A Missing Piece in Subchapter V Eligibility & A Potential Work-Around

A missing piece? (Photo by Marilyn Swanson) By: Donald L Swanson One of the missing pieces in Subchapter V is this: it’s easier for a corporate business to meet the “engaged in commercial or business activities” standard for eligibility than it is for an individual owner/guarantor of that business. Here’s how one court describes the missing... Continue Reading →

Subchapter V: Providing Hope To Formerly Successful Entrepreneurs

Hope?! (photo by Marilyn Swanson) By: Donald L Swanson The Bankruptcy Code's Subchapter V provides hope to formerly successful entrepreneurs. It's a hope that never before existed. I'll try to explain. Formerly Successful Entrepreneurs – A Historical Problem The Bankruptcy Code became effective in October of 1979. And I’ve been practicing under the Bankruptcy Code from... Continue Reading →

Working Together: A Previously Successful Business’s General Counsel and Distressed-Debt Counsel

Working together? (photo by Grant Swanson) By: Donald L Swanson Answers to these two questions can get tricky: When should a previously successful business engage distress-debt counsel? What is the role of the business’s general counsel once that happens? Second Question: Role Here’s the answer to the second question first:  The business’s general counsel needs to... Continue Reading →

Student Loans Take Another Bankruptcy Hit: This Time On Subchapter V Eligibility (In re Reis)

A direct hit (photo by Marilyn Swanson) By: Donald L Swanson The hits keep coming for student loans in bankruptcy. This time the hit is this: student loans for attending medical school do not qualify as “commercial or business” loans for Subchapter V eligibility. The central finding, for a medical student who worked as an employee... Continue Reading →

How the “Engaged In” Standard For Subchapter V Eligibility Is Easily Satsified (In re Robinson)

Easily satisfied? (photo by Marilyn Swanson) By: Donald L Swanson Is a debtor “engaged in commercial or business activities” for Subchapter V eligibility? Such question has been addressed on many occasions and by many courts.  The trend seems to be toward a conclusion that the nature and quantity of “commercial or business activities” required for Subchapter... Continue Reading →

Subchapter V Plan Confirmation: Non-Voting & Classification (In re Creason)

Inactive (photo by Marilyn Swanson) By: Donald L Swanson What happens when a creditor class fails or refuses to vote on confirmation of a Subchapter V plan? Does that prevent a consensual confirmation? We have a recent answer from In re Creason, Case No. 22-00988, Western Michigan Bankruptcy Court (opinion issued 2/23/2023). Facts The Subchapter V... Continue Reading →

Denying Corporate Debtors A Discharge Under § 523(a)’s “Individual Debtor” Exceptions? (Avion Funding v. GFS)

Painting over? (Photo by Marilyn Swanson) By: Donald L Swanson Can a corporate debtor be denied a Subchapter V discharge under § 523(a), despite this § 523(a) language (emphasis added): “A discharge under section . . . 1192 [Subchapter V] . . . does not discharge an individual debtor from . . . ”? A recent... Continue Reading →

Subchapter V Trustee: Initial And Subsequent Zoom Meetings–A Facilitation Tool

A Vise-Grip Tool By: Donald L Swanson “The [Subchapter V] Trustee shall— . . . facilitate the development of a consensual plan of reorganization.”  11 U.S.C. § 1183(b)(7). That’s what we Subchapter V trustees are supposed to do. Ok, fine.  But how are we supposed to do that? A facilitation tool that many Subchapter V trustees... Continue Reading →

Two Subchapter V Plan Confirmation Standards: (i) Chapter 7 Liquidation, & (ii) Unfair Discrimination (In re Lapeer Aviation)

Two different standards? (Photo by Marilyn Swanson) By: Donald L Swanson Every now and then we get an example of how a process should work. That’s exactly what we have, regarding confirmation of a contested Subchapter V plan, in the case of In re Lapeer Aviation, Inc., Case No. 21-31500 in the Eastern Michigan Bankruptcy Court.... Continue Reading →

Subchapter V Trustee’s Right To “Appear And Be Heard”: Duties v. Powers

Appearing and being heard? (Photo by Marilyn Swanson) By: Donald L Swanson Back in Subchapter V’s early days, I’m serving as Trustee in a Subchapter V case.  In that case: One of the parties files a motion, to which I file a written response.  The motion has nothing to do with any of the four topics... Continue Reading →

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