A study on using round-number offers and precise-number offers in negotiations reaches these two conclusions:
Here’s the latest opinion on a controversial question: In re Franco’s Paving LLC, Case No. 23-20069, Southern Texas Bankruptcy Court, (decided 10/5/2023; Doc. 74).
The Question & Answer
Voter apathy is a problem in Subchapter V cases. That apathy is in the form of creditors failing or refusing to vote on a Subchapter V plan. The In re Franco’s opinion addresses this apathy problem head-on.
Recent expressions of concern about courts mandating mediation reminded me of a mandated mediation process that worked well: the City of Detroit bankruptcy.
An illustration of the success of mandated mediation in the Detroit case is this line:
The Bankruptcy Judge“put an end to the public bickering over the water deal by ordering the parties into confidential mediation.”
In Purdue Pharma, the U.S. Supreme Court grants certiorari on this question:
The absolute priority rule [Fn. 1] has been a problem for businesses in bankruptcy—for a very long time! The rule dates back to at least 1899, when the U.S. Supreme Court prevents certain shareholder actions “until the interests of unsecured creditors have been preserved.” [Fn. 2]
Since then, the U.S. Supreme Court has followed a long and relatively straight road for the absolute priority rule. And the rule has shown staying power, along that road.
ICC Judge Mullen’s decision in Sunset Ltd & Anor v Al-Hindi [2023] EWHC 2443 (Ch) emphasises the importance of ensuring the existence of a debt capable of forming the basis of a bankruptcy petition at the time of presentation.
The petition in this case was presented against Mr Al-Hindi by Sunset Limited and Morville Limited on 23 June 2022 based on his failure to comply with statutory demands dated 29 March 2022 claiming £248,750 said to be due by way of unpaid rent under leases of four London properties.
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