Category: Closely-Held Business

Litigating Legacy Debt: “Commercial Or Business Activities” for Subchapter V Eligibility? (In re Fama-Chiarizia)

A different kind of legacy? (Photo by Marilyn Swanson) By: Donald L Swanson “courts agree that . . . evaluating, asserting, pursuing, and defending litigation claims . . .  can satisfy Section 1182(1)(A)’s requirement of ‘commercial or business activities.’” In re Fama-Chiarizia, Case No. 21-42341, E.D.N.Y. Bankruptcy Court, issued 9/15/2023, Doc. 238, at 37. One of... Continue Reading →

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Individual Subchapter V Debtor’s Liquidating Plan: Can Discharge Be Denied Under § 1141(d)(3)? (In re Lucido)

A liquid plan? (Photo by Marilyn Swanson) By: Donald L Swanson Here’s a Bankruptcy Court opinion addressing a no-discharge claim under § 1141(d)(3) against an individual debtor who proposes a liquidating Subchapter V plan:   RGW Construction, Inc. v. Lucido (In re Lucido), Adv. No. 21-4031, Northern California Bankruptcy Court (issued 9/13/2023, Doc. 113). The Issue... Continue Reading →

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Beating The “Single Asset Real Estate” Exclusion From Subchapter V Eligibility (In re Evergreen)

A “single asset real estate”? (Photo by Marilyn Swanson) By: Donald L Swanson Excluded from Subchapter V eligibility is a “single asset real estate” debtor. We have a recent opinion on a Subchapter V debtor who beats that exclusion: In re Evergreen Site Holdings, Inc., [Fn. 1] What follows is a summary of that opinion. Eligibility... Continue Reading →

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Trade-Off Theory: For Minimizing Debtor Benefits In Subchapter V

Trade-Off: Bait & Tackle v. Coffee & Deli (Photo by Marilyn Swanson) By: Donald L Swanson There is trade-off theory going around for construing Subchapter V statutes.  The theory is used to minimize benefits that Subchapter V statutes provide to debtors. The Theory The theory goes like this: elimination of the absolute priority rule is a... Continue Reading →

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Shouldn’t Entrepreneurs Have After-Liquidation Bankruptcy Relief For The Risks They Take? (In re Hillman)

Entrepreneurship (Photo by Marilyn Swanson) By: Donald L Swanson Subchapter V eligibility requires a debtor to be “engaged in” commercial/business activities. Case Law Consensus Case law consensus is that such activities must exist on the petition filing date.  That means a debtor cannot utilize Subchapter V when: business assets are fully-liquidated; unpaid debts are the only... Continue Reading →

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Getting Subchapter V Trustees Paid: § 1191(e)

For love or money? (photo by Marilyn Swanson) By: Donald L Swanson Subchapter V of the Bankruptcy Code’s Chapter 11 is relatively new: it took effect as a new law on February 19, 2020.  Accordingly, new questions continue to arise on how its terms and provisions should be applied. A Trustee Fees Question One Subchapter V... Continue Reading →

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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 →

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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 →

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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 →

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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 →

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