V under Chapter 11 of the U.S. Bankruptcy Code.
In the past, few small businesses have been able to reorganize under Chapter 11 of the Bankruptcy Code due to the costs and administrative burdens associated with the process.
Secured creditors filing a UCC financing statement under Article 9 must include a description of the collateral. (UCC 9-502) UCC Article 9 adopts a “notice filing” system, under which the purpose of the filing is to provide notice of a security interest in the specified collateral. UCC Article 9 does not require a precise (e.g., serial number) description. Even so, there has been much litigation over the sufficiency of the collateral descriptions in UCC financing statements.
In bankruptcy, a debtor must relinquish assets to satisfy debts. But there are exceptions to this general rule. Certain assets may be exempted from a debtor’s bankruptcy under federal and state law. Other assets, which are subject to a contractual loan agreement and the security interest of a lender, may be “reaffirmed” by a debtor pursuant to a reaffirmation agreement.
On May 20, 2019, the U.S. Supreme Court issued its long-awaited decision in Mission Products Holdings, Inc. v. Tempnology, LLC nka Old Cold LLC, (Case No. 17-1657, U.S. Supreme Court, May 20, 2019) ("Tempnology"). The U.S. Supreme Court decided that a trademark licensee can continue to use a trademark license even when a bankrupt trademark licensor rejects the license agreement.