The U.S. Court of Appeals for the Seventh Circuit recently upheld a trial court’s rejection of a borrower’s allegations that a mortgagee and its servicer violated the federal Fair Credit Reporting Act and the federal Fair Debt Collection Practices Act by allegedly inaccurately reporting her loan as delinquent following the borrower’s successful completion of her bankruptcy plan, allegedly rejecting her subsequent monthly payments, and filing a foreclosure action based on the supposed post-bankruptcy defaults.
The U.S. Court of Appeals for the Eleventh Circuit recently held that the anti-modification provision in the federal Bankruptcy Code applies to loans secured by mixed-use real properties, such as the large parcel at issue here which functioned both for commercial use and as the debtor’s principal residence.
A copy of the opinion in Lee v. U.S. Bank National Association is available at: Link to Opinion.
Conventional wisdom suggests there is no requirement that a debtor be “insolvent” to file a case under Chapter 11 or any other chapter of the Bankruptcy Code. No Code provision explicitly imposes such a requirement. Yet in 2023, several courts addressed the issue, and two courts directed the dismissal of massive Chapter 11 cases imposing what may fairly be characterized as an insolvency requirement.
Picture this: You are wrapping up writing a brief, memorandum of law, motion or the like regarding a complex bankruptcy issue. It is a close call, and you are grasping for additional arguments to make to the judge. Now ask yourself: Have I discussed the relevant burden of proof? If not, now ask yourself: Whose burden is it anyway?
A look back at bankruptcy trends and litigation in 2023 reveals a spike in bankruptcy filings driven by economic factors and fallout from the pandemic while in upper courts several interesting cases were decided involving proofs of claim, stay violations, and discharge issues.
The Eighth Circuit recently ruled that avoidance causes of action are property of the bankruptcy estate under § 541 of the Bankruptcy Code and thus may be sold by the trustee or debtor in possession. Pitman Farms v. ARKK Food Company, LLC, et al., No. 22-2011 (8th Cir. August 21, 2023). The ruling reinforces the notion that estate causes of action are assets that can be sold under § 363 of the Code, a practice which has been increasingly used in § 363 sales.
Theintroduction of Subchapter V in 2020 created a new avenue for small business debtors to more efficiently and effectively obtain relief under Chapter 11 of the Bankruptcy Code.
The U.S. Court of Appeals for the Eighth Circuit recently affirmed the dismissal of several conversion claims brought by the estate of a deceased account holder against a bank, holding that one of the conversion claims was time-barred, and that the estate did not have standing to pursue the remaining conversion claims as the alleged injury was not fairly traceable to the bank.
A copy of the opinion in Muff v. Wells Fargo Bank NA is available at: Link to Opinion.
In 2020, Congress enacted the Small Business Reorganization Act (SBA), which codified Subchapter V within Chapter 11 of the Bankruptcy Code. The newly added subchapter is remarkably powerful, and with the new additions from Congress, creates a streamlined process for small businesses to reorganize. After passing the SBA, Congress subsequently increased the applicable debt limits for businesses eligible for Subchapter V, from approximately $2.7 million to $7.5 million, which qualified many more businesses for Subchapter V relief.
Bankruptcy filings, particularly Chapter 11 bankruptcy reorganization filings, are on a significant rise. Approximately 3,000 commercial Chapter 11 bankruptcy cases were filed in the first six months of 2023, an increase of more than 60 percent over the prior year. These cases include the most prominent bankruptcy filings—often in Delaware, Southern District of Texas or Southern District of New York.