Frequently, borrowers file for bankruptcy at the 11th hour to halt foreclosure sales. Once a petition for bankruptcy relief has been filed, secured creditors must cease their collection efforts to avoid violating the automatic stay. However, the automatic stay terminates upon a debtor’s dismissal and closure of the bankruptcy case. A Pennsylvania bankruptcy court recently ruled that if a foreclosure sale occurs between the time when a bankruptcy case is dismissed and when it is reinstated, the foreclosure sale is not void and does not violate the automatic stay.
On December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021 (CAA 2021). Similar to the March 2020 CARES Act, several temporary changes to the Bankruptcy Code are included in Title X of the CAA 2021. Below, we examine four of the CAA 2021’s most significant changes to consumer bankruptcy laws.
On December 9, 2020, Congressional Democrats, including Elizabeth Warren (D-Mass.) and Jerrold Nadler (D-N.Y.), proposed sweeping legislation that would overhaul consumer bankruptcy law. The proposed changes generally make it easier for consumers to access the bankruptcy system and discharge their debts. Below is a discussion of 10 critical changes proposed in the Consumer Bankruptcy Reform Act of 2020 (CBRA).
1. Chapters 7 and 13 Are Replaced with New Chapter 10
Hot on the heels of the landmark changes to the insolvency landscape brought by the Corporate Insolvency and Governance Act 2020 (CIGA) (see our previous article on CIGA), the Government recently announced reforms relating to pre-packaged administration sales to connected parties.
We recently reported on Delaware Judge Christopher Sontchi’s decision in the Extraction bankruptcy to permit the rejection of midstream gathering agreements.1 Fellow Delaware Judge Karen Owens followed Extraction in the Southland Royalty decision issued November 13, 2020.2 Judge Owens determined that Southland Royalty Company, LLC (“Southland”), an E&P operator with assets primarily in Wyoming, could reject the gas gathering agreement and sell its assets free and clear of the agreement.
Summary of decisions In re Body Transit, Inc., No. BR 2010014 ELF, 2020 WL 1486784 (Bankr. E.D. Pa. Mar. 24, 2020).
Straffi v Aeris Bank (In re Hillesland), No. 1925278( CMG), 2020 Bankr. LEXIS 2235 (Bankr. D.N.J. Aug. 17, 2020).
Case Snapshot The Bankruptcy Court held that a chapter 7 trustee could avoid judgment creditor’s lien pursuant to his “strongarm” powers under section 544(a) of the bankruptcy code because the judgment creditor did not make a good faith effort to locate debtor’s personal property before it levied against real property, as required under applicable New Jersey law.
In re Tribune Company, et al. No. 182909 (3d Cir. filed Aug. 26, 2020).
Case Snapshot
In re Affordable Auto Repair, Inc., No. 6:19bk18367MW, 2020 Bankr. LEXIS 2366 (Bankr. C.D. Cal. Sept. 2, 2020).
Case Snapshot
2020 has seen a significant increase in chapter 11 filings by oil and gas producers. Critical to the operations of these companies, and to the transportation and processing of the producer’s gas, are gathering agreements entered into between the producers and midstream companies. A pivotal question posed at the start of these chapter 11 proceedings is whether the gathering agreements are executory contracts subject to rejection or whether they create real property interests that cannot be rejected in chapter 11 proceedings. The answer depends on who you ask.