Category Archives: Bankruptcy

Since the beginning of the war in Ukraine, Russian and Ukrainian hackers have been fighting tit for tat on what we can call the "digital front line." To quantify the firepower involved, the number of ransomware attacks on Russian companies has tripled since Feb. 28, according to Kaspersky Lab, a Russian multinational cybersecurity firm that found a direct link between the uptick in online targeting to the breakout of military conflict in Ukraine.

At the same time, developers of information security solutions such as Fortinet, ESET, Avast and NortonLifeLock Inc. have left the Russian market, making it harder for companies to protect themselves against external attack.

Earning cash through online ransoms and blackmail has often served as the motivation for carrying out cyberattacks. But prior to the war, cybercriminals had tended to keep news headlines in mind when going after their targets for example, at the beginning of the COVID-19 pandemic, when users were faced with a large amount of spam and phishing emails.

In 2022, however, the face of cybercrime has evolved. Attacks are now driven more by personal motives and moral convictions than by a desire for financial gain.

The goal of new attacks is to block or complicate access to the victims data. Alexey Chuprinin, head of Application Security Softline, tells Russian business daily Kommersant that hackers are not only targeting companies that are capable of paying a ransom, for example industry and finance they are also targeting organizational structures, which can cause a public outcry.

Immediately after the outbreak of war, Conti, a ransomware-as-a-service group, announced unequivocal support for the Russian government. In retaliation, a partner working from Ukraine, posted information about the identities of Conti members, as well as the source code of the ransomware program.

This allowed hacktivists to use this family of programs against organizations in Russia, said the head of the Group-IB digital forensics laboratory, Oleg Skulkin. It served as a means to protest against their own government anonymously.

Similarly, a representative of Ransomware group Network Battalion 65 (NB65) told Tech Novosti how a former member of the Russian group Trickbot leaked two years of chat logs as well as a host of operational data regarding their group.

We took a copy of the source code and decided that it would be a good idea to use this ransomware against Russia. The irony of using Russian ransomware against Russian companies seemed like the perfect 'f*ck you,'" he said. "This is our way of saying 'Russian ship, Russian ship, this is Network Battalion 65. F*ck you!'"

The Ukrainian government is welcoming this growth in hacking. Slava Banik, head of the IT Army Of Ukraine at the country's Ministry of Digital Transformation, tells Euronews that more than 300,000 people worldwide are using their computers to help disrupt Russias war efforts, as well as the everyday lives of Russian civilians.

One way of doing this is to overload Russian websites with junk traffic, forcing them offline. It is a tactic that even ordinary non-tech-savvy citizens can resort to, and it can be used to target Russian banks, governmental websites and media.

In its latest report, Kaspersky Lab backs its thesis that cyber-incidents are politically motived, as variants of encryption programs that are made exclusively in Ukraine are involved in attacks on Russian resources.

One of the malwares recently discovered by experts was the Freeud viper, developed by pro-Ukrainian supporters. The ransom note sent after activating the program states that Russian troops must leave Ukraine.

The choice of words and the way the note is written suggest that it was written by a native Russian speaker, Kaspersky experts say.

Yes, the enemy (on or offline) can be where you least expect him.

See the rest here:

Ukraine Has Exposed The Bankruptcy Of Germany's "Never Again" Pacifism - Worldcrunch

The recent case of In re Micah Cade McKinney, Case No.21-50046-rlj-11 (Bankr. N.D. Tex., April 28, 2022) provides insightas to violations of the bankruptcy discharge injunction.

Contempt litigation in bankruptcy court is occasionally drivenby intentional, willful conduct on the part of a creditor - perhapsout of spite that the debtor who owed them money had filed forbankruptcy in the first place. But more often than not, violationsof the automatic stay or the discharge injunction occur out of amisunderstanding of the applicable law. This case represents anexample of the latter.

Since December, 2018, the Debtor, Micah McKinney, and his wifeLeslie McKinney, were parties to a divorce case in State Court. OnMarch 31, 2021, the State Court held a hearing on two motions filedby Leslie McKinney in the divorce case: a motion for enforcement oftemporary orders and a motion to allocate a tax refund. The StateCourt orally granted Leslie McKinney's requested relief on therecord, holding Micah McKinney in contempt and ordering that hetransfer approximately half of a $3 million tax refund to LeslieMcKinney.

On April 5, 2021, before any written order was issued by theState Court, Micah McKinney filed this chapter 11 bankruptcy case.The case was primarily filed because Micah McKinney did not havethe funds to comply with the State Court's March 31 ruling.

On August 22, 2021, after a lengthy mediation, Micah McKinneyand Leslie McKinney entered into a settlement agreement thatresolved all their divorce disputes save for certain SAPCR("suits affecting the parent-child relationship") issues.The terms of the settlement agreement were incorporated into MicahMcKinney's bankruptcy plan ("Plan"). On November 4,2021, the Plan was confirmed. Under the Plan, and the settlementagreement incorporated therein, Leslie McKinney released all claimsagainst Micah McKinney, including claims in the divorce case,except for certain post-petition SAPCR issues. The Plan also statesthat all claims of the Lanfear Firm, which represented LeslieMcKinney in the divorce case, were released. The order confirmingthe Plan includes a broad injunction ("DischargeInjunction") barring all actions to enforce anypre-confirmation claims against Micah McKinney in a mannerinconsistent with the terms of the Plan. At the time of the hearingthe subject of this case, Micah McKinney had satisfied all hisobligations to Leslie McKinney under the Plan.

On February 17, 2022, Leslie McKinney, through the Lanfear Firm,filed a motion in the divorce case requesting entry of two ordersrelated to the State Court hearing held on March 31, 2021("Motion to Enter"). The orders, asproposed, provide that Micah McKinney be incarcerated if he failsto pay several pre-bankruptcy claims to Leslie McKinney, theLanfear Firm, and others; they also required that Micah McKinneyplace the $3 million tax refund in escrow for payment of a claim tothe Lanfear Firm. Each of the claims addressed by the proposedorders were discharged through the order confirming MicahMcKinney's Plan. After counsel for Micah McKinney emailedLeslie McKinney's counsel on February 17, 2022, voicing MicahMcKinney's objection to the Motion to Enter as a violation ofthe Discharge Injunction, counsel for Leslie McKinney said she didnot intend to seek the relief in the Motion to Enter but simplywanted a clear record to ease the adjudication of the remaining

SAPCR issues in State Court. Subsequently, Leslie McKinney filedan amended motion on February 28, 2022 ("AmendedMotion to Enter") that added language to the ordersstating that their entry was not an attempt to enforce relief but,rather, to accurately reflect the record. A hearing on the AmendedMotion to Enter was set in State Court for March 22, 2022.

On February 25, 2022, Micah McKinney filed a motion seeking tohold Leslie McKinney and the Lanfear Firm in contempt for violatingthe Discharge Injunction by filing the Motions to Enter. On March1, 2022, he filed a motion for a preliminary injunction, which wasgranted on March 8, 2022, enjoining Leslie McKinney and the LanfearFirm from pursuing their Motion to Enter and Amended Motion toEnter (collectively "Motions to Enter") and enjoining theState Court from entertaining the Motions to Enter at the March 22hearing. The Court took the motion for contempt underadvisement.

When a creditor violates the discharge injunction in abankruptcy case, a bankruptcy court may hold the creditor incontempt to compensate the debtor for the violation and to coercethe creditor into compliance with the injunction. PlacidRefining Co. v. Terrebonne Fuel & Lube, Inc. (In re TerrebonneFuel & Lube, Inc.), 108 F.3d 609, 612-13 (5th Cir. 1997).This authority derives from 11 U.S.C. 105, which allows abankruptcy court to enter any order necessary to carry out theprovisions of the Bankruptcy Code. Cirillo v. Valley BaptistHealth Sys. (In re Cirillo), No. 09-10324, 2014 WL 1347362, at*4 (Bankr. S.D. Tex. Apr. 3, 2014). To determine whether a partyshould be held in contempt for violating a discharge injunction,courts employ an

objective standard, and contempt is appropriate when "thereis not a 'fair ground of doubt' as to whether thecreditor's conduct might be lawful under the dischargeorder." Taggart v. Lorenzen, 139 S. Ct. 1795, 1804(2019).

Under Taggart, three elements must be proven for acourt to hold a party in contempt: "(1) the party violated adefinite and specific order of the court requiring him to . refrainfrom performing . particular . acts; (2) the party did so withknowledge of the court's order; and (3) there is no fair groundof doubt as to whether the order barred the party'sconduct." In re City of Detroit, Mich., 614 B.R. 255,265 (Bankr. E.D. Mich. 2020).

The Court had no trouble finding that Leslie McKinney and theLanfear Firm violated the Discharge Injunction by filing theMotions to Enter. The Discharge Injunction states:

AS OF THE EFFECTIVE DATE ALL HOLDERSOF CLAIMS AGAINST THE DEBTOR . ARE HEREBY PERMANENTLY ENJOINED ANDPROHIBITED FROM . THE COMMENCING OR CONTINUATION IN ANY MANNER,DIRECTLY OR INDIRECTLY, OF ANY ACTION, CASE, LAWSUIT OR OTHERPROCEEDING OF ANY TYPE OF NATURE AGAINST THE DEBTOR OR THE ESTATE,WITH RESPECT TO ANY SUCH CLAIM OR INTEREST ARISING OR ACCRUINGBEFORE THE EFFECTIVE DATE, INCLUDING WITHOUT LIMITATION THE ENTRYOR ENFORCEMENT OF ANY JUDGMENT, OR ANY OTHER ACT FOR THECOLLECTION, EITHER DIRECTLY OR INDIRECTLY, OF ANY CLAIM OR INTERESTAGAINST THE ESTATE OR THE DEBTOR.

The proposed orders on the Motions to Enter directed that MicahMcKinney was to make payments to Leslie McKinney for a portion ofthe $3 million tax refund and payments to the Lanfear Firm forattorney's fees-obligations that were expressly discharged byconfirmation of the Plan. The Discharge Injunction enjoins the"continuation in any manner" of "the entry orenforcement of any judgment" on a prepetition claim. As anaction that continues to seek entry in State Court of a prepetitionclaim, Leslie McKinney and the Lanfear Firm's filing of theMotions to Enter plainly violated the Discharge Injunction. So toowould a hearing on the motions or the State Court's issuance ofan order on the motions. The Court rejected the notion that theinclusion of a disclaimer in the motion saying that it was not anattempt to collect any of the monetary relief or awards thereinsaved the conduct from contempt. And the Court flatly rejected anythought that the requested State Court order was needed toaccurately reflect the record. Any further proceedings in the StateCourt were stayed by Micah McKinney's bankruptcy filing. Inaddition, the savings language did nothing to solve the criticalissue, which is that any continuation of a dischargedclaim violates the Discharge Injunction regardless of thepurpose of the continuation. The Court made clear that Entry of anorder against a debtor on a prepetition claim during the pendencyof a bankruptcy case violates the automatic stay; and entry of an order againsta debtor on a prepetition claim after the debtor receives adischarge violates the Discharge Injunction.

Turning to the second prong of the Taggart test, theCourt easily found the existence of knowledge, as Leslie McKinneyand the Lanfear Firm did not dispute that they were aware of theDischarge Injunction when they filed the Motions to Enter. Bothwere claimants under the plan, actively negotiating with MicahMcKinney before its approval. They both received distributionsunder the plan post-confirmation. The Amended Motion to Enterexpressly recognized that the Plan resolves the monetary reliefsought through their motions.

Turning to the final prong under Taggart, the Courtfound that Leslie McKinney and the Lanfear Firm had "noobjectively reasonable basis for concluding that [their] conductmight be lawful." Despite Leslie McKinney's belief thatshe was acting lawfully, the Court found no objective basis forconcluding that her and the Lanfear Firm's continuedprosecution of claims in State Court on a prepetition claim wouldnot violate the Discharge Injunction-such conduct directly violatesthe injunction's clear and plain language.

Finding that all three elements of the Taggart test hadbeen met, the Bankruptcy Court found Leslie McKinney and theLanfear Firm in contempt. The Court therefore turned to fashioningan appropriate sanction. The Court found that evidence made clearthat neither Leslie McKinney nor the Lanfear Firm intended toviolate the Discharge Injunction. Therefore, the Court found that,while she never had an objectively reasonable basis for concludingshe was not violating the Discharge Injunction, she had shown thatshe was "not proceeding in bad faith but, instead, under amisguided understanding of how she was restrained under theDischarge Injunction." Therefore, despite a request forattorneys' fees and punitive damages, the Court ultimatelylimited its damage assessment to a sanction of $250/day for everyday after the date that this order became final that LeslieMcKinney failed to file a notice in State Court withdrawing theMotions to Enter.

The refusal to grant attorneys' fees to Micah McKinney wassomewhat surprising, but the Court determined that, in this case,further sanction was not necessary or appropriate under thecircumstances.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

Read the original:

Violations Of The Bankruptcy Discharge Injunction - Insolvency/Bankruptcy - United States - Mondaq

NEW YORK, May 04, 2022 (GLOBE NEWSWIRE) -- Total U.S. bankruptcy filings in April 2022 decreased 21 percent from the previous year, according to data provided by Epiq Bankruptcy, the leading provider of U.S. bankruptcy filing data. Bankruptcy filings totaled 32,508 in April 2022, down from the April 2021 total of 40,931. Noncommercial bankruptcy filings totaled 30,747 in April 2022, also registering a 21 percent decrease from the April 2021 noncommercial total of 38,826. Commercial filings decreased 16 percent in April 2022, as the 1,761 filings were down from the 2,105 commercial filings registered in April 2021. There were 249 commercial chapter 11 filings registered in April 2022, a decline of 15 percent from the 290 filings in April 2021. Small business filings, captured as subchapter V elections within chapter 11, decreased 26 percent to 83 in April 2022 from 112 in April 2021.

New bankruptcy filing volumes continue to decline as the country emerges from the global pandemic, says Chris Kruse, senior vice president of Epiq Bankruptcy Technology. The seasonality we see in March each year also occurred in 2022, and the April decline was expected.

Aprils total bankruptcy filings represented a 10 percent decrease when compared to the 36,059 total filings recorded the previous month. Total noncommercial filings for April also represented a 10 percent decrease from the March 2022 noncommercial filing total of 34,234. The commercial filing total represented a four percent decrease from the March 2022 commercial filing total of 1,825. Commercial chapter 11 filings decreased 15 percent from the 292 filings in March 2022. Subchapter V elections within chapter 11 declined 40 percent from the 138 filed in March 2022.

Legislation that passed recently in the Senate and is currently being considered in the House would expand the debt-eligibility limits for small businesses and individuals looking to reorganize their finances, said ABI Executive Director Amy Quackenboss. ABI appreciates the work by Congress to create greater access and a more efficient process for small businesses and families to achieve a financial fresh start.

The decline of subchapter V elections reflects the return of the debt-eligibility limit to the original $2,725,625 threshold from the expanded amount of $7.5 million first established under the CARES Act of 2020. Legislation was passed in the Senate to restore the eligibility limit back to $7.5 million and cover any subchapter V cases that were pending at the time of the March 27 sunset. Consistent with the recommendations of ABIs Commission on Consumer Bankruptcy, the substitute also continues to push for the debt limit for individual chapter 13 filings to be increased to $2.75 million and remove the distinction between secured and unsecured debt for that calculation. Both of the expanded eligibility limits for small business subchapter Vs and consumer chapter 13s would sunset after two years.

ABI has partnered with Epiq Bankruptcy to provide the most current bankruptcy filing data for analysts, researchers, and members of the news media. Epiq Bankruptcy is the leading provider of data, technology, and services for companies operating in the business of bankruptcy. Epiqs new Bankruptcy Analytics subscription service provides on-demand access to the industrys most dynamic bankruptcy data, updated daily. Learn more at https://bankruptcy.epiqglobal.com/analytics.

About Epiq Epiq Bankruptcy is a division of Epiq, a global technology-enabled services leader to the legal services industry and corporations that takes on large-scale, increasingly complex tasks for corporate counsel, law firms, and business professionals with efficiency, clarity, and confidence. Clients rely on Epiq to streamline the administration of business operations, class action and mass tort, court reporting, eDiscovery, regulatory, compliance, restructuring, and bankruptcy matters. Epiq subject-matter experts and technologies create efficiency through expertise and deliver confidence to high-performing clients around the world. Learn more at https://www.epiqglobal.com.

About ABI ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 10,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit http://www.abi.org. For additional conference information, visit http://www.abi.org/calendar-of-events.

Press Contacts: Angela Hoidas Epiq (678) 956-8728 angela.hoidas@epiqglobal.com

John Hartgen ABI (703) 894-5935 jhartgen@abi.org

See original here:

Total April Bankruptcy Filings Decrease 21 Percent Over the Same Period Last Year - GlobeNewswire

Sri Lanka is on the brink of bankruptcy and now facing its worst economic crisis since independence, with acute shortages of food, fuel and other essentials.

Protests have been taking place on the island nation of 22 million people since the end of March between pro-government supporters and those calling for an immediate change in authority.

The background

Sri Lanka, which gained independence from the UK in 1948, emerged from a devastating civil war in 2009.

In 2019, the country was rocked by Easter Sunday bombings - 250 people were killed as suicide bombers targeted churches and hotels across the country.

The COVID-19 pandemic then torpedoed its pivotal tourism industry, which makes up its fifth-largest source of foreign revenue.

This economic downturn meant Sri Lanka was already in a precarious state when the most recent unrest erupted.

The country also has significant debt and was due to pay 5.7bn this year, with its total foreign debt standing at 41.5bn.

Rising oil prices and tax cuts have meant Sri Lanka now has as little as $50m (40m) of useable foreign reserves.

Sri Lanka needs at least 40,000 tonnes of gas each month, and the monthly import bill would be $40m (32m) at current prices.

When did the latest conflict begin?

On 31 March, hundreds of protestors tried to storm the home of President Gotabaya Rajapaksa, demanding his resignation.

The capital was placed under curfew and a state of emergency was declared the following day.

On 2 April, troops were deployed, and a 36-hour nationwide curfew was imposed. The following day, almost all of Sri Lanka's cabinet resigned.

An interim government was appointed, overseen by the president and the president's brother, Mahinda Rajapaksa, the prime minister.

Trading was then halted on Sri Lanka's stock exchange and the governor of the central bank - having resisted calls to seek a bailout from the International Monetary Fund - also resigned.

On 5 April President Rajapaksa lost his parliamentary majority after his finance minister resigned, and he lifted the state of emergency.

Protests soon broke out across the country, fuelled by a further shortage of life-saving medicines. Protesters called on the president to resign, as they blamed him for not managing the crisis - he was accused of borrowing too much money to finance projects which had not returned enough profit for Sri Lanka.

What happened next?

President Rajapaksa imposed the second state of emergency from 6 May, and gave security forces the power to crack down on growing unrest, a move that human rights groups have expressed concern over.

The government has since approached the International Monetary Fund for a bailout and has been holding a virtual summit with officials from the multilateral lender aimed at securing emergency assistance. But it was told its progress would depend on negotiations on debt restructuring with creditors.

Pro-government supporters, some armed with iron bars, attacked anti-government demonstrators at the "Gota Go Gama" tent village that sprang up last month and became the focal point of the nationwide protests.

Tear gas and water cannon have also been used as thousands broke the curfew.

The country has $25bn (19.2bn) of foreign debt, which is due over the next five years - however, it has unilaterally suspended all payments.

This culminated in the resignation of Prime Minister Mahinda Rajapaksa after trade unions began a "week of protests" demanding immediate government change.

How has this affected ordinary Sri Lankans?

With the economy in crisis, prices spiraling and food running out, farmers who should be planting their crops at the start of the rainy season are struggling, as they cannot afford - or sometimes even find - the fuel required for tractors and rotavators to turn the soil.

With farmers planting less, the food crisis looks set to get even worse.

With lower yields, the price in shops and markets has tripled and Sri Lanka is more reliant on imports it can barely afford.

Read more:The country where limes cost 240% more than last year - and a food crisis looms

Fruit and vegetable yields are also down and general food inflation is running at 50%.

Authorities have announced country-wide power cuts will increase to about four a day because they cannot supply enough fuel to power stations.

Continue reading here:

What's happening in Sri Lanka? Country facing worst economic crisis and on the brink of bankruptcy - Sky News

What does it mean for an entity to be a debtor under chapter 15, and does it matter whether the entity is a debtor under that chapter of the Bankruptcy Code? While these may seem like strange questions with obvious answers, recent case law challenges those notions.

Section 1502 (1) of the Bankruptcy Code defines the term debtor, for purposes of chapter 15, as an entity that is the subject of a foreign proceeding. That somewhat circular definition is not expressly in sync with the requirements to qualify as a debtor under 109 (a) of the Bankruptcy Code that is, whether the entity has a domicile, place of business or property in the U.S. In In re Al Zawawi, the U.S. Bankruptcy Court for the Middle District of Florida referenced and expanded the split of authority as to whether a foreign debtor under chapter 15 must, in addition to satisfying the requirements of 1502 (1), meet the 109 (a) requirements applicable to other Code chapters.

Originally published in ABI Journal - May 2022.

Please see full Article below for more information.

Visit link:

Al Zawawi and 109(a): Parsing What It Means to Be a Debtor Under Chapter 15 - JD Supra

Bids due June 7 for June 14 auction featuring wide array of Opportunity Zone and other assetsincluding single-family homes, multi-unit buildings, undeveloped land and vacant commercial/industrial buildings; many properties located close to Kansas State University.

MANHATTAN, Kan., May 3, 2022 /PRNewswire/ -- A&G Real Estate Partners is now accepting bids for its June 14 bankruptcy auction of more than 50 properties in and around Manhattan, Kansas. The assets include several development sites and multi-unit buildings in a federal Opportunity Zone adjacent to Kansas State University.

"This bankruptcy auction features assets that will be of interest to a wide array of potential buyers, including opportunistic developers and investors, and even first-time homebuyers," said Jamie Cot, A&G's Senior Managing Director of Real Estate Sales.

The June 14 bankruptcy auction begins at 10 A.M. at the Hilton Garden Inn Manhattan Conference Center. Those wishing to participate in the auction must submit Qualifying Bids to A&G by June 7, 2022.

The properties include:

Cot noted that the properties will be offered in many combinations, allowing investors of all sizes to participate.

Meanwhile, several of the assets on offer will be of particular interest to investors in federal Opportunity Zonesdesignated census tracts where new investments, under certain conditions, may be eligible for preferential tax treatment, said Emilio Amendola, Co-President of A&G Real Estate Partners.

The most substantial of these parcels measures 22,500 square feet and is located just one block from the university. This site currently contains a 12-unit apartment building and a single-family home. "However, current zoning allows for 45,000 square feet of construction on the site, with the potential to have an even larger building approved with the new Redevelopment Design zoning overlay," Amendola explained.

Other Opportunity Zone properties in the auction include four-unit and five-unit buildings on Ratone and Bluemont Streets, as well two adjacent properties at 804 and 810 Fremont Street. "With their proximity to the popular Aggieville entertainment district, the Fremont Street sites would make for an ideal redevelopment," Amendola noted.

In terms of geographic distribution in the Manhattan area, 24 lots as well as nine residences are located within the Valleywood neighborhood; a commercial lot and the vacant nursing home are in Abilene; three homes are in Enterprise; and the vacant former ice factory is located in Junction City.

"Workforce housing rentals and new housing stock in Manhattan are in very short supply. The properties that we are offering provide great options for both investors and builders to fill that void," Amendola added.

A&G was retained to direct the sale by I-70 Properties, LLC, as part of I-70's Chapter 11 bankruptcy (Case No. 21-40768), filed in The U.S. Bankruptcy Court for the District of Kansas.

For further information on the properties and procedures for submitting bids, visit: http://www.agrep-sales.com/kansas

Interested parties can also contact Emilio Amendola, (631) 465-9507, [emailprotected]; or Jamie Cot, (630) 954-7444, [emailprotected]

Press Contacts for A&G: Jaffe Communications (908-789-0700), Elisa Krantz, [emailprotected] or Bill Parness, [emailprotected].

SOURCE A&G Real Estate Partners

See more here:

A&G Bankruptcy Sale Offers Over 50 Properties in and around Manhattan, Kansas - PR Newswire

Sri Lankan auto rickshaw drivers queue up to buy petrol near a fuel station in Colombo, Sri Lanka, Wednesday, April 13, 2022.

Sri Lankas economy is in dire straits with its usable foreign reserves down to less than $50 million, the countrys finance minister said Wednesday.

Ali Sabry was speaking to Parliament after returning to Sri Lanka from talks with the International Monetary Fund. He said any IMF rescue program, including a rapid financing instrument needed to urgently resolve shortages of essential goods, would depend on negotiations on debt restructuring with creditors and would take six months to implement.

Sri Lanka is on the brink of bankruptcy and has suspended payments on its foreign loans. Its economic miseries have brought on a political crisis, with the government facing a protests and a no-confidence motion in Parliament.

The country is due to repay $7 billion this year of the $25 billion in foreign loans it is scheduled to pay by 2026.

Get briefed on the story of the week, and developing stories to watch across the Asia-Pacific.

There is a severe risk in front of all of us, said Sabri. He said Sri Lankas reserves stood at $7.6 billion at the end of 2019 and fell to $5.7 billion by the end of 2020 as payments outpaced inflows of foreign currency amid the pandemic.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

The reserves declined to $3.1 billion by the end of 2021, and to $1.9 billion by the end of March, he said. With foreign currency in short supply thanks to less tourism and other revenues, official reserves were tapped to pay for importing essentials including fuel, gas, coal and medicines beginning in August 2021.

The bulk of Sri Lankas remaining reserves including a $1 billion equivalent SWAP facility from China, are not usable for settling dollar-denominated payments, he said.

Sabris comments came a day after the countrys main opposition party issued a no-confidence motion aiming at ousting Prime Minister Mahinda Rajapaksa and his Cabinet.

The opposition United Peoples Force blames the government of failing in its constitutional duty to provide decent living standards. It accuses top government officials of excessively printing money, hurting farm production by banning chemical fertilizers to make the production fully organic and minimize import costs, failing to order COVID-19 vaccines in a timely manner and buying them later at higher prices.

A date has not yet been announced for a vote on the no-confidence motion.

The foreign currency crisis has limited imports and caused severe shortages of essential goods like fuel, cooking gas, medicine and food. People must line up for hours to buy what they can and many return home with little, if any, of what they were seeking.

Protests have spread demanding the resignations of Mahinda Rajapaksa, who heads an influential clan that has held power for most of the past two decades, and his younger brother, President Gotabaya Rajapaksa. An occupation of the entrance to the presidents office by protesters demanding the Rajapaksas resign was in its 26th day on Wednesday.

So far, the Rajapaksa brothers have resisted calls to resign, though three other Rajapaksas out of the five who are lawmakers stepped down from their Cabinet posts in mid-April.

Sabri said Sri Lanka was in the process of appointing legal and financial advisers for negotiations on restructuring its foreign debt.

This is an economic crisis. The economic crisis has created a political crisis. It is important to resolve the political crisis in order to find solutions to the economic crisis, Sabri said.

Here is the original post:

Sri Lanka Is on the Brink of Bankruptcy - The Diplomat

On March 14, 2022, Senator Chuck Grassley (R-IA) introduced proposed legislation thatif enactedwould make permanent the $7.5 million debt limit applicable to debtors under subchapter V of chapter 11 of the Bankruptcy Code that has enjoyed only temporary status under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) for the prior two years. Of course, as bankruptcy practitioners may expect, the Bankruptcy Threshold Adjustment and Technical Corrections Act, S. 3823, 117th Cong. (as introduced to the S. Comm. on the Judiciary, Mar. 14, 2022) (the Act) substantially and permanently expands the scope of Subchapter V relief through an inconspicuous cross-reference to previously enacted legislation (the progeny of which is discussed below). Despite the Acts humble language, the proposed change promises a wider swath of small businesses and business owners a faster and more affordable pathway to reorganization in bankruptcy.

On February 19, 2020, the Small Business Reorganization Act (the SBRA) became effective. The brainchild of the American Bankruptcy Institutes (the ABI) Commission to Study the Reform of Chapter 11, the SBRA established subchapter V of the Bankruptcy Code to address the increasingly prohibitive time and cost reorganizations posed to Main Street mom and pop businesses. However, to ensure only small businesses and business operators accessed the truncated procedures of subchapter V, Section 1182(i)(B)(1) of the Bankruptcy Code limited the term debtor for subchapter V purposes to a person engaged in commercial or business activities with aggregate debts not exceeding $2,725,625.

And thenas with any contemporary storycame the COVID chapter. The CARES Act, which was signed into law by President Trump on March 27, 2020, offered sweeping legislative responses to the predicted economic toll the coronavirus pandemic would wreak upon the United States economy. In connection with this focus, the CARES Act provided for a temporary increase in the subchapter V debt limit from $2,725,625 to $7.5 million. The CARES Act debt limit increase was scheduled to sunset one year later, on March 27, 2021, but was extended to March 27, 2022 by the COVID-19 Bankruptcy Relief Extension Act.

The Act simply refers to the Section 1113(a)(5) of the CARES Actthe sunset provisionand provides simply that it is amended by striking paragraph (5). However, this simple legislative modification would nearly triple the debt limit permanently. In a press release, the ABI applauded the Act for increasing the debt limit and noted that, since the enactment of the SBRA, more than 3,000 debtors have elected to file under subchapter V of chapter 11. The Act likewise has found bipartisan supporthaving been introduced with co-sponsorship from Sen. Richard J. Durbin (D-IL), Sen. Sheldon Whitehouse (D-RI), and Sen. John Coryn (R.-TX).

Yet, the timing could have been better. As of the date of this post, the debt limit has reverted to its original limits under the SBRA due to the sunset provisions in the CARES Act and COVID-19 Bankruptcy Relief Extension Act. As the Act winds its way through Congress, the subchapter V practitioners and potential debtors affected by the debt limit reduction will need to watch with bated breath for a permanent solution. Until then, small business debtors whose debt exceeds the $2,725,625 debt limit but is less than the $7.5 million under the Act have a difficult decision to make: whether to wait until the Act passes and is signed into law before commencing a case under subchapter V, or commencing a case under chapter 11 and then seek to convert the case to subchapter V after the Act passes or dismiss the case and refile under subchapter V. This post will be updated if and when the Act is passed by the Senate and signed into law.

[View source.]

Read the original here:

A Day Late and Nearly $5 Million Short?: Legislation Introduced to Make Permanent the $7.5 Million Subchapter V Debt Limit As Temporary Extensions...

WHEN debts become unmanageable, bankruptcy can become an invaluable financial recovery in helping regain control over your finances. Without the fresh start that bankruptcy provides, it would be impossible for a lot of people to ever pay back what they owe, and they will simply remain stuck in debt with nowhere to go. If youve tried everything you can to pay your debts but nothing has worked up to this point, it may be time to consider legal options.

Debt problems can happen to anyone at any time. No one is exempt. Bankruptcy is a fact of life. Without it, people with serious debt problems will remain stuck where they are, unable to move on with their lives. Living with stress every day caused by the burden of debt is a horrible way to live. Bankruptcy can offer hope when the future looks bleak. So, the whole concept of bankruptcy is to give you a fresh financial start when you have done your best to find a way out of debt but have realized that nothing is working anymore. So instead of trying to fix the situation, you just start with a clean slate.

Some people with limited income and resources will qualify for Chapter 7 to completely wipe out their debts. Others may have no choice but to file Chapter 13 and pay their creditors over a 3 to 5- year period. Much of it depends on your income and your assets. You also need to take into consideration your objective in seeking debt relief. Do you need to just wipe out your debts so you can start over or do you just need to consolidate your bills into a more affordable monthly payment?

Under the rules for Chapter 7 bankruptcy eligibility, your current monthly income must be measured against the median monthly income for a family of your size in your state. If your average monthly income is lower than the median, Chapter 7 may be for you. If your income is higher than the median, Chapter 7 is still a possibility, but there is an additional step. You have to pass whats known as the means test, a mathematical formula for calculating your disposable income and determining whether it is high enough to help pay off some of your debts. If the court believes that you are in a position to pay a certain portion of your debts through Chapter 13, then whatever amount you can afford will be good enough and you dont necessarily have to pay everything in full.

Chapter 13 can be the most effective way to consolidate all your debts into one low monthly payment while paying 0% on your credit card and other unsecured debts. As I mentioned above, in a lot of cases, most debts are only paid a small percentage of the actual amount, resulting in significant reduction- a reduction of 50% or more is not unusual. So, for the sake of this discussion, lets say that you owe a total of $50,000 in credit card debts but you can only afford to pay $400 per month. This amount may be acceptable and good enough to satisfy all creditor claims. Call my office and I will explain to you how this might be possible. Just imagine what this will do for you if you can cut your debt payments every month by more than half! Or better yet, if you qualify for Chapter 7, then you may not have to make any payments at all! No more sleepless nights worrying about your bills. No more living paycheck to paycheck and wondering every month how you can afford to pay rent and keep the lights on until the next paycheck comes.

Instead of hopelessly trying to pay your debts and not making progress, you may be better off just filing bankruptcy now to start fresh and rebuild your credit sooner than later. If you need help in getting out of debt, I would like to help you. Call my office at 1-866-477-7772 and lets talk about how I can get you a fresh financial start through either Chapter 7 or 13. Or if bankruptcy is not the best option for you, perhaps I can help you negotiate settlements with your creditors.

* * *

None of the information herein is intended to give legal advice for any specific situation. Atty. Ray J. Bulaon has successfully helped over 6,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call RJB Law Offices at TOLL FREE 1-866-477-7772.

(Advertising Supplement)

View original post here:

[COLUMN] Bankruptcy: When you've done everything you can but it's still not good enough - Asian Journal News

On 16 March 2022, the Slovak Parliament approved the anticipated new act on solving threatened bankruptcy (the Act) and also amended related legislative documents. It implements the Directive (EU) 2019/1023 on preventive restructuring, whose implementation was postponed by one year to 17 July 2022 due to the COVID-19 pandemic. The Act aims to reform insolvency in Slovakia and make preventive mechanisms effective enough to reduce the number of bankruptcies.

To whom does the Act apply?

The Act applies to all entrepreneurs that are legal entities threatened with insolvency. Certain financial entities such as banks, insurance companies, health insurance companies and state-owned companies are excluded. According to the amended Slovak Insolvency Act, an entrepreneur is threatened with insolvency if illiquidity is possible, i.e. if considering all circumstances it can be reasonably assumed that the entrepreneur will become illiquid (unable to pay its debts) within the next 12 months. This adds to the specification of a company in crisis in accordance with the Slovak Commercial Code, fulfilled if the ratio of its equity and liabilities falls below 8:100.

What possibilities exist?

Under the existing law, a debtor is obliged to take steps to prevent insolvency. However, the specification of appropriate measures adopted in that respect is missing.

Preventive restructuring is split into public preventive restructuring and non-public preventive restructuring, whereby the public preventive restructuring is governed by secondary legislation.

Unless the debtor obtains the required creditors consent with the moratorium, it must engage a professional advisor with adequate experience and liability insurance. The details are subject to contract, but certain provisions on liability and fees can be adjusted only with the approval of the creditors committee.

Public Preventive Restructuring

Public preventive restructuring has two phases subject to court approval: (i) approval of public preventive restructuring; and (ii) approval of the restructuring plan.

Only the debtor can file a motion together with the outline of the restructuring plan on the form which will be published by the Ministry of Justice on its website: vod - Ministerstvo spravodlivostiSR (gov.sk). The court will/must/should approve the public preventive restructuring if certain conditions are met, in particular if the debtor is not insolvent, cancelled, in liquidation or enforcement proceedings. In the same decision, if requested the court will/must/should grant a moratorium for three months (which can be extended up to six months in total) provided that certain creditors agree and conditions are met. The Act replaces the existing Act on Bankruptcy Moratoria about which you can find more information here. The moratorium can be accompanied with a preliminary injunction if necessary and justified.

The court selects at random and appoints a trustee only in certain situations (moratorium, expectation of cram down, request by the debtor or majority of creditors).

Following a meeting of affected creditors and the creditors committee, the debtor prepares the restructuring plan to be subsequently approved by the creditors meeting and the court (including the cross-class cram down if necessary).

Certain creditors, such as employees, small creditors and non-monetary creditors, are considered by law or by the plan itself as unaffected by the plan.

Non-public Preventive Restructuring

This tool is available only to creditors subject to supervision by the National Bank of Slovakia or similar foreign institutions. The debtor notifies the court of the initiation of such proceedings (if the affected creditors agree) and must submit the restructuring plan to the court within three months of the notification. If the court does not reject the plan within 15 days of its submission, it is deemed approved with effect against the creditors agreeing to it in writing.

Innovation

The Act envisages more transparency and simplification in insolvency proceedings through the mandatory publication of information in the Insolvency Register, mandatory electronic forms for most actions, as well as the possibility of videoconferences for creditors meetings.

Public preventive restructuring will be supervised by special trustees that have to pass an exam to ensure higher professionality and transparency; the special committee will prove the competence of such future special trustees with the mandatory re-testing every five years.

Final Observations

The Act intends to fulfil the long-desired reform of Slovak insolvency law and provide some guidance for debtors to avoid potential insolvency. Success will depend on the seriousness of their approach, openness and quality of the proposed solution.

Read the original here:

New Slovak legislation on solving threatened bankruptcy - Lexology