THE DEMISE OF NUNC PRO TUNC LEASE REJECTION[1] Bankruptcy Code § 365(b) enables trustees and debtors in possession (“Trustees”) to “reject” or terminate pre-petition leases. This leaves the non-debtor lessor without a lessee and with a “rejection” claim for what may be less than the rent reserved under the balance of the lease.[2] Before a lease is rejected, Trustees must pay and remain current on post-petition rent due under leases.[3] Unpaid post-petition rent is an “administration” claim with priority over unsecured claims and sharing estate assets with other administration priority… Read More
People ask, “what’s involved in chapter 7 personal bankruptcy case?” Here’s a practical answer: Recognize the problem Investigate professionals Interview professionals Chose and retain professional Chose a course of problem-solving – alternatives to bankruptcy may be preferable Decide to file Determine the best time to file Prepare petition, schedules and statements Take mandatory pre-petition counseling File petition If an incomplete “emergency” petition was filed, finish and file schedules and statements (within 14 days of filing) Provide trustee with required documents (e.g. tax returns, pay stubs, bank records) Attend meeting of… Read More
Bankruptcy Code2 § 1307(b) has been called an “escape hatch”3 for “bad faith” Chapter 13 filers, facing creditors’ § 1307( c ) motions to convert their cases to Chapter 7. Those debtors assert § 1307(b)’s “absolute right”4 to voluntarily dismiss their case. But, “how can a debtor assert § 1307(b) if they don’t qualify for Chapter 13 relief?” Disqualified from Chapter 13 Access to Chapter 13 relief has specific requirements.5 Failure to satisfy any of these requirements denies debtors Chapter 13 relief.6 Dismissal vs. Conversion A debtor’s § 1307(b) motion… Read More
It’s official. The Coronavirus is having economic consequences. Business owners face falling sales. Workers face layoffs or shorter hours. Each of these means less funds to pay bills and expenses. So, what’s to do. As always, don’t panic. Similarly, whenever possible, don’t think . . . know. It requires a little more effort. But, the results are usually much better. Thinking of Bankruptcy Meanwhile, if you’re out of work and have bills to pay, don’t rush into bankruptcy. You want a fresh start, not a false start. Waiting may be the hardest… Read More
A 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. II.… Read More
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] This solution presents its own… Read More
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. Automatic Stay for Whom? It’s not hard to imagine an individual debtor and their business as defendants in an action arising from the business’ conduct. The universally accepted rule is that “the automatic stay does not apply to non-debtors.”[4] For whom do you file a case? The individual? The… Read More
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? Fed. R. Bankr. P. 7069 incorporates Federal Rule of Civil Procedure 69 (“Rule 69”)[4] into bankruptcy cases. Rule 69 is the designated vehicle for conducted discovery to enforce judgments.[5] Fed. R.… Read More
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. This not happening defies reason. No one needs an automatic or semi-automatic weapon to hunt unarmed game. Those weapons exist for one purpose: killing people. The peoples’ representative should protect constituents from a proven threat: people-killing weapons. People-killing weapons should be available only to the peoples’ approved agents:… Read More
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. In my experience as a lawyer, a rule is stated. Its vagaries produce discussion through its application. When the rule maker explains the reasons for the rule’s creation, a well-written rule does not require discussion. However, the rule’s unanticipated applications could produce discussion. Most of my writings’ audiences are judges. They… Read More
