On April 23, 2024, the American Bankruptcy Institute’s Subchapter V Task Force issued its Final Report.
This article is the fourth in a series summarizing and condensing the Task Force’s Final Report into “a nutshell.” The subject of this article is:
The opinion is In re Packet Construction, LLC, Case No. 23-10860 in the Western Texas Bankruptcy Court (issued April 30, 2024, Doc. 103).
Subchapter V Issue & Ruling
Here’s the issue raised by the Subchapter V Trustee’s plan objection and the Bankruptcy Court’s ruling thereon.
–Issue
On April 23, 2024, the American Bankruptcy Institute’s Subchapter V Task Force issued its Final Report.
This article is the third in a series summarizing and condensing the Task Force’s Final Report into “a nutshell.” The subject in this article is:
- whether debtor’s attorney can be compensated for services performed after removal of debtor from possession. [Fn. 1]
Task Force Proposal
There is a lesson for all debtor attorneys in the Chapter 7 case of In re Aquilino.[Fn. 1]
The moral of the In re Aquilino story is this:
- a little carelessness in describing and disclosing bankruptcy fees in a Chapter 7 case can create big problems.
Fee Agreements & Disclosures
Here is the winding path of fee agreement descriptions and disclosures, between the Debtors and their attorneys, in the In re Aquilino Chapter 7 case:
Boris Becker was originally made bankrupt in June 2017. In the ordinary course, a debtor is made bankrupt for a period of one year, and upon the anniversary of the bankruptcy order they are automatically discharged. While a bankrupt is undischarged, they are subject to various restrictions e.g. they are unable to act as company director or be involved in the management, promotion or formation of a business. Once discharged, the debtor can (in theory) start to rebuild their life afresh while their pre-bankruptcy assets remain in the hands of their trustee in bankruptcy (the Trustee).
On April 23, 2024, the American Bankruptcy Institute’s Subchapter V Task Force issued its Final Report.
This article is the second in a series summarizing and condensing the Task Force’s Final Report into “a nutshell.” The subject of this article is:
- whether future rents should be included in the debt cap calculation for Subchapter V eligibility.[Fn. 1]
Recommendation
Delaware’s Court of Chancery has no subject matter jurisdiction over an assignment for benefit of creditors proceeding when the debtor/assignor is an Illinois corporation with no assets or operations in Delaware, even when its ABC assignee/trustee is from Delaware.
That’s the decision of Delaware’s Court of Chancery in In re Vernon Hills Serv. Co., 2024 Del. Ch., C.A. No. 2021-0783 (issued March 28, 2024).
Facts
While franchising has typically been a more robust business model than others, it remains susceptible to broader economic and sectoral pressures, as The Body Shop’s recent entry into administration demonstrates.
In the unfortunate event that a franchisor or franchisee becomes insolvent, disruption is inevitable. However, insolvency doesn’t necessarily spell a terminal outcome. In this article we consider some of the key considerations for both franchisors and franchisees.
Handling franchisee insolvency: the franchisor’s approach
On April 23, 2024, the American Bankruptcy Institute’s Subchapter V Task Force issued its Final Report.
This article is the first in a series that summarizes and condenses the Task Force’s Final Report into “a nutshell.” This article:
- provides background information and data on Subchapter V.[Fn. 1]
Overall
Debtor’s Chapter 11 counsel cannot be compensated for services performed after a trustee is appointed and the debtor removed from possession.
- That’s the rule of law in the Fifth Circuit and in a not-for-publication decision of the Ninth Circuit’s Bankruptcy Appellate Panel, based on a U.S. Supreme Court ruling.
So . . . the question is, what about Subchapter V? Does that same no-compensation rule apply in Subchapter V when the debtor is removed from possession?
Ninth Circuit BAP Opinion