When Does The SBRA’s “Due Diligence” Preference Duty Apply?

Must prepare to perform (photo by Marilyn Swanson) By: Donald L Swanson (b) . . . the trustee may, based on reasonable due diligence in the circumstances of the case and taking into account a party’s known or reasonably knowable affirmative defenses under subsection (c), avoid any transfer of an interest of the debtor in property—... Continue Reading →

What Are Owners Of A Closely-Held Business To Do, When Subchapter V Is Not Available?

By: Donald L Swanson It happens.  There are businesses in financial stress who, for a variety of reasons, can’t qualify for Subchapter V.  Owners want to save the business, but Subchapter V is not available. Reasons why Subchapter V might be unavailable include: Debtor has more than $7.5 million of qualifying debt and can’t get enough... Continue Reading →

U.S. Trustee & Bankruptcy Administrator Programs: Is This Constitutional? (St. Angelo v. Victoria / In re Buffets)

Uniformity (photo by Marilyn Swanson) By: Donald L Swanson Bankruptcy courts in 48 of our 50 United States are administered by the U.S. Trustee program; while bankruptcy courts in the remaining 2 states (Alabama and North Carolina) are under the Bankruptcy Administrator program.  This has been true since the 1980s. The primary differences in the two... Continue Reading →

Bankruptcy’s Uniformity Requirement & Federal Arbitration Act (Nelson v. Carland)

Uniformity (photo by Marilyn Swanson) By: Donald L Swanson The U.S. Constitution requires that bankruptcy laws be “uniform . . . throughout the United States.” Among such uniformity requirements is this: rulings on core bankruptcy issues must be subject to meaningful appellate review—all the way to the U.S. Supreme Court. Explaining this requirement is the dissent... Continue Reading →

U.S. Solicitor General: A POWERFUL AND BIASED Advocate Before the U.S. Supreme Court on Bankruptcy Issues (Deutsche Bank v. McCormick Foundation)

Unbiased justice (photo by Marilyn Swanson) By: Donald L Swanson The Acting Solicitor General is invited to file a brief in this case expressing the views of the United States [on whether to grant the Petition for Writ of Certiorari]. --From U.S. Supreme Court docket entry dated October 5, 2020, in Deutsche Bank v. McCormick Foundation... Continue Reading →

Fraudulent Transfer–Distinguishing Between A “Recipient” And A “Transferee” (Jalbert v. Gryaznova)

A conduit (photo by Marilyn Swanson) By Donald L. Swanson Under the Bankruptcy Code, an “initial transferee” is strictly liable for a fraudulent transfer—there is no good faith, subsequent advance, or similar defense. Fortunately for some fraudulent transfer defendants, it’s possible to be the “recipient” of a transfer as a mere conduit, without becoming a “transferee”... Continue Reading →

Do Creditors Vote on Subchapter V Plans? (In re Desert Lake / In re Pearl Resources)

Voting (photo by Marilyn Swanson) By: Donald L Swanson In Subchapter V of the Bankruptcy Code, the “Post-Petition Disclosure and Solicitation” provisions of § 1125 do not apply without a specific court order (see § 1181(b)). Voting Questions So, a question exists on how the plan voting provisions of § 1126 and Fed.Bankr.R. 3018 might apply... Continue Reading →

U.S. Solicitor General: A Biased Advocate Before The U.S. Supreme Court On Bankruptcy Issues–Again (City of Chicago v. Fulton)

City of Chicago (Photo by Marilyn a Swanson) By: Donald L Swanson The case before the U.S. Supreme Court is City of Chicago v. Fulton, Case No. 19-357.  It is scheduled for oral argument on Tuesday, October 13, 2020. Facts The essential facts are these: City of Chicago impounds Fulton’s car to collect fines and penalties... Continue Reading →

Bankruptcy Laws v. Insolvency Laws: A Debtors’ Prison Distinction (Sturges v. Crowninshield)

Flying high (photo by Marilyn Swanson) By: Donald L Swanson Over the past two hundred and thirty years, the United States of America has been flying high on a massive economic expansion, punctuated periodically by times of economic stress or crisis. Bankruptcy laws have struggled to keep pace with the expansion and occasional turmoil. An earliest... Continue Reading →

Force Majeure Contract Provisions (Contrasting Court Opinions)

Flooding — an unforeseen event (photo by Marilyn Swanson) By Donald L. Swanson A business contract will often have a “force majeure” provision, which excuses a party from performing under the contract when performance is prevented by unforeseen circumstances. Force majeure provisions, while commonly included in business contracts, rarely take effect and are rarely even relevant—until... Continue Reading →

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