Tag: Subchapter V

Shouldn’t Entrepreneurs Have After-Liquidation Bankruptcy Relief For The Risks They Take? (In re Hillman)

Entrepreneurship (Photo by Marilyn Swanson) By: Donald L Swanson Subchapter V eligibility requires a debtor to be “engaged in” commercial/business activities. Case Law Consensus Case law consensus is that such activities must exist on the petition filing date.  That means a debtor cannot utilize Subchapter V when: business assets are fully-liquidated; unpaid debts are the only... Continue Reading →

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Subchapter V Trustee’s “Facilitate” Duty: A Confidentiality Dilemma

A dilemma: elegance or country? (Photo by Marilyn Swanson) By: Donald L Swanson A Subchapter V Trustee “shall . . . facilitate the development of a consensual plan of reorganization.” [Fn. 1]  This is a mediator-ish role: a “third party” who “participates to assist in the resolution of issues in controversy.” [Fn. 2] Subchapter V Trustee... Continue Reading →

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Getting Subchapter V Trustees Paid: § 1191(e)

For love or money? (photo by Marilyn Swanson) By: Donald L Swanson Subchapter V of the Bankruptcy Code’s Chapter 11 is relatively new: it took effect as a new law on February 19, 2020.  Accordingly, new questions continue to arise on how its terms and provisions should be applied. A Trustee Fees Question One Subchapter V... Continue Reading →

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Guidance From Eighth Circuit BAP On Plan Feasibility Issues (Farm Credit v. Swackhammer)

Is this feasible? (Photo byMarilyn Swanson) By: Donald L Swanson Feasibility of a bankruptcy plan is always a tough issue. Think about it: debtors are in bankruptcy because they can’t make their payments when due; and in bankruptcy, a debtor must propose a plan for paying creditors—that will work this time. We now have a new... Continue Reading →

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A Missing Piece in Subchapter V Eligibility & A Potential Work-Around

A missing piece? (Photo by Marilyn Swanson) By: Donald L Swanson One of the missing pieces in Subchapter V is this: it’s easier for a corporate business to meet the “engaged in commercial or business activities” standard for eligibility than it is for an individual owner/guarantor of that business. Here’s how one court describes the missing... Continue Reading →

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Subchapter V: Providing Hope To Formerly Successful Entrepreneurs

Hope?! (photo by Marilyn Swanson) By: Donald L Swanson The Bankruptcy Code's Subchapter V provides hope to formerly successful entrepreneurs. It's a hope that never before existed. I'll try to explain. Formerly Successful Entrepreneurs – A Historical Problem The Bankruptcy Code became effective in October of 1979. And I’ve been practicing under the Bankruptcy Code from... Continue Reading →

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Working Together: A Previously Successful Business’s General Counsel and Distressed-Debt Counsel

Working together? (photo by Grant Swanson) By: Donald L Swanson Answers to these two questions can get tricky: When should a previously successful business engage distress-debt counsel? What is the role of the business’s general counsel once that happens? Second Question: Role Here’s the answer to the second question first:  The business’s general counsel needs to... Continue Reading →

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Student Loans Take Another Bankruptcy Hit: This Time On Subchapter V Eligibility (In re Reis)

A direct hit (photo by Marilyn Swanson) By: Donald L Swanson The hits keep coming for student loans in bankruptcy. This time the hit is this: student loans for attending medical school do not qualify as “commercial or business” loans for Subchapter V eligibility. The central finding, for a medical student who worked as an employee... Continue Reading →

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How the “Engaged In” Standard For Subchapter V Eligibility Is Easily Satsified (In re Robinson)

Easily satisfied? (photo by Marilyn Swanson) By: Donald L Swanson Is a debtor “engaged in commercial or business activities” for Subchapter V eligibility? Such question has been addressed on many occasions and by many courts.  The trend seems to be toward a conclusion that the nature and quantity of “commercial or business activities” required for Subchapter... Continue Reading →

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Subchapter V Plan Confirmation: Non-Voting & Classification (In re Creason)

Inactive (photo by Marilyn Swanson) By: Donald L Swanson What happens when a creditor class fails or refuses to vote on confirmation of a Subchapter V plan? Does that prevent a consensual confirmation? We have a recent answer from In re Creason, Case No. 22-00988, Western Michigan Bankruptcy Court (opinion issued 2/23/2023). Facts The Subchapter V... Continue Reading →

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