In addition to their full-time jobs, many individuals have their own “side businesses” which generate some income but not enough to enable them to give up their “day job.” Many of these side businesses require assets in order for the individual to deliver the goods or services to his customers. When that individual has to file for bankruptcy, may he or she claim a “tools of the trade” exemption in the assets used in the side business? The Tenth Circuit Bankruptcy Appellate Panel in held a debtor may assert such an exemption in appropriate circumstances, in its decision in&
Although Section 506(b) of the Bankruptcy Code explicitly allows payment of post-petition interest to holders of oversecured claims (i.e., where the value of the collateral exceeds the amount of the claim), the Bankruptcy Code does not describe how to calculate it. No bright line rules exist dictating how to determine oversecured status, the timing of the valuation, and the rate and type of interest to be paid to oversecured creditors. Computation of post-petition interest is a frequent topic of debate among the courts.
Despite the absence of any provision in the Bankruptcy Code expressly authorizing the recharacterization of a debt claim to an equity interest, it generally is well-established that recharacterization is within the broad powers afforded a bankruptcy court under section 105(a) of the Bankruptcy Code and is necessary for the proper application of the Bankruptcy Code’s priority scheme.1 In a recharacterization analysis, a
bankruptcy court ignores the labels of a transaction, examines the facts, and determines whether a
New value is an important defense to preference liability under the Bankruptcy Code. It allows a preference defendant to relieve their preference liability on a dollar-for-dollar basis for the value provided to the debtor prior to the bankruptcy case.
In a very important decision, the Eighth Circuit recently addressed how the new value defense to preference liability should be applied in three-party payment arrangement.
The Ninth Circuit’s Bankruptcy Appellate Panel (BAP) recently upheld the disallowance of a credit union’s claims after the credit union’s “disgruntled employee” failed to file the proofs of claim before the claims bar date.
The case of Spokane Law Enforcement Federal Credit Union v. Barker (In re Barker) serves as a cautionary tale—reminding creditors and their attorneys of the importance of timely filing proofs of claim.
On March 4, 2014, a unanimous United States Supreme Court decided Law v. Siegel1 and clarified that exercising statutory or inherent powers, a bankruptcy court may not contravene specific statutory authority. Law will likely have broad implications for business bankruptcy cases even though it directly involved the exercise of a bankruptcy judge’s authority under section 105(a) to create a pragmatic solution to the actions of a bad actor in a consumer bankruptcy case.
A central purpose of bankruptcy is to grant debtors a fresh start – in bankruptcy terms, a “discharge” of existing debts. But not all debts are dischargeable. Bankruptcy Code § 523(a)(2)(A), for example, prevents the discharge of debts resulting from “false pretenses, a false representation, or actual fraud . . . .” What if a principal incurs a large debt based not on his own fraud, but on the fraud of his agent? Is that debt dischargeable? That was the question addressed recently by the Ninth Circuit Bankruptcy Appellate Panel inIn re Huh, BAP No.
On March 4, 2014, the Supreme Court decided Law v.
Although property obtained by a debtor after filing for bankruptcy is usually safe from creditors, a recent case from the Ninth Circuit Bankruptcy Appellate Panel allowed a Chapter 7 Trustee to sell real property obtained by the debtors post-petition.
Last week, the 8th Circuit B.A.P. affirmed, first noting that criminal judgments, including restitution awards and liens, are afforded special protection from bankruptcy discharge.