When Does The SBRA’s “Due Diligence” Preference Duty Apply?

Must prepare to perform (photo by Marilyn Swanson) By: Donald L Swanson (b) . . . the trustee may, based on reasonable due diligence in the circumstances of the case and taking into account a party’s known or reasonably knowable affirmative defenses under subsection (c), avoid any transfer of an interest of the debtor in property—... Continue Reading →

When To Start Drafting the Mediation Settlement Agreement?

Getting started (Photo by Marilyn Swanson) By: Donald L Swanson The American Bar Association published an article titled, “Draft the Settlement Agreement First,” by John Bickerman. [Fn. 1]  The article begins with the following: “One of the most effective techniques I know and use as a mediator is to begin negotiating the terms of the settlement agreement before... Continue Reading →

What Are Owners Of A Closely-Held Business To Do, When Subchapter V Is Not Available?

By: Donald L Swanson It happens.  There are businesses in financial stress who, for a variety of reasons, can’t qualify for Subchapter V.  Owners want to save the business, but Subchapter V is not available. Reasons why Subchapter V might be unavailable include: Debtor has more than $7.5 million of qualifying debt and can’t get enough... Continue Reading →

A Study of Anger and Its Effects — Implications for Mediation?

What is his perspective? (photo by Marilyn Swanson) By: Donald L Swanson Have you ever been in a mediation—or other negotiation context—where one party blows-up in a fit of anger?  And wondered about the effect of that moment on the negotiation effort? A 2019 study on "Losing your temper" shows that “anger reduces perspective-taking.” [Fn. 1]... Continue Reading →

U.S. Trustee & Bankruptcy Administrator Programs: Is This Constitutional? (St. Angelo v. Victoria / In re Buffets)

Uniformity (photo by Marilyn Swanson) By: Donald L Swanson Bankruptcy courts in 48 of our 50 United States are administered by the U.S. Trustee program; while bankruptcy courts in the remaining 2 states (Alabama and North Carolina) are under the Bankruptcy Administrator program.  This has been true since the 1980s. The primary differences in the two... Continue Reading →

Refusing a Mediation Opportunity

By: Donald L. Swanson “By providing you with this notice, [creditor’s name] is merely complying with the notice requirements under the Nebraska Farm Mediation Act. [Creditor’s name] does not, in any way, acquiesce to participation in the mediation process with you.” --Two sentences from a creditor’s notice of mediation rights to a debtor under Neb. Rev.... Continue Reading →

Bankruptcy’s Uniformity Requirement & Federal Arbitration Act (Nelson v. Carland)

Uniformity (photo by Marilyn Swanson) By: Donald L Swanson The U.S. Constitution requires that bankruptcy laws be “uniform . . . throughout the United States.” Among such uniformity requirements is this: rulings on core bankruptcy issues must be subject to meaningful appellate review—all the way to the U.S. Supreme Court. Explaining this requirement is the dissent... Continue Reading →

Mediation Paves The Way To Plan Confirmation — Quickly! (In re Tailored Brands)

The way is paved (photo by Marilyn Swanson) By: Donald L Swanson The parent company of menswear chains Jos A. Bank and Men’s Wearhouse filed Chapter 11 bankruptcy on August 2, 2020.  And it achieved a confirmed plan on November 13, 2020.  The case is In re Tailored Brands, Inc., Case No. 20-33900 in the Southern... Continue Reading →

Subchapter V Eligibility: Beware The “Affiliated Debtor” Trap (In re 305 Petroleum)

Affiliates? (photo by Marilyn Swanson) By: Donald L Swanson "The term 'small business debtor'— . . . (B) does not include—(i) any member of a group of affiliated debtors that has aggregate noncontingent liquidated secured and unsecured debts in an amount greater than [$7,500,000] (excluding debt owed to 1 or more affiliates or insiders)."             --11 U.S.C. §... Continue Reading →

Subchapter V Eligibility: Congress Needs To Permanently Extend The $7.5 Million Limit — Now!

A permanent extender? (photo by Marilyn Swanson) By: Donald L. Swanson The Small Business Reorganization Act of 2019 (aka “Subchapter V”) has been in effect since February 19, 2020.  And here’s something we’ve learned since then: Subchapter V meets a definite need in our society for helping small businesses and owners in financial stress. I’ve seen... Continue Reading →

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