On Bankruptcy and Mediation
By: Donald L. Swanson Hypothetical: A family business has been successful for many years. But obsolescence of its products and services is taking a toll: the business is now insolvent, its assets are fully encumbered, no one is interested in buying the business as a going concern, and family shareholders have guaranteed most of its debts.... Continue Reading →
By: Donald L Swanson “It’s assumed.” That's the answer I heard, recently, to this question: “Why does the U.S. Supreme Court fail to discuss, or even cite, the ‘Bankruptcies’ clause of the U.S. Constitution when it decides constitutional questions of bankruptcy law?” [Fn. 1] Say what?! Let’s get this straight: The U.S. Constitution has a clause empowering... Continue Reading →
By: Donald L. Swanson “What is at issue for these parties, practically speaking, is whether to classify as prepetition or post-petition liability any damages caused by Debtor’s failure to honor its executory obligations.” --U.S. First Circuit Court of Appeals in Mission Product Holdings v. Tempnology, LLC., Case No. 16-9016 (1/12/2018), at 14. Current Posture Mission v.... Continue Reading →
By: Donald L. Swanson The U.S. Supreme Court’s Dewsnup v. Timm opinion (502 U.S. 410 (1992)) was wrongly decided and needs to be overturned. Unfortunately, that's not going to happen any time soon, since the U.S. Supreme Court denied certiorari on Tuesday (February 19, 2019) in the case of Ritter v. Brady, Supreme Court Case No. 18-747.... Continue Reading →
By: Donald L. Swanson About a decade ago, I have an appointment scheduled in my office with two brothers. I’m excited, because they are the principals of a major family business in our region. I’m aware that their business is facing economic headwinds and am assuming they want my counsel on managing their business difficulties. Our... Continue Reading →
By: Donald L. Swanson Congress must be allowed “to fashion a modern bankruptcy system which places the basic rudiments of the bankruptcy process in the hands of an expert equitable tribunal.” --Justice Blackmun, dissenting in Granfinanciera v. Nordberg, 492 U.S. 33 (1989). Forty years ago -- back in 1978 -- Congress enacted the current Bankruptcy Code.... Continue Reading →
By: Donald L. Swanson The absolute priority rule is the greatest legal impediment to reorganizing a family business under Chapter 11—no other legal impediment is even close. In what follows, I offer a strategy for beating that rule. The Absolute Priority Rule The absolute priority rule is a Chapter 11 plan confirmation requirement. It says:... Continue Reading →
By: Donald L. Swanson I’ve been practicing law since 1980. A major portion of my practice, throughout those decades, has been in bankruptcy and related areas of law. And I’ve represented all sides: debtors, creditors, trustees, committees, etc. During that time, I’ve counseled hundreds of family businesses and their owners—helping each walk through a period of... Continue Reading →
By: Donald L. Swanson You know how bankruptcy debtors can strip-away out-of-money liens in Chapters 11, 12 and 13, using 11 U.S.C. § 506? Well . . . they can’t do it in Chapter 7. That’s because of a screw-up by the U.S. Supreme Court in an early opinion under the Bankruptcy Code—the opinion is Dewsnup... Continue Reading →
