The opinion is In re Legarde, Case No. 22-12184, Eastern Pennsylvania Bankruptcy Court (issued September 14, 2023; Doc. 112).

Facts

Debtor claims Creditor raped her.

Then, Debtor posts stuff about Creditor on the internet.

So, Creditor sues Debtor for defamation, alleging willful and malicious conduct.

Bankruptcy Developments

“courts agree that . . . evaluating, asserting, pursuing, and defending litigation claims . . . can satisfy Section 1182(1)(A)’s requirement of ‘commercial or business activities.’”

This isn’t going to end well.

Looks like our bankruptcy system in these United States is about to take a big hit—to the tune of hundreds of millions of dollars (projected to be around $350 million). And those responsible for creating the debacle are going to skate.

Here’s how.

U.S. Trustee v. John Q. Hammons

Here’s a Bankruptcy Court opinion addressing a no-discharge claim under § 1141(d)(3) against an individual debtor who proposes a liquidating Subchapter V plan:

• RGW Construction, Inc. v. Lucido (In re Lucido), Adv. No. 21-4031, Northern California Bankruptcy Court (issued 9/13/2023, Doc. 113).

The Issue

What rate of interest should a debtor pay under a bankruptcy plan?

Question

Once a Subchapter V debtor is removed from possession under § 1185(a), what happens next?

The answer to this question seems to have evolved over the few years of Subchapter V’s existence:

• from a low-power position for debtor, early-on;
• to a high-power position for debtor, in a re-thought view; and
• then back to the low-power position for debtor, when problems of the re-thought view become evident.

I’ll try to explain.

Early Answer

The equitable mootness doctrine is before the U.S. Supreme Court on a Petition for writ of certiorari. The case is U.S. Bank National Association v. Windstream Holdings, Inc.[Fn. 1]

All who’ve seen an effort to abuse equitable mootness, from a creditor’s view, will appreciate the following information from U.S. Bank’s Petition and from a supporting Amicus Brief of law professors in U.S. Bank v. Windstream.

Here’s my take on third-party releases in a bankruptcy plan [not that anyone asked]:

“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitate the development of a consensual plan of reorganization.”

• From 11 U.S.C § 1183(b)(7)(emphasis added).

Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.

“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”

• From 11 U.S.C § 1183(b)(7)(emphasis added).

Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.

My purpose in this multi-part series is to provide observations on the facilitation role.