Merchant Cash Advances Are Loans, Not Sales, And Violate Usury Laws (In re Shoot the Moon)

A death knell? (photo by Marilyn Swanson) By: Donald L Swanson Merchant cash advances are the business version of payday loans: a relatively small amount of money loaned at a high rate of interest. Payday loans are repaid from debtor’s next paycheck, while merchant cash advances are repaid by daily withdrawals from debtor’s bank account. Merchant... Continue Reading →

Constitutionality of U.S. Trustee v. Administrator Programs (Siegel v. Fitzgerald)

Uniformity (photo by Marilyn Swanson) By: Donald L Swanson The United States of America is asking the U.S. Supreme Court to rule on the constitutionality of having U.S. Trustees in 88 judicial districts and Bankruptcy Administrators in 6 judicial districts. What follows is a summary of the U.S. Trustee’s explanation of the constitutionality issue in a... Continue Reading →

Allowing Subchapter V Trustee Fees In A Dismissed Case As “Reasonable” and “Necessary” (In re Besthost)

A reasonable and necessary path (photo by Marilyn Swanson) By: Donald L Swanson A Subchapter V Trustee is entitled to allowance of fees, even when the Subchapter V case is dismissed for lack of authority to file the case. That's the December 16, 2021, ruling in In re Besthost Inn LLC, Case No 21-12158 in the... Continue Reading →

Arbitration Clause As Executory Contract: Rejecting In Bankruptcy To Forestall Arbitration? (Highland Capital v. Dondero)

An outlier (photo by Marilyn Swanson) By: Donald L Swanson Bankruptcy Court denies a motion to compel arbitration, because the arbitration agreement is a rejected executory contract. This appears to be a new and outlying theory for denying arbitration of bankruptcy disputes. The opinion is Highland Capital Management, L.P. v. Dondero et al., A.P. No. 21-03003,... Continue Reading →

“Single Asset Real Estate” & Subchapter V Eligibility (In re Moore; In re McGrath; In re ENKOGS1)

A “single asset real estate”? (Photo by Marilyn Swanson) By: Donald L Swanson Rules for Subchapter V eligibility exclude a “single asset real estate” business.  The operative statute provides: “Debtor’ . . . [in Subchapter V] means a person engaged in commercial or business activities . . . excluding a person whose primary activity is the... Continue Reading →

§ 1111(b) Election’s Two-Step For Confirmation (In re Topp’s Mechanical)

Election (photo by Marilyn Swanson) By: Donald L Swanson A new Bankruptcy Court opinion applies the § 1111(b) election and its two-step test in the context of a Subchapter V plan confirmation. The opinion is In re Topp’s Mechanical, Inc., Case No. 21-40038, Nebraska Bankruptcy Court (issued November 23, 2021, Doc. 94).  What follows is an... Continue Reading →

Debtors In Bankruptcy: The “Criminals” Of Olde (Wood v. Owings)

Title page of U.S. Supreme Court's 1803 opinion, Wood v. Owings By Donald L. Swanson “The committing an act of bankruptcy is, in law, considered as criminal. The bankrupt law is, therefore, in this respect, to be construed strictly.” This quotation is a punch line from the very first opinion by the U.S. Supreme Court on... Continue Reading →

Ending The Tragedy Of Debtors Prison (U.S. Supreme Court — Beers v. Haughton)

Imprisoned in a Safari Park (photo by Marilyn Swanson) By: Donald L Swanson Bankruptcy laws must (and do) change.  That’s because the U.S. economy is always changing: it has been in an ever-expanding mode—punctuated by recessions and depressions from time-to-time—throughout the course of its existence. One example of change is abolition of the debtors prison remedy.... Continue Reading →

Subchapter V Eligibility: A “Liberal Construction” Trend (Lyons v. Family Friendly; In re Mongeau)

"Commercial or business activity"? (photo by Grant Swanson) By: Donald L Swanson Bankruptcy courts continue struggling with the meaning of the phrase “commercial or business activities” for Subchapter V eligibility.  That’s especially true when a debtor’s business liquidates before the bankruptcy is filed. However, the distinct trend of such struggle is toward a liberal construction of... Continue Reading →

“Scheduled” Property & Automatic Abandonment (§ 554(c)): What About Listing Only On SOFA? (Stevens v. Whitmore)

11 U.S.C. Sec. 554–on abandonment By: Donald L Swanson “any property scheduled under section 521(a)(1) of this title not otherwise administered at the time of the closing of  a case is abandoned to the debtor”  (11 U.S.C. § 554(c), emphasis added).  Question: What does “scheduled under section 521(a)(1)” mean in § 554(c): Is inclusion on the... Continue Reading →

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