On Bankruptcy and Mediation
By: Donald L Swanson Imagine a federal bankruptcy agency—like the Securities and Exchange Commission—called the “United States Bankruptcy Administration.” That’s exactly what was proposed by the report of the 1970s Bankruptcy Commission, which resulted in the Bankruptcy Code of 1978. The bankruptcy agency proposal was, in fact, “the most important innovation of the Commission’s report,” along... Continue Reading →
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 →
By: Donald L Swanson Every now and then a good thing happens in bankruptcy. It’s not very often—but good things do happen. Here’s a story of one of those good things [Fn. 1]. Our Hero (the bankruptcy Debtor) is a 54 year old, single mother of two college-aged children. She is a self-employed professional in a... Continue Reading →
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 →
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 →
By: Donald L. Swanson Centuries ago (during the 1200’s) the Mongols ruled China. Mongol law in China "provided for declarations of bankruptcy.” Here are some details: —“no merchant or customer could declare bankruptcy more than twice as a way to avoid paying debts”; and —“On the third time he faced the possible punishment of execution.” [Fn.... Continue Reading →
By: Donald L. Swanson “I’d be happy to pay the million dollars I owe you. The problem is that I have only two of them.” --A defendant’s claim of poverty and non-collectibility in settlement negotiations. A defendant's poverty/non-collectibility claim creates an interesting dynamic in mediation and other negotiations. And that’s true whether the defendant is an... Continue Reading →
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 →
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 →
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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