On November 5, the DOJ announced a proposed settlement with a bank for allegedly violating bankruptcy rules by not providing homeowners with required notices that would have allowed them to challenge the accuracy of increased mortgage rates.
A recent Second Circuit Court of Appeals decision, Franklin v. McHugh, 2015 WL 6602023 (2d Cir. 2015), illustrates the dire consequences of failing to comply fully with all electronic filing requirements for a notice of appeal.
We know you’ve been spending a lot of time trying to figure out how to translate “Absolute Priority Rule,” “Equitable Mootness,” and “Make-Wholes” (not to mention “Cramdown”) into Halloween costumes, so you may have missed out on some of the entries the Weil Bankruptcy Blog has posted over the past six weeks. For our treats to you, we are handing out these entries in convenient (Count Dracula) bite-sized servings. You can indulge a little today, and we will have more for you next week.
For those readers who have a sophisticated understanding of bankruptcy law, the holdings of Jester v. Wells Fargo Bank, N.A. (In re Jester) will not be surprising.
We see this scenario all too often – invoices were marked “net 30 days” and, for the entire shale boom, they were always paid timely or at least within the next month. But now your customers are asking for net 60, 90, even 120 day schedules, which your company simply cannot float.
With some customers, you may have been forced to negotiate COD payment arrangements. With others, they have simply disappeared and left you holding a half million dollars in accounts receivable.
We hope you are emerging from your sugar coma and ready for some easy to digest morsels of the Weil Bankruptcy Blog. With this entry, we summarize the blog entries from the second half of October.
In a Twist, Court Finds That Junior Stakeholders Violated Their Implied Duties Under an Indenture
A debtor that files a bankruptcy proceeding is automatically protected from collection actions by the bankruptcy “stay,” which stops all creditor actions to collect pre-petition debts. However, excluded from the stay is the “commencement or continuation of a criminal action or proceeding against the debtor.” This is called the “criminal prosecution exception” to the automatic stay. For example, the automatic stay does not stop a criminal prosecution for theft or passing bad checks.
Courts continuing to deal with Crawford copycat claims are bringing a sharper focus to the issue and looking closely at the conflict presented by the FDCPA and Bankruptcy Code. Three courts who have recently reviewed Crawford claims have dismissed them, concluding in all three cases that the filing of an otherwise accurate time barred proof of claim does not give rise to an FDCPA claim.
We all learned the first day of our Bankruptcy 101 class in law school that just because a debtor files for bankruptcy doesn’t mean those entities who have guaranteed the debtor’s obligations are off the hook. Doesn’t ring a bell? Well if you were sleeping during this part of the lecture, allow us to elaborate. Unless a guarantor has itself filed for bankruptcy, it will not be afforded protections under the Bankruptcy Code and creditors will not be stopped from looking to the guarantor for payment if the debtor fails to fulfill its obligation. But what if the debtor&