On August 1, 2019 the U.S. Senate passed the Family Farmer Relief Act of 2019, which more than doubled the debt limit for “family farmers” qualifying for relief under Chapter 12 of the U.S. Bankruptcy Code to $10,000,000. The House of Representatives previously passed the same legislation on July 29, 2019; the legislation will now proceed to the White House for the President’s signature.

The Bottom Line

The recent decision by the Fifth Circuit Court of Appeals in In re Provider Meds, L.L.C. is a stark reminder to chapter 7 trustees that they have an affirmative obligation to examine a debtor’s assets. A trustee’s failure to conduct a sufficient and timely examination may deprive the estate of significant value.

Although it may be difficult to define precisely what an “executory contract” is (with the Bankruptcy Code providing no definition), I think most bankruptcy lawyers feel how the late Supreme Court Justice Potter Stewart famously felt about obscenity--we know one when we see it. Determining that a patent license was executory in the first place was an issue in the Fifth Circuit’s recent decision in RPD Holdings, L.L.C. v.

In Claridge Associates, LLC, et al. v. Anthony Schepis (In re Pursuit Capital Management, LLC), Adv. P. No. 16-50083 (LSS) (Bankr. D. Del. Nov. 2, 2018), the Honorable Laurie Silverstein held that a chapter 7 trustee was authorized to sell the right to pursue fraudulent conveyance claims to third parties, pursuant to section 363 of the Bankruptcy Code. In doing so, the Court extended the Third Circuit’s holding in Official Committee Of Unsecured Creditors of Cybergenics Corp. v. Chinery, 330 F.3d 548 (3d. Cir. 2003) (en banc) to chapter 7 cases.

Indenture trustees and agents participate in the administration of chapter 11 cases in a number of ways, including by protecting holders’ rights, ensuring compliance with the applicable indenture and other agreements, and fulfilling their duties and responsibilities under applicable law.

The purpose of bankruptcy is twofold: (1) to provide the party filing for bankruptcy—the “debtor”—with a fresh start, and (2) to fairly distribute the debtor’s non-exempt assets to creditors in accordance with the priority scheme set forth in the U.S. Bankruptcy Code. This may sound relatively simple, but accomplishing these dual objectives can be difficult. One of the challenges in all bankruptcy cases is determining the scope and extent of assets that constitute “property of the estate” which are available for distribution to creditors.

The Bankruptcy Code provides bankruptcy trustees, debtors, and creditor committees with “avoidance powers” that allow them to set aside and recover certain transfers that a debtor made before filing for bankruptcy.[1]  These avoidance powers are, however, limited by a number of exceptions enumerated in the Bankruptcy Code, including the securities safe harbor at § 546(e).  Section 546(e) protects from avoidance any transfer “made by or to (or for the benefit of) . . .

Filing for Chapter 13 bankruptcy as a consumer is a voluntary decision. Once a Chapter 13 case has been filed, it is also up to the debtors to dismiss the case if they so choose.

What happens if, after a Chapter 13 case has been filed and a plan confirmed, a debtor decides to dismiss the case but the Chapter 13 trustee is holding funds that would have otherwise been distributed to creditors?

The next few years are expected to see a significant increase in the volume of bankruptcy cases filed by health care providers. Thus far in 2017, the number of bankruptcies in health care-related sectors, including hospitals, physicians’ offices and clinics, specialty outpatient facilities, assisted-living facilities, and other providers, has been surpassed only by bankruptcies in the oil and gas, finance, and retail industries.