Lots of things are wrong with the student loan program in these United States. For example:

• It’s a corporate-welfare program for high-price colleges; but
• Their students pay the price.

Unfortunately, the safety valve protection for students (i.e., a bankruptcy discharge) has failed them—and made the problem worse!

Here’s how

Here’s a first of its kind: a report about federal judges mediating other judges’ cases.

• It’s a January 22, 2022, report titled, Other Judges’ Cases, authored by Melissa B. Jacoby, Professor of Law, University of North Carolina at Chapel Hill—scheduled to publish in 72 NYU Annual Survey of American Law (2022).

What follows is an attempt to summarize portions of the report, including its description of a can-this-actually-happen case.

The opinion is Wells Fargo Bank, Indenture Trustee v. The Hertz Corp. (In re The Hertz Corp)

The question is whether (and at what rate) post-petition interest can be recovered on pre-petition unsecured claims, when debtor is solvent, under the “solvent debtor exception.” The answers pit equitable arguments against statutory provisions and even looks back to caselaw under the Bankruptcy Act of 1898.

The U.S. Supreme Court, in its Fulton v. City of Chicagoopinion, let Chicago off the automatic stay hook for holding onto impounded vehicles owned by Chapter 13 debtors.

But Fulton is not the last word on that subject.

The new opinion is Cordova, et al. v. City of Chicago, Case No. 19-0684 in the Northern Illinois Bankruptcy Court (issued December 6, 2021, Doc. 154).

Background

An “Order Staying the Later-Filed Bankruptcy Cases” is from In re The Aliera Companies Inc., Case No. 21-11548, Delaware Bankruptcy Court (issued January 18, 2022, Doc. 56), followed by an “Order Transferring Venue of the Later-Filed Voluntary Bankruptcy Cases” (issued January 25, 2022, Doc. 67) in the same case.

Can the foreclosure of a property tax lien on real estate be avoided as a fraudulent transfer under § 584 of the Bankruptcy Code?

That’s the issue before the District Court, on a bankruptcy appeal, in Duvall v. County of Ontario, New York, Case No. 21-cv-06236 in U.S. District Court, WDNY (issued 11/9/2021).

Courts have gone both ways on the issue.

The Difficulty

Every now and then, (i) something is blatantly obvious, but (ii) those in charge insist that what seems obvious is actually false. Such a disconnect breeds distrust.

That’s precisely what exists in our bankruptcy system. The U.S. Constitution requires that bankruptcy laws be “uniform . . . throughout the United States”:

The opinion is from In re The Diocese of Buffalo, N.Y., Case No. 20-10322, Western New York Bankruptcy Court (entered December 27, 2021, Doc. 1487).

The Diocese of Buffalo asks the Bankruptcy Court to refer its Chapter 11 case and related adversary proceedings to mandatory global mediation–it does so twice. Its first request is denied. It’s second is granted . . . but with limitations.

“We can’t see what the Subchapter V trustees are doing, so we don’t have an opinion on their effectiveness.”

–This is the response of a couple bankruptcy judges, when asked about the effectiveness of Subchapter V trustees in performing the statutory “facilitate a consensual plan” duty.

Startled!

Startled! That’s my initial reaction, upon hearing the judges’ response.

But the response actually makes sense:

On January 3, 2022, Reuters reports, under the heading “Judge orders mediation for Purdue, Sacklers over opioid settlement,” as follows: