Should a membership agreement governing a debtor’s interest in an LLC be treated as property of the estate or an executory contract? Equally, should a debtor’s economic and non-economic interests in an LLC be treated as property or a contractual right? Can’t make up your mind? Don’t worry—the bankruptcy courts can’t either.
Are a debtor’s net operating losses considered property of the estate when they are reported on a consolidated tax return by a non-debtor parent? We previously wrote about this issue here.
In re Denman, 513 B.R. 720 (Bankr. W.D. Tenn. 2014) –
A chapter 13 debtor was a member of a limited liability company. Another member sought relief from the automatic stay in order to exercise a right to acquire the debtor’s membership interests pursuant to the LLC operating agreement.
Vieira v. Harris (In re JK Harris & Co., LLC), 512 B.R. 562 (Bankr. D. S.C. 2012) –
A chapter 7 trustee sued a manager of three limited liability company (LLC) debtors for breach of fiduciary duty and to hold the manager personally liable for distributions made to members, including himself.
The July 10, 2014 opinion by the U.S Court of Appeals for the 11th Circuit (Georgia, Florida, and Alabama) in Crawford v. LVNV Funding, LLC held that the act of filing a proof of claim on a time-barred debt is a violation of the Fair Debt Collection Practices Act (FDCPA). This decision could have an impact on providers attempting to work and collect old patient debts.
Creditors in bankruptcy cases may be interested in the July 10, 2014 Opinion issued by the Eleventh Circuit in Crawford v. LVNV Funding, LLC.
The Bankruptcy Code impairs lenders’ rights in various ways. Accordingly, lenders have long attempted to devise methods of preventing borrowers from filing for bankruptcy protection. Such attempts generally have not been successful -- courts hold that as a general matter, a borrower’s pre bankruptcy waiver of the right to file bankruptcy is against public policy and is void. See, e.g., Klingman v. Levinson,831 F.2d 1292, 1296 n.3 (7th Cir.
A recent decision from an Oregon bankruptcy court provides a cautionary tale for lenders attempting to “bankruptcy proof” their borrowers.
It is often said that the acid test of a security interest or lien on property is the bankruptcy of the property owner. If that person or entity files a bankruptcy petition, the bankruptcy trustee has a number of options to challenge or even avoid certain liens. A lien that is not properly perfected is subject to attack by a trustee under both the “strong-arm clause” (Bankruptcy Code § 544) and the preference provisions (Bankruptcy Code § 547). If the lien is avoided, the property can then be sold and the proceeds distributed to the unsecured creditors.
Introduction