What Happens When Executory Contracts are Rejected? U.S. Supreme Court to Decide (Mission v. Tempnology)

By: Donald L. Swanson When an executory contract is rejected in bankruptcy, what happens to the rights of the other party under that contract: Are those rights vaporized? Do those rights continue as if nothing happened? or Are those rights affected in some other way? The U.S Supreme Court will tackle this question in the case... Continue Reading →

Two New Justices on U.S. Supreme Court: Here’s Hoping for a Reset on Bankruptcy Court Authority

By: Donald L. Swanson Justices Scalia and Kennedy are gone from the U.S. Supreme Court and replaced by Justices Gorsuch and Kavanaugh.  Hopefully, this change provides a fresh perspective on bankruptcy law and a reset on bankruptcy court authority issues. Justices Scalia and Kennedy A reset is needed because Justices Scalia and Kennedy voted together to... Continue Reading →

Eighth Circuit’s In re Knudsen Opinion is Still Good Law on Chapter 12 Taxes — Despite the U.S. Supreme Court

By: Donald L. Swanson In 1986, Congress enacted Chapter 12 of the Bankruptcy Code to help farmers. Throughout the 1980s, many farmers liquidated their farm assets, either voluntarily or involuntarily, and moved on to other careers. Unfortunately, the liquidation left many of them with nondischargeable tax liabilities beyond anything they could ever repay. Congressional Action on... Continue Reading →

How, Decades Ago, the U.S. Supreme Court Screwed-Up Our Bankruptcy World — Twice

By: Donald L. Swanson Here are two declarations of law, by the U.S. Supreme Court and from decades ago, that screwed-up our bankruptcy world — all the way to present: “The bankruptcy power, like the other great substantive powers of Congress, is subject to the Fifth Amendment.” Louisville Joint Stock Land Bank v. Radford, 295 U.S.... Continue Reading →

Katz — The Supreme Court’s Most Important Bankruptcy Opinion

By: Donald L. Swanson The most important bankruptcy opinion from the U.S. Supreme Court, since enactment of the Bankruptcy Code in 1978, is this: --Central Virginia Community College v. Katz, 546 U.S. 356 (2006). Here’s why: Katz evaluates the U.S. Constitution’s Bankruptcy Clause against a conflicting part of the Constitution—i.e., the Eleventh Amendment; and Katz  determines... Continue Reading →

Renewing the Constitution’s “Bankruptcies” Clause for Bankruptcy Court Jurisdiction

By: Donald L Swanson Back in 1966, when the Bankruptcy Act of 1898 was newly-eligible (in human years) for Social Security, the U.S. Supreme Court issued a 7 to 2 majority opinion in Katchen v. Landy, 382 U.S. 323 (1966). The Katchen opinion is founded in the U.S. Constitution’s “Bankruptcies” clause and authorizes bankruptcy courts to... Continue Reading →

Appeals to Bankruptcy Appellate Panels and “Sandbagging”

By: Donald L. Swanson One of the best innovations in the U.S. bankruptcy system is creation of bankruptcy appellate panels (“BAPs”), as a division of the U.S. circuit courts of appeals.  BAPs hear appeals of bankruptcy court decisions. Currently, there are five BAPs, one in each of the following circuits: First, Sixth, Eighth, Ninth and... Continue Reading →

Effects of Executory Contract Rejection — At U.S. Supreme Court

By: Donald L. Swanson Here’s a case about the effects of executory contract rejection. While its focus is on “intellectual property” rights under § 365(n) [Fn. 1], the case also delves into the effects of rejection for all types of executory contracts under § 365(g) [Fn. 2]. And this case demonstrates the hazards of a failure... Continue Reading →

Successor Liability After Bankruptcy Sales: Actual Knowledge v. Constructive Notice, at U.S. Supreme Court

By: Donald L. Swanson Imagine buying assets out of bankruptcy at a fair price, only to have a previously-unknown liability tag along. --Surprise, surprise! The U.S. Supreme Court has an opportunity to weigh-in on such a “Surprise, surprise” issue.  A petition for writ of certiorari is pending in a case where this could happen—complete with a $63... Continue Reading →

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