On Bankruptcy and Mediation
A Bed & Breakfast (photo by Marilyn Swanson) By: Donald L Swanson Chapter 11 Debtor owns her home and uses it as a Bed & Breakfast. The mortgage on Debtor's B&B/residence is her primary debt. This raises Subchapter V issues like: Eligibility—is her primary debt a consumer debt or a business debt?Eligibility—is her bankruptcy a "single... Continue Reading →
By: Donald L Swanson Subchapter V exists "to improve the reorganization process for small business chapter 11 debtors." In re Wright, Case No. 20-01035 (Bankry.S.Car., Order dated 4/27/2020, Doc. 37 at 5). Charles Wright (“Debtor”) files a Chapter 11 case on February 28, 2020, designating himself a small business debtor and electing to proceed under Subchapter... Continue Reading →
We have failed to craft a bankruptcy relief that is viable for the needs of today’s entrepreneurs.
By: Donald L Swanson Cash in a business is like blood in a body: without it, you die! A Huge Challenge Cash availability is a huge challenge for family businesses in bankruptcy. Here’s why: Running out of cash is a common symptom of financial stress that leads to bankruptcy; and A bankruptcy filing will magnify that... Continue Reading →
By: Donald L. Swanson Over the years, there have been some really-bad ideas for punishing debtors. Examples from Olden Times Under Draco’s Law, back in Athens of the 600s, death and dismemberment could be a debtor’s fate (not sure which occurred first), with sale into slavery as an alternative. Fast forward to Merry Olde England... Continue Reading →
By: Donald L. Swanson The U.S. economy is constantly changing; and our bankruptcy laws must change with it. The months of March and April, 2020, bring massive disruptions in our economy; and our bankruptcy laws must adjust. Here are a few of the needed changes: Middle class debtors must be allowed to select Chapter 7 relief;... Continue Reading →
By: Donald L Swanson Five different bankruptcy courts have allowed Subchapter V designations for debtors whose Chapter 11 cases were already existing on the effective date (February 19, 2020) of the Small Business Reorganization Act (“SBRA”). And their opinions are instructive on procedures and legal standards for doing so. These five cases run the gamut of... Continue Reading →
By: Donald L Swanson The CARES Act (“Coronavirus Aid, Relief, and Economic Security Act” ) is now law—and has been since March 27, 2020. Bankruptcy Amendments in CARES Act Sec. 1113 of the CARES Act deals with “Bankruptcy” and contains the following provisions. Eligibility for Small Business Bankruptcy. Total-debts eligibility for the Small Business Reorganization Act... Continue Reading →
By: Donald L Swanson One of the travesties of our current bankruptcy laws is the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (aka “BAPCPA”). Here’s why BAPCPA is a travesty: The Bankruptcy Code (enacted in 1978), (i) recognized the existence of honest but unfortunate debtors, and (ii) presumed each individual debtor to be just... Continue Reading →
By: Donald L Swanson Defendant “seriously breached her fiduciary duties” as a member of the Official Committee of Unsecured Creditors. Naylor v. Farrell (In re Farrell), 610 B.R. 317, 323 (Bkrtcy.C.D.Cal. 2019). Facts Here’s what happened: Defendant failed to play by the rules. Debtor filed a voluntary Chapter 11 bankruptcy. Debtor and and his spouse (the... Continue Reading →
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