There is NO Split of Authority on Make-Whole Premiums Between the Second and Third Circuits

By Donald L. Swanson The consensus I’ve been reading these days is that a split of authority is shaping up between the Second and Third Circuit Courts of Appeals on enforcability of make-whole premiums in bankruptcy. --The first of two cases is from the Third Circuit: In re Energy Future Holdings Corp., 842 F.3d 247 (3rd... Continue Reading →

A Surprise Development at U.S. Supreme Court in Oral Arguments on Merit Management v. FTI Consulting

By: Donald L. Swanson The case before the U.S. Supreme Court is Merit Management Group, LP v. FTI Consulting, Inc., Case No. 16-784. The bankruptcy question is whether the § 546(e) safe harbor prohibits avoidance of a transfer made through a financial institution as escrow agent. Oral arguments occurred on November 6, 2017 [Footnote 1]. Justice... Continue Reading →

Oddities at U.S. Supreme Court Continue in Oral Arguments on U.S. Bank v. Lakeridge

By:  Donald L. Swanson The U.S. Supreme Court has already dismissed one bankruptcy appeal this term as “improvidently granted.”  This is an oddity. And it should have also dismissed U.S. Bank National Association v. Village at Lakeridge, Case No. 15-1509, for the same reason. Instead, the Court held oral arguments in the Lakeridge case on... Continue Reading →

Family Farmer Bankruptcy Clarification Act of 2017 is Enacted Into Law

By:  Donald L. Swanson Financially strapped farmers and their lenders finally get some much-needed bankruptcy tax relief. Normally, pre-bankruptcy income and capital gains tax claims have a priority and non-dischargeable status in bankruptcy. And the same taxes, when arising during bankruptcy, add an administrative claim status. Some Farm History Such normal rules had a devastating... Continue Reading →

We Need a Bankruptcy System for Small Businesses Without the Absolute Priority Rule: Two Alternatives

  By Donald L. Swanson During the entire existence of the Bankruptcy Code (enacted in 1978), Chapter 11 rules have been essentially the same for large and small businesses. General Motors, for example, is governed by the same Chapter 11 bankruptcy rules that govern every small Mom & Pop enterprise. I've always thought this same-treatment to... Continue Reading →

Federal Arbitration Act Needs a Bankruptcy Exception

By Donald L. Swanson This article is in follow-up to a prior one titled, "Federal Arbitration Act vs. Stern v. Marshall: So . . . What's Fair About This?"  The point here is that we need a bankruptcy exception to the Federal Arbitration Act. Litigation in bankruptcy: Here's how the issue arises. A Chapter 7, 11,... Continue Reading →

Recovering Tax Payments From IRS as Fraudulent Transfers (§ 544(b)): The “Actual Creditor” Issue

By: Donald L. Swanson The fact scenario is this. An S corporation pays its own taxes each year. Then it files bankruptcy. So, the bankruptcy trustee sues the IRS for recovery of those tax payments as fraudulent transfers.  It does so under two different sections of the Bankruptcy Code: (i) Under § 548, for payments within... Continue Reading →

“Bad” Fraud v. “Desperate” Fraud: The Ancient Pitkin / Brerewood Affair

By Donald L. Swanson Fraudulent conduct is as old as humanity itself. And it’s not going away. A Distinction: Bad Fraud v. Desperate Fraud Not all fraud is alike. --Two Illustrations My first experiences with fraud [or what might have been fraud – I’m not really sure] are in early high school days. Growing up on... Continue Reading →

Federal Arbitration Act vs. Stern v. Marshall: So . . . What’s Fair About This?

By Donald L. Swanson I’m irritated [not that anyone actually cares]. Here’s why. Federal Arbitration Act I’ve been reading some bankruptcy cases on requirements of the Federal Arbitration Act. These cases talk about submitting a bankruptcy dispute to arbitration based on an arbitration provision in the disputing parties’ pre-petition contract. Never mind that the dispute is... Continue Reading →

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