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New York Bankruptcy Law Blog

Ten Commandments for Chapter 11

The 10 Commandments of Chapter 11 by Wayne GreenwaldA client suggested I write the "Ten Commandments" of Chapter 11, responding to clients' misperceptions and mis-expectations of the process. The time for those rules to descend from above1 arrived. They may not be "the" Ten Commandments. But they're useful.

I. THOU SHALT BE ALERT TO EVILS - Too many folks seek chapter 11 relief when it's too late to save the venture. If a problem exists and the first turn-around effort failed, trying a second, without professional help may exhaust precious resources preventing a successful extraction from a death spiral. 

Discrete Chapter 11s or the Beach Club Exception to the New Debtor Syndrome: A Good Faith Bad Faith Filing

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You may have an identifiable problem that is killing your business or personal finances. The best example of this is owning property which is in foreclosure, or a problem venture with its own identifiable assets and secured creditors. Like a coyote in a trap; you'd bite off your leg to be free of it.

That's one possible bankruptcy strategy. Transferring the problem assets into a new entity which can reorganize in Chapter 11 to solve the problem, while the viable business continues outside of bankruptcy.[1]

The Automatic Stay for Non-Debtors, Automatically. Really?

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Queenie, Ltd. v. Nygard Int'l,[1]'s Sweet 16 Bankruptcy is not reserved for the destitute individual.[2] It's more useful for those with something to save than nothing to lose.[3] 

For debtors, extending the automatic stay to its farthest domain seems the immediate strategy.

86ing a 2004 With 69

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Federal Rule of Bankruptcy Procedure 2004 is one of the most powerful discovery tools around. A legitimate fishing expedition.[2] However, it has limits.[3]

Imagine a Chapter 7 Trustee has a money judgment against the debtor in a bankruptcy case. The Trustee seeks Fed. R. Bankr. P. 2004 discovery from the debtor to enforce that money judgment. Should it fly? 

Our Slow Response to Automatic Weapons

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ABC News offers a map[1] showing only ten states avoiding mass shootings within their borders. That means forty, or fifty, state representatives should favor keeping automatic and semi-automatic weapons from civilians. They should vote to protect their constituents from needless bloodshed and sorrow.

On(ward) Harry Evans or Write On

On(ward) Harry Evans or Write On

Kudos to Time magazine for its article on Sir Harry Evans restating the need for clarity in communicating and communications. Sir Harry wrote Do I Make Myself Clear which offers ten rules for writing[1], expounding on the rules with each chapter.

Social Research for Legal Research Examining a Judicial Assumption

Social Research for Legal Research Examining a Judicial Assumption by Wayne Greenwald

The Scenario

In 2010, you won a state court judgment against "Joe" for breach of contract. In 2017, "Joe" filed for Chapter 7 bankruptcy. Should you be allowed to object to Joe discharging your judgment by now asserting that Joe's debt to you arose from a fraud? 

An Unappealable Contempt Decision Providing Rachmones[1]

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The American Bankruptcy Institute's ("ABI") VOLO Project had me synopsize the Second Circuit Court of Appeals' decision in U.S.A. v. Kerr-McGee Corp. (In re Tronox Inc.).[2]

The sixty-two-page opinion boiled down to two "holdings."[3] They are:

a.) Claims derived through a debtor are bankruptcy estate property which only a trustee can assert;

b.) A District Court order on a contempt motion which:

1.) enforced an existing injunction; and

2.) made no contempt finding nor sanctions award was not a "final order"[4] subject to immediate appeal. 

Debt Cancellation - From the Frying Pan to the Fire?

Debt Cancellation From the Frying Pan to the Fire by Wayne Greenwald

When you're floundering in debt, having some of it cancelled or forgiven sounds great. Be careful. You may be trading a junk-yard dog for Godzilla.

To the Internal Revenue Service (the "IRS") forgiven debt creates Cancellation of Debt Income ("CODI").1

CODI is taxable unless the discharge:

(A) occurs in a bankruptcy case;

(B) occurs when the taxpayer is insolvent;

(C) is of qualified farm indebtedness;

(D) is of qualified real property business debt of anyone other than a C corporation; or      

(E) is of debt from a qualified principal residence which occurred-

(i) before January 1, 2017; or

(ii) subject to a written agreement before January 1, 2017.

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