Becoming Eligible For Subchapter V By A Retroactive Change In the New Law (In re Phenomenon)

Making adjustments? By: Donald L Swanson On June 21, 2022, Congress and the President (i) extend the $7.5 million debt limit for Subchapter V eligibility, and (ii) adjust other Subchapter V rules.[Fn. 1] One of the adjustments is this: formerly, an “affiliate” of any corporation did not qualify for Subchapter V; but now, only an “affiliate”... Continue Reading →

InfoWars and Subchapter V Eligibility—Again (In re Free Speech Systems)

Wading in—again (photo by Marilyn Swanson) By: Donald L Swanson Three InfoWars entities file voluntary bankruptcy on April 17, 2022, under Subchapter V of Chapter 11.[Fn.1]  And a storm of controversy immediately erupts on whether the three entities actually qualify for Subchapter V relief. On June 10, 2022, the Bankruptcy Court enters an “Agreed Order Dismissing... Continue Reading →

Subchapter V Discharge And § 523(a): A Footnote 2 Problem (Cantwell v. Cleary)

The same . . . or different? (photo by Marilyn Swanson) By: Donald L Swanson “2 There is one inconsequential difference — § 1228(a) refers to debt ‘of a kind specified,’ while § 1192(2) refers to debt ‘of the kind specified.’” [Fn. 1] This "inconsequential difference" quotation, from footnote 2 in the Fourth Circuit’s Cantwell v.... Continue Reading →

Subchapter V’s $7.5 Million Debt Limit Is Renewed: With Bells & Whistles!

Renewal (photo by Marilyn Swanson) By: Donald L Swanson Congress and the President finally extend the $7.5 million debt limit for Subchapter V eligibility: by “unanimous consent” in the Senate;by a vote of 392 – 21 in the House; andsigned by the President on June 21, 2022. A legislative history of the new law is at... Continue Reading →

What’s Needed For Subchapter V ”Engaged In” Eligibility? Not Much—Not Even A Profit Motive (RS Air)

Engaged in commercial or business activity? (Photo by Marilyn Swanson) By: Donald L Swanson Subchapter V has an “engaged in commercial or business activities” criterion for eligibility. Court opinions applying such criterion appear to be trending in this direction: what’s required is “not much.” A new appellate opinion demonstrating this trend is In re RS AIR, LLC,... Continue Reading →

What Does ”Affiliate Of An Issuer” Mean For Subchapter V Ineligibility? (In re Phenomenon)

Affiliates? (Photo by Marilyn Swanson) By: Donald L Swanson What the heck does this mean: “(1) Debtor.—The term ‘debtor’— . . . (B) does not include— . . . (Iii) any debtor that is an affiliate of an issuer, as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c)”    —from Subchapter V’s... Continue Reading →

Subchapter V Trustees: Satisfying The § 1183(b)(3) Duty To “Appear And Be Heard”

Appearing and being heard? (Photo by Marilyn Swanson) By: Donald L Swanson "The trustee shall . . . appear and be heard at . . . any hearing that concerns . . . the value of property . . . confirmation of a plan . . . sale of property." § 1183(b)(3) (emphasis added). In every... Continue Reading →

Subchapter V Plan: Why Extend The Deadline And Slow The Case?!

Built for speed (photo by Marilyn Swanson) By Donald L. Swanson “Subchapter V is supposed to be a fast process toward plan confirmation, but I don’t see that happening!” --Comment of a Bankruptcy Judge (as I recall the comment) It’s true: (i) Subchapter V is supposed to go quickly, but (ii) it often doesn’t. Here’s why... Continue Reading →

The Setting Of The Sun: Subchapter V Eligibility

SUNSET (photo by Marilyn Swanson) By Donald L. Swanson The sun has set.  Yes it has.  The $7,500,000 eligibility limit for Subchapter V expired yesterday (March 28, 2022), without action by Congress to extend it. Actually, the Subchapter V sun was set to set on March 27—but that’s a Sunday.  So let’s give the benefit of... Continue Reading →

Subchapter V Trustee Duties: Facilitation Conflicts With Other Statutory Duties

Rainbow—a spectrum of light (photo by Marilyn Swanson) By: Donald L Swanson “The [Subchapter V] Trustee shall— . . . facilitate the development of a consensual plan of reorganization.”  11 U.S.C. § 1183(b)(7). Facilitation is a mediator-like tool that can be used by every bankruptcy trustee in every case.  Conflicting Duties For Subchapter V trustees, however,... Continue Reading →

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