Recently, in Artesanias Hacienda Real S.A. De C.V. v. North Mill Capital, LLC; Leisawitz Heller, the Third Circuit held that creditors can pursue claims of the bankruptcy estate that have been abandoned by the trustee. Although the plaintiff, Artesanias, had Article III standing to pursue certain claims, because these claims were derivative of harm to … Continue Reading
Earlier this year, Chapter 11’s new Subchapter V became a part of the Bankruptcy Code when the Small Business Reorganization Act of 2019 (SBRA) became effective. Very shortly thereafter, the CARES Act expanded the debt limits for a business or individual to qualify as a debtor under the SBRA. In the wake of these new … Continue Reading
In practice, it is not uncommon for bankruptcy debtors to file suit against creditors or debt collectors for stay and discharge injunction violations. Often, they will do so before making any meaningful attempt to communicate with the creditor or debt collector to request that they stop their improper collection efforts. The Bankruptcy Court for the … Continue Reading
Under the Fair Debt Collection Practices Act (FDCPA), debt collectors are prohibited from using “false, deceptive, or misleading representation[s]” in connection with collecting debts. If a debt collector violates the FDCPA, the debt collector may be liable in the amount of the actual damages incurred by a debtor resulting from the FDCPA violation. Further, additional … Continue Reading
In the very unusual period in which we find ourselves today, it seems to be common wisdom that an avalanche of commercial loan defaults is coming. As such, it is a good time to take a fresh look at the terms and provisions used in commercial workout documents, whether in a simple agreement that extends … Continue Reading
Small businesses often struggle to reorganize in bankruptcy. To address this issue, Congress passed the Small Business Reorganization Act of 2019 (the SBRA). The SBRA took effect in February 2020 and makes small business bankruptcies faster and less expensive. The recent case of In re Ventura, 2020 WL 1867898 (E.D.N.Y. Apr. 10, 2020) addresses many … Continue Reading
The coronavirus pandemic is affecting businesses large and small. Now is the time for lenders to prepare for its effect on business borrowers. Industries Already in Distress In February, a PricewaterhouseCoopers (PwC) report identified five industry sectors likely to see the greatest restructuring activity in 2020: Energy Retail Dining and food service Auto suppliers Specialty … Continue Reading
In a unanimous opinion released last week, the Supreme Court provided guidance as to how to determine the finality of an order in a bankruptcy case for purposes of an appeal under 28 U.S.C. § 158(a). The Court held that the adjudication of a creditor’s motion for relief from stay is properly considered a discrete … Continue Reading
The circuit courts continue to wrestle over the duties imposed by the Bankruptcy Code’s automatic stay on creditors concerning turnover of a debtor’s impounded vehicle. Is a creditor required to automatically turn over the vehicle as soon as the bankruptcy petition is filed, or can it retain possession while awaiting an order of the bankruptcy … Continue Reading
Since the 2005 amendments to the Bankruptcy Code, small business debtors have continued to struggle to reorganize effectively under Chapter 11 of the Bankruptcy Code. On Friday, August 23, 2019, President Trump signed the Small Business Reorganization Act of 2019 into law in an effort to address some of these issues. The act aims to … Continue Reading
The United States Senate passed the “Family Farmer Relief Act of 2019” (H.R. 2336), which substantially increases the debt limit for agricultural producers seeking to file for relief under Chapter 12 of the United States Bankruptcy Code. The bipartisan legislation, which passed the U.S. House of Representatives in June and is expected to be signed … Continue Reading
The intersection of Chapter 13 bankruptcy and escrow accounts is complicated and confusing. Since 2011, various bankruptcy rule and form changes have occurred in an effort to eliminate perceived problems with Chapter 13 escrow issues. This article explains how one of these changes – a revised version of a proof of claim attachment form – … Continue Reading
We previously provided you with some of the American Bankruptcy Institute’s Commission on Consumer Bankruptcy’s recommendations to improve the consumer bankruptcy system. As the commission noted, changes in bankruptcy law occur slowly. The last major amendments to the Bankruptcy Code were in 2005, and the last major amendments to the Bankruptcy Rules were in 2011. … Continue Reading
Chicagoans have found a new avenue through which to regain possession of their vehicle after it has been impounded by the City: file a chapter 13 bankruptcy case. In 2018, 17,603 new chapter 13 bankruptcy cases were filed in the Northern District of Illinois. By comparison, in 2018, the Middle District of Florida, one of … Continue Reading
The American Bankruptcy Institute’s Commission on Consumer Bankruptcy released its Final Report and recommendations on April 12, 2019. The commission was created in 2016 to research and develop recommendations to improve the consumer bankruptcy system. During its review, the commission focused on new trends regarding how Americans are incurring debt. At the conclusion of its … Continue Reading
Part IV: Modifications Post-Discharge Welcome to Part IV of our series on servicing discharged mortgage debt. This part will discuss modifying a borrower’s loan post-discharge. (If you missed Part I, Part II or Part III, go ahead and catch up.) Part III discussed the legal ambiguity surrounding loan modifications when the borrower discharges personal liability in … Continue Reading
Part III: Modifications Post-Discharge Welcome to Part III of our series on the servicing of discharged mortgage debt. This part will discuss modifying a borrower’s loan after a discharge. (If you missed Part I or Part II, go ahead and catch up.) Servicers and borrowers struggle with lack of clarity regarding the nature of the relationship … Continue Reading
Individuals have several options when filing bankruptcy. Chapter 13 is often preferred for individuals with regular income who wish to keep their homes and other secured assets. In a Chapter 13 filing, the court will approve the debtor’s three-to-five-year payment plan, which generally provides for curing any pre-petition delinquency, maintaining payments on secured debt, and … Continue Reading
Welcome to Part II of our series on the servicing of discharged mortgage debt (catch up on Part I). This part will discuss communications to discharged borrowers and evaluate various disclaimers that can be utilized. The only way to fully eliminate the risk of violating the bankruptcy discharge injunction is to cease all communications to … Continue Reading
Mortgage servicers are plagued by their nebulous relationships with the borrowers who discharge their personal liability in bankruptcy. Issues arise when the borrower whose debt has been discharged continues to engage with the mortgage servicer. These activities include making monthly payments and requesting and participating in loss mitigation. There are few, if any, bright line … Continue Reading
Trade finance, in both domestic and international financial transactions, is often utilized when one company seeks to import a shipment of goods from a supplier (or exporter). These transactions comprise an enormous amount of global trade. It is estimated that approximately 80 to 90 percent of world trade relies on trade finance. In fact, almost … Continue Reading
Timely proof of claim filings by secured creditors have “been a thorn in the side of many Chapter 13 cases involving secured creditors,” according to Judge Wood in In re Pajian. However, a recent Seventh Circuit decision may cause the industry to revise their current process for proof of claim filings. Bankruptcy Rule 3002(c) requires … Continue Reading
