By: Donald L. Swanson “Creative destruction” occurs when something new kills off whatever existed before it. IPhone Example Just think, for example, of all the creative destruction that the iPhone has wrought! It has destroyed businesses that provided telephones and phone books, cameras and film, audio recordings and players, newspapers and newsstands, and related services. Businesses... Continue Reading →
Subchapter V: Early Termination Of A Trustee’s Services Under A Consensual Plan (§ 1183(c))
An early end By Donald L. Swanson A Subchapter V trustee has various duties established by statute (see 11 U.S.C. § 1183(b)). Such duties are substantial and important, but most are concluded upon confirmation of a Subchapter V plan. Administrative Expense—Early Termination Savings Of necessity, a Subchapter V trustee’s performance of statutory duties creates an... Continue Reading →
Lack of Experience — And Filing A Subchapter V Case
Utilizing and gaining experience from another (photo by Marilyn Swanson) By: Donald L Swanson It’s been a while—quite a long while, actually—since bankruptcy cases were booming. A Problem The result of such time lag is this: younger attorneys have missed-out on opportunities to grow in the bankruptcy realm; andthe bankruptcy bar is aging, without adequate development... Continue Reading →
Subchapter V Eligibility: “Engaged In” is NOT Modified By “Petition Date”!
Opposing views (photo by Marilyn Swanson) By: Donald L Swanson To be eligible for Subchapter V relief, the debtor must be “a person engaged in commercial or business activities” (§ 1182(1)(a)). Opposing Views Opposing views are developing on how this “engaged in” criterion should be applied. One view says, (i) nothing requires a debtor to be... Continue Reading →
Removing Subchapter V Debtor From Possession And Replacing With Subchapter V Trustee (In re Young)
Removed (photo by Marilyn Swanson) By: Donald L Swanson When a Subchapter V debtor is removed from possession, the Subchapter V trustee steps into the possession role. That’s according to statute. Statutes Here are the statutory provisions (emphasis added): 11 U.S.C. § 1182(2) is titled, “Debtor in Possession” and says, “The term ‘debtor in possession’ means... Continue Reading →
Subchapter V’s $7.5 Million Debt Limit Is Extended (But Only For A Year!!)
COVID-19 Bankruptcy Relief Extension Act of 2021 By: Donald L Swanson It's finally happened -- on bi-partisan and nearly-unanimous votes. The $7.5 million debt limit for Subchapter V eligibility, set to expire on March 27, 2021, is extended. Yet, it took a March 2021 fire drill to do so (see this webpage), which fire drill concluded... Continue Reading →
When Does A Subchapter V Discharge Happen? (In re Satellite Restaurants)
Timing (photo by Marilyn Swanson) By Donald L. Swanson Here are opposing Subchapter V discharge rules—based on whether the plan is confirmed consensually or non-consensually: Consensual Confirmation. “If a plan is consensual and confirmed under Section 1191(a), the debtor receives a discharge under Section 1141(d)”; butNon-Consensual Confirmation. If a plan is non-consensual and confirmed under Section... Continue Reading →
Generating a Positive Cash Flow in Reorganization: The Central Task of a Family Business
By: Donald L Swanson A family business in Chapter 11 (whether in Subchapter V or a regular Chapter 11) has one task that stands above all others in importance. It’s this: The business must generate a positive cash flow. The Lawyer’s Impossible Task All the favorable bankruptcy rules that exist, and all the favorable bankruptcy court... Continue Reading →
A Subchapter V Plan Needs To Be A First Day Filing (In re Online King)
A first day? (photo by Marilyn Swanson) By: Donald L Swanson Here is a Hard-Knocks Rule (i.e., a lesson I’ve learned the hard way): A plan of reorganization needs to be a first-day filing—or as close to that as possible. This lesson first imposed itself upon me three decades ago. I’m representing a Chapter 11 debtor,... Continue Reading →
Quiz Question On Debt Limits For Bankruptcy Eligibility
Not eligible for roaming the prairie (photo by Marilyn Swanson) By: Donald L Swanson QUIZ – Multiple Choice Question Question: Where is this bankruptcy eligibility language found: “aggregate noncontingent liquidated secured and unsecured debts as of the date of the filing of the petition or the date of the order for relief in an amount not... Continue Reading →