In a much-anticipated follow-up to its 2014 decision in Crawford v. LVNV Funding, LLC, 738 F.3d 1254 (11th Cir. 2014), the U.S. Court of Appeals for the Eleventh Circuit recently held that there is no irreconcilable conflict between the federal Fair Debt Collection Practices Act (FDCPA) and the Bankruptcy Code.

UNITED STATES SUPREME COURT Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015) Key Issue: Post-Stern v. Marshall, whether a Bankruptcy Court (as an Art. I court) has a proper delegation of authority from the District Court (as an Art. III court) to enter findings of fact and final orders on non-core issues upon the consent of the parties and, if so, whether consent must be express or may be implied? Holding: In a 5/1/3 opinion, relying heavily on Commodity Futures Trading Comm’n v. Schor, 478 U. S.

Imagine that you are an unsecured lender who has learned that a borrower has filed for bankruptcy and has little to no assets available to pay creditors. Is there any way to prevent your debt from being extinguished? This is a common question and often the answer unfortunately is no; however, if the debtor is an individual and the debt meets certain requirements established by the Bankruptcy Code, the court may declare the debt nondischargeable (in other words, the debt will remain with the debtor after the bankruptcy case is closed).

In a brief, 4-page decision released May 26, 2016, Judge Gross of the Delaware Bankruptcy Court granted a motion for summary judgment, barring state court litigation in California on the grounds of res judicata. Judge Gross’ opinion is available here (the “Opinion”).

On March 11, 2016, the Seventh Circuit ruled that a distressed company’s termination of a lease pursuant to an agreement with its landlord and the relinquishment of its leasehold interest to its landlord constituted “transfers” that may be avoidable as fraudulent transfers and preferences under the Bankruptcy Code.  The decision, Official Comm. Of Unsecured Creditors v. T.D. Invs. I, LLP (In re Great Lakes Quick Lube LP, 816 F.3d 482 (7th Cir. 2016)), serves as a cautionary tale for landlords dealing with distressed tenants.

Background

Perhaps Next Time the Debtor Will Speak Up a Little Sooner

One of the goals of the Bankruptcy Code is to provide a debtor with a fresh start. The discharge of prepetition debts at the conclusion of a bankruptcy case is one of the most important ways to attain this fresh start.  On May 16, 2016, the Supreme Court made it harder for debtors to obtain a fresh start by broadening an exception to discharge.

HIGHLIGHTS:

Chapter 13 bankruptcy allows debtors to confirm plans that provide for the payment of their debts through future earnings while, at the same time, retaining their assets. If a creditor wishes to receive payments pursuant to a debtor’s plan, the creditor must file a proof of claim. And it must do so timely.

That intriguing little tech company in which you invested has just filed bankruptcy. Will you ever be able to recover any of that investment? Maybe. It depends upon the form of your investment. And because recoveries depend upon the form of the investment, you may want to consider how you document your investments in the future.