On Bankruptcy and Mediation
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 →
Sec. 1183(c) By: Donald L Swanson There is no doubt about this: after the consensual confirmation of a Subchapter V plan: the trustee’s role terminates upon “substantial consummation” (see § 1183(c)); and“substantial consummation” often occurs shortly after confirmation (see § 1101(2)). The early trustee termination is not merely a possibility, it’s mandatory upon substantial consummation... Continue Reading →
Monitoring? (photo by Marilyn Swanson) By: Donald L Swanson Question: Does a Subchapter V trustee have a duty to “monitor” debtor’s compliance with a confirmed plan? Answer: “No.” I’ll try to explain . . . and to add a suggestion on what Subchapter V trustees might do, instead. Consensual Confirmation When a plan is confirmed under... Continue Reading →
A farming operation? (Photo by Marilyn Swanson) By: Donald L Swanson “Engaged in” eligibility for Chapter 12 (farming operations) and Subchapter V (commercial or business activities) are similar-but-separate things. An opinion by the Kansas Bankruptcy Court shows the difficulty in addressing the “engaged in” eligibility standards in Chapter 12—even when Subchapter V opinions are consulted as... Continue Reading →
Behind the scenes (photo by Marilyn Swanson) By Donald L. Swanson “We can’t see what the Subchapter V trustees are doing, so we don’t have an opinion on their effectiveness.” --This is the response of a couple bankruptcy judges, when asked about the effectiveness of Subchapter V trustees in performing the statutory “facilitate a consensual plan”... Continue Reading →
11 U.S.C. Sec. 1191(c)(2) By: Donald L Swanson “The three-year term here is fair and equitable, as it properly balances the risks and rewards for both the debtor and its creditors”; and“the Court declines to fix a longer plan period.” --From a Bankruptcy Court opinion confirming Debtor’s Subchapter V plan—In re Urgent Care Physicians, Ltd, Case... Continue Reading →
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 →
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 →
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 →
Sunset (photo by Marilyn Swanson) By: Donald L Swanson So . . . here we go again. We’re four months from a “sunset” of the $7.5 million limit for Subchapter V eligibility. And we’ve heard nothing from Congress about extending that limit. Everyone agrees that the $7.5 million limit is a good thing . . .... Continue Reading →
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