Category Archives: Bankruptcy

What do the following 15 people have in common: Presidents Thomas Jefferson,Abraham Lincoln, Ulysses S. Grant, and William McKinley; Senator George McGovern; businessinnovators Henry Ford, J.C. Penney, and Henry John Heinz; financial advisor Dave Ramsey; talkshow host Larry King; celebrated author Mark Twain; entertainment entrepreneurs Walt Disneyand P.T. Barnum; actress Debbie Reynolds; and NFL Hall of Fame Quarterback Johnny Unitas?

They are all well-known and successful, to be sure. But in addition, they all sufferedinsurmountable financial reverses, and they all got a second chance by filing for bankruptcy.

This list shows the wide variety of people who may need the protection of bankruptcy. Many other widely recognized names could be included, too. It also shows that many people willencounter financial reverses and difficulties in their lives and incur debts they are unable to repay. Often this is through no fault of their own. Financial reverses can result from a downturn in the economy or a serious illness, or through poor financial planning or management, bad business decisions, or other personal or financial reasons.

Indebtedness from such reverses can become so great that a person or business will neverbe able to pay it all back. In addition to the financial burden, such debt can place a heavy mentaland emotional burden on those trying to carry on with their lives. Individuals and businesses inthis position need a second chance.

The Framers of the Constitution recognized this need for a second chance. Article I of the United States Constitution gives Congress the power to establish . . . uniform laws on the subjectof bankruptcies throughout the United States. Through the years, Congress has not only passed laws creating bankruptcy protections, but has also created bankruptcy courts to handle bankruptcy proceedings. Bankruptcy courts are federal courts and are components of U.S. District Courts. Wherever there is a U.S. District Court, there is a corresponding U.S. Bankruptcy Court.

The Framers also recognized that laws on bankruptcy should be consistent throughout the country. For this reason, the Constitution refers to uniform laws on bankruptcy. Uniformity isachieved in part by Congresss giving federal courts exclusive jurisdiction over bankruptcyproceedings. This means that all bankruptcies are handled in federal courts and not in state courts.

Bankruptcy proceedings start when a person or business who can no longer repay their debts files a petition with the local bankruptcy court. In some cases, creditors of the person orbusiness may file the petition to have the person or business declared bankrupt.

Bankruptcy may result in the debts being liquidated or in the development of a repayment plan. Whether through liquation of debt or the institution of a repayment plan, the goal is to befair not only to the bankrupt individual or business, but also to the creditors. Sometimes this willrequire that the property of the bankrupt person or business be sold to pay back as much of thedebt as possible. This may be necessary because the goal of a bankruptcy proceeding is not a freepass, but a new start.

As is clear from the list of names above, bankruptcy is not a reflection of bad character or a sign of poor business judgment. And it does not preclude a person from achieving great successlater on. The federal courts, through bankruptcy proceedings, provide an important opportunityfor a second chance and a new start in business and in life.

Curtis L. CollierUnited States District JudgeChair, Eastern District of Tennessee Civics and Outreach Committee

Carrie Brown StefaniakLaw Clerk to the Honorable Curtis L. CollierImmediate Past President, Chattanooga Chapter of the Federal Bar Association

Eliza L. TaylorLaw Clerk to the Honorable Curtis L. Collier

View original post here:

Bankruptcy Court - The Court Of Second Chances - The Chattanoogan

The Boston Herald, Chicago Tribune, Dallas Stars, Los Angeles Dodgers, Nebraska Book Company, Tropicana Las Vegas Casino, and Washington Mutual all proudly bear the name of a city or state where they are based. Yet all filed for Chapter 11 Bankruptcy in Delaware, taking advantage of a loophole in bankruptcy law that allows businesses to flee their home states and have their Chapter 11 cases heard in jurisdictions to which they have no meaningful connection. This frequently-used loophole enables bankrupt businesses to pick the court, the applicable case law, and sometimes even the judge who will hear their Chapter 11 cases.

This practice, called venue shopping, has been deemed the single most significant source of injustice in chapter 11 bankruptcy cases by retired bankruptcy Judge Steven Rhodes, who administered the City of Detroits bankruptcy. Outside of bankruptcy, plaintiffs and defendants may only sue or be sued in locations based upon strict, constitutionally-based principles of personal jurisdiction. Current bankruptcy law, however, allows medium to large businesses to file their bankruptcy cases basically anywhere in the country. The Boy Scouts of America, a federally-chartered corporation based in Texas, filed for bankruptcy in Delaware, while the National Rifle Association, a New York corporation with headquarters in Virginia, filed for bankruptcy in Dallas, Texas.

These runaway cases create opportunities for unjust results tucked away from the scrutiny of those most concerned. Big business debtors and their advisors often choose bankruptcy venue far away from headquarters, making it difficult for creditors, employees, retirees, and the home-town media to observe and participate in the case. Venue shopping forces creditors who are sued by debtor companies to defend themselves in a remote forum chosen by the company and without any connection to their dealings with the debtor. Forcing participants to hire local counsel (as required in Delaware) and travel to the remote venues imposes significant costs, often on those who can least afford them, and may preclude them from participating in the bankruptcy.

Venue shopping enables the owners and managers of bankrupt companies to seek out a friendly landing place, perhaps one where they will be personally protected or where they believe the court will approve large bonuses for the executives who took the company into bankruptcy. Purdue Pharma, the opioid manufacturer with headquarters in Connecticut and principal manufacturing plants in Rhode Island and North Carolina, shopped its chapter 11 bankruptcy into White Plains, N.Y., where the sole presiding judge had ruled in another case in a way that might protect the Sackler family that owns Purdue.

Venue shopping has caused a concentration of large business bankruptcy cases in a handful of courts perceived of as being management-friendly, despite having little connection with the debtors business. The overwhelming concentration of runaways is in Delaware, which has little connection with most of the businesses that file there as either the location of their headquarters or principal assets. At the moment, other favored courts include the Southern District of Texas (Houston) and the Richmond Division of the Eastern District of Virginia, although changing judges and more recent rulings may cause lawyers to pick other locales as time goes by. Some of these filings go beyond picking a district to looking for a specific judge that the debtors management would prefer, which they can do where a judicial district or division has only one or two judges.

The judges in the favored districts are capable and honorable public servants, but Congress never intended for only a handful of judges to handle large business cases, and there is no legitimate reason for doing so. Bankruptcy judges throughout the country have the ability to handle all types of cases, including large Chapter 11 reorganizations, because they are appointed based on merit by appellate judges, not politicians, and they are vetted for their knowledge and experience in bankruptcy procedures and the local law applicable to the companys business and to its customers and suppliers. No person or corporation should be allowed to pick the judge in its own case.

The best way to stop venue shopping is for Congress to amend the bankruptcy venue statute, a no-cost solution. The Bankruptcy Venue Reform Act of 2021 (H.R. 4193), a bipartisan bill introduced by Representatives Zoe LofgrenZoe Ellen LofgrenBiden to meet with 11 Democratic lawmakers on DACA: report House GOP blames Pelosi not Trump for Jan. 6 House erupts in anger over Jan. 6 and Trump's role MORE (D-Calif.) and Ken BuckKenneth (Ken) Robert BuckGOP lawmakers demand answers on withheld restitution following Nassar revelation Hillicon Valley: Biden: Social media platforms 'killing people' | Tech executives increased political donations amid lobbying push | Top House antitrust Republican forms 'Freedom from Big Tech Caucus' Top House antitrust Republican forms 'Freedom from Big Tech Caucus' MORE (R-Colo.) in the House, would close the loophole and stop the manipulation of venue by requiring businesses to file bankruptcy where their headquarters or principal assets are located, resulting in a better distribution of cases around the country. A more even distribution of cases will better utilize existing judicial resources and better ensure that that the tens of millions of Americans who interact with bankruptcy courts have confidence in the system that decides their financial futures. Public confidence in the bankruptcy system depends on eliminating this dangerous practice and Congress enacting this reform.

Joan Feeney and Steven Rhodes are former bankruptcy judges; Adam Levitin and Jay Westbrook are law professors who teach bankruptcy at Georgetown University and The University of Texas at Austin, respectively.

Visit link:

Now is the time for bankruptcy venue reform | TheHill - The Hill

(file photo)

PublishedAug 6, 2021 11:52 AM by The Maritime Executive

The bankruptcy judge hearing the case of Bouchard Transportation approved the sale of the companys tugs and barges during a hearing on August 5. Under the proposed final sale, the assets of the company would be split between two financial firms that provided financing during the bankruptcy, although the company is holding out hope for a last-minute alternate proposal that would permit it to retain some assets.

Judge David Jones at the U.S. Bankruptcy Court in Texas expressed satisfaction with the sale process, although there have been concerns raised by the companys debtors and members of the Bouchard family. Earlier in the process, they questioned if that the asset sale would raise sufficient funds to provide a meaningful recovery for the approximately $230 million owed the companys debtors. In addition, the debtors are objecting to fees due to Hartree Partners, an unsuccessful first bidder designated by the company. The judge said in yesterdays hearing that he would consider the issue of the fees at a later date.

Under the sale approved by the court, 17 of the companys tugs and 12 barges would be sold to JMB Capital Partners. JMB offered a total of $115.3 million of which $20.8 million would be cash with the remainder being a credit against the debtor in possession financing JMB provided to Bouchard at the beginning of the bankruptcy process. In April, JMB supplied financing and it has a lien against the vessels it would acquire which were listed as collateral in the financing.

Separately, a financial group led by Wells Fargo was approved to acquire eight tugs and 10 barges. Wells Fargo through Rose Cay submitted a bid of $130 million, but $100 million is a credit against debts due to the bank on the assets with only $30 million being in cash.

Financial advisers for the bankruptcy told the court that these were the best of the seven bidders who had submitted a total of nine written indications of interest for Bouchards assets. Six of the bids were for specific assets while three had bid for nearly all the assets. However, none of the bidders proposed to become a chapter 11 sponsor, which would have acquired the entire company and its assets in a single transaction.

The question of the valuation of the Bouchard assets has been raised a number of times. Legal trade Law 360 quotes the financial adviser Richard Morgner as saying the sale was challenging, in part because the fleet had not been operating in a meaningful way. He told the court that capital will be required to return the vessels to full operating condition.

Bouchards lawyers also told the court that discussions were continuing with a possible alternate bidder and the court granted the companies until the afternoon of Monday, August 9 to complete the new proposal. Bouchard is working with another distressed asset creditor, 507 Summit, on a proposal where the firm would become an equity investor permitting Bouchard to retain some assets. Wells Fargo would have to agree to receive new notes for its debt and the proposal reportedly would offer creditor notes valued at 50 cents on the dollar for their claims. If this deal can be reached, the tugs and barges to be sold to the Wells Fargo group would be retained by Bouchard.

The company filed for reorganizational bankruptcy in September 2020 to prevent foreclosure on its vessels in Florida, Louisiana, New York, and Texas. At the time, they cited a loss of business after a barge accident that killed two crew members in 2017 and the impact of the pandemic in 2020.

After Mondays deadline for alternate proposals, the court has scheduled a confirmation hearing for August 18 to conclude the sale of the tugs and barges.

Read this article:

Bankruptcy Court Approves Sale of Bouchard's Tugs and Barges - The Maritime Executive

Top picture courtesy: REUTERS/Brendan McDermid & bottom picture: REUTERS/Yuriko Nakao

The company and law firm names shown above are generated automatically based on the text of the article. We are improving this feature as we continue to test and develop in beta. We welcome feedback, which you can provide using the feedback tab on the right of the page.

(Reuters) - Earlier this year, some of Mallinckrodt's creditors balked at the prospect of rewarding top executives of the bankrupt pharmaceutical company with bonuses when management was facing accusations of misconduct. But their complaints didn't persuade the judge overseeing the case, who ruled that the 12 executives could collect about $30 million in performance bonuses if they met certain goals.

Denouncing bonuses for high-ranking officers of companies that are in bankruptcy is not uncommon. But it often has little sway with judges, who must approve the incentive plans. In fact, what made the Mallinckrodt situation stand out was that creditors even bothered to challenge the payments in court. These days, corporate debtors tend to arrange a deal with their creditors behind the scenes in order to fend off a public fight when a bonus plan is presented publicly.

Mallinckrodts bankruptcy was precipitated by widespread litigation accusing it of helping to fuel the national opioid epidemic, which has resulted in the deaths of hundreds of thousands of Americans, by downplaying the risks of its drugs. But in April, U.S. Bankruptcy Judge John Dorsey in Delaware concluded that mere allegations of senior management misconduct in the years leading up to the bankruptcy was not enough to justify denying them bonuses.

Mallinckrodt said the bonuses were a matter of "appropriately compensating and incentivizing" the executives, in response to the objections. A representative for the company declined to comment.

Mallinckrodt is just one of many bankrupt companies - including OxyContin maker Purdue Pharma - that have sought and received court approval of executive bonus plans in recent years, even as many have opted to pay bonuses before they file for Chapter 11 protection.

Waiting to seek approval of a bonus plan during a bankruptcy offers more transparency for creditors and the general public and provides opportunities for those who have questions about the payments to have their say. Still, opposition to such executive bonuses appears to have waned recently compared with five or six years ago, when it was common to see labor unions or junior creditor challenges to additional payments for top brass in bankruptcy court.

And even the COVID-19 pandemic did not have any obvious effect on bonus plans approved by bankruptcy judges. Since March 2020, Neiman Marcus Group was approved to pay up to $10 million to eight executives, Intelsat was approved to pay up to $22 million to eight executives, SpeedCast International was approved to pay up to $7.6 million to six executives, and offshore driller Valaris was approved to pay up to $11 million to 12 executives. Those are just a handful of examples. None of those bonus plans prompted opposition from junior creditors.

SOUNDING THE ALARM SOLO

These days, the lone opponent of this type of plan in court has often been the bankruptcy arm of the U.S. Department of Justice, the U.S. Trustee Program (USTP), which serves as the government watchdog on various aspects of a Chapter 11 proceeding.

One of the USTP's many roles in a bankruptcy involves policing these bonus plans called key employee incentive plans, or KEIPs, in bankruptcy lingo. The companies lawyers must be careful to ensure that the bonus plans they present to a bankruptcy judge for approval are not actually retention plans, because those are not permitted for high-ranking executives under bankruptcy law. (Lower-level employees may collect retention bonuses during a bankruptcy, however.)

Proponents of the bonuses say theyre beneficial to the company as a whole, as well as to its creditors, because they encourage executives to work their hardest to achieve the best possible outcome and the highest possible value for the company. But the USTP believes the KEIPs are getting out of hand.

Overall, we are concerned that bonuses are considered an entitlement, USTP Director Clifford White III said in an interview with Reuters.

The best his office can do, he said, is to force the bankrupt company to be as transparent as possible about the potential bonuses and ensure that the goals executives must meet to collect their money are genuinely difficult. Basically, the U.S. Trustee is making sure the executives arent being paid extra just for showing up to work.

BEHIND THE SCENES

In the not-too-distant past, KEIPs may have inspired opposition from junior creditors. But now bankrupt companies often work with their various creditor constituencies behind the scenes before they file their bonus plan publicly in the hope of keeping any drama out of the public eye.

Unsecured creditors committees, whose constituents are likely to see substantial discounts to their recoveries in a bankruptcy, will sometimes ask for modifications to a KEIP but ultimately wont put up much of a fight in court because they want to see the case move forward and achieve some sort of return for them, as quickly as possible.

As unsecured creditors, theyre relying on management to get them the best result possible in a bankruptcy case, Richard Kanowitz of Haynes and Boone said. So if [the company is] saying these people are imperative and necessary to reorganization, you dont want to fight to just fight.

During the rash of bankruptcies among coal companies around 2015 and 2016, it was more common to see pushback to executive bonus plans from labor, with the United Mine Workers of America often arguing that it was inappropriate to reward executives while miners didnt know whether theyd have jobs or pensions by the end of the case. But as coal bankruptcies have faded and Chapter 11s in the retail and oil and gas sectors which generally dont have a unionized workforce have increased, workers are heard from less than they once were.

Acceptance of executive bonuses has grown, especially as union influence has diminished, according to Jack Cohen, who chairs the Association of BellTel Retirees. One of the associations areas of focus is runaway executive compensation.

People become numb to it, Cohen said. Unions have lost some of their power, what they had years ago.

RESOURCE IMBALANCE

Judges who must sign off on these bonus plans are largely limited to the evidence the company and other interested parties present, U.S. Bankruptcy Judge Marvin Isgur in Houston said in an interview with Reuters. But often the company is the only one presenting evidence.

Isgur, who has presided over an array of high-profile Chapter 11 cases in recent years, noted during a December hearing for offshore driller Valaris that while the U.S. Trustees attorney made good arguments questioning bonuses for the top brass, he didnt offer evidence to counteract what Valaris provided in favor of them. Isgur signed off on the plan.

Sometimes, Isgur said, he feels the frustration he assumes the U.S. Trustee lawyers must experience when they make good legal arguments but dont have the resources to put on evidence that would back up their position. But in approaching these bonus plans, he added, its important for a judge to only weigh the evidence that's been presented and keep personal views on the executive compensation out of the picture.

They know what theyre confronting and facing because theyre very fine lawyers, and Im happy to have them make the arguments and I want them to ask the questions, he said. But in the end, I've got the evidence.

- Additional reporting by Rick Linsk and Disha Raychaudhuri

Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.

Read the rest here:

With diminishing pushback, executive bonuses in bankruptcy veer toward 'entitlement' - Reuters

A new Senate bill aims to make it possible to achieve a federal student loan discharge in bankruptcy court, requiring certain universities to grant a tuition refund if a student's federal loans are discharged. (iStock)

The Senate Judiciary Committee met on Wednesday to discuss a new bipartisan bill, The FRESH START Through Bankruptcy Act of 2021, which would make federal student loans eligible for discharge in bankruptcy after 10 years.

Certain higher education institutions would be responsible for repaying a portion of the remaining balance so that the burden doesn't fall solely on the federal government. Specifically, the bill would require colleges with more than a third of their students receiving federal student aid to partially refund the government if the school had consistently high student loan default and low repayment rates.

FRESH START is being poised as an alternative to student loan forgiveness, which was an issue that President Joe Biden campaigned on but has yet to deliver. At the Aug. 3 Senate Judiciary Committee hearing, Sen. Chuck Grassley (R-Iowa) said that student loan cancellation would "overwhelmingly would benefit the wealthy at the expense of others."

"We shouldnt ask those who didnt attend college to pick up the tab for those who did."

Bankruptcy reform may offer a more nonpartisan solution compared to canceling student loan debt. But while bankruptcy can provide a long-term path to financial stability to consumers who are struggling, it's extremely difficult to discharge either federal or private student loan debt through bankruptcy as it currently stands. Plus, filing for bankruptcy comes with its own drawbacks, so it's not always the most favorable first choice for borrowers.

If you're struggling to repay your student loans, keep reading to learn more about your options, including forbearance, income-driven repayment (IDR) and student loan refinancing.

Private student loan refinance rates are at historic lows, and you can compare your estimated rates without impacting your credit score on Credible's online marketplace.

HERE ARE SOME OF THE BEST STUDENT LOAN FORGIVENESS PROGRAMS

How your student loans may be impacted under FRESH START

The goal of FRESH START is to "improve the integrity of the federal student loan program, and quality of education a student receives without disrupting the vast majority of educational services that do provide real value to their graduates."

FRESH START would make federal student loans dischargeable in bankruptcy, but it doesn't end there. The bill would retain the existing undue hardship option for discharging private and federal student loans in bankruptcy that have been due for less than 10 years.

PRIVATE STUDENT LOANS CAN BE DISCHARGED IN BANKRUPTCY, BUT CONSIDER THE ALTERNATIVES

Even if the bill is passed, bankruptcy might seem like an extreme option for certain borrowers. Chapter 7 bankruptcy, also known as liquidation bankruptcy, requires you to sell off assets and investments to pay off your debt. Chapter 13 bankruptcy restructures rather than discharges your debts.

Filing either chapter of bankruptcy would have a lasting negative impact on your credit score, making it difficult to take out loans with favorable terms. Having a bad credit score can keep you from getting a mortgage or renting an apartment, and it makes borrowing money more expensive with higher interest rates.

Before you try to get out of student loan debt by filing for bankruptcy, you should exhaust all your options. Borrowers who are struggling with private student loan debt may be able to lower their monthly payments by refinancing, for example, to stay out of default and avoid being sued over the debt.

If you're considering refinancing your private student loans, be sure to shop around for the lowest interest rate possible to make sure you're saving as much money as you can. You can compare rates across multiple private lenders at once on Credible.

ANOTHER STUDENT LOAN SERVICER ENDS FEDERAL CONTRACTS, DESERTING BORROWERS

What to do now if you can't repay your student loans

Defaulting on your student loans can result in your debt being sent to a collections agency. This can negatively impact your credit score and even result in wage garnishment if you're successfully sued over the debt.

But for borrowers struggling to repay their student loans, bankruptcy isn't always an option. You might also consider:

Federal loan borrowers can apply for economic hardship deferment or unemployment deferment. Both options can grant you a 36-month forbearance period in which you don't have to repay your loans during which income does not accrue, but not all low-income borrowers will meet the circumstances to qualify.

Borrowers with federal direct loans can also enroll in income-driven repayment (IDR) to lower their monthly loan payments. Under an IDR student loan repayment program, your payment may not exceed about 10% to 20% of your disposable income, depending on the type of loans you have.

BIDEN ADMINISTRATION HAS CANCELLED $1.5B IN STUDENT LOAN DEBT FOR BORROWER DEFENSE

Finally, borrowers with private student loans could consider refinancing to a lower interest rate. Private student loan refinance rates are near all-time lows, according to data from Credible. Student loan refinancing can help you pay off your student loans faster or even lower your monthly payment.

If you have federal loans, though, refinancing comes with an important caveat: Refinancing to a private student loan makes you ineligible for federal protections like forbearance, IDR and even possible student loan forgiveness, including the Public Service Loan Forgiveness program (PSLF).

Still not sure if student loan refi is right for you? Get in touch with an expert loan officer at Credible to discuss your options for refinancing eligible loans.

VETERANS BORROWING VA PROGRAM LOANS AT A RECORD PACE, STUDY SHOWS

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert atmoneyexpert@credible.comand your question might be answeredby Crediblein our Money Expert column.

Read the rest here:

Senate bill targets student loans in bankruptcy: What this means for student loan cancellation - Fox Business

The amazing streak of very low bankruptcy filings continues.

Fifty-four households and businesses filed in July. Thats three more than the 51 that filed in June 2021, the lowest number for any month since 1987.

Everybody expected bankruptcies to rise during the pandemic. Instead, thanks to a massive amount of federal money and protections, they fell to levels not seen in a generation. Last July, when the state unemployment rate was 8%, there were only 72 filings. This July, there were 18 fewer cases or 25 percent less. Thats the lowest of any July since 1987, when there were 46.

The high for July was in 2009, during the last recession, when there were 494 filings. In other words, more than 9 times as many as last month.

Filings have now stayed in the double digits for 16 straight months. For 30 years before that, they have been in the triple digits.

Year to date, the monthly average is 66. In 2020, the average was 88 (thanks to the first quarter, before the pandemic). Compare that to 2010 monthly average in the midst of the last recession: 459.

Business filings are also down. There were no personal filings that included business related debt, compared to three in June. Two businesses did file directly, compared to one in June.

J. Hunter Properties, LLC (apparently a small motel property), Hampton, filed July 15, Chapter 11. Assets and Liabilities: $1 million to $10 million.

Pro Line Companies, LLC, New Boston, filed July 22, Chapter 7. Assets: $0. Liabilities: $141,048.

Read more:

Another near record bankruptcy low - New Hampshire Business Review

05 August 2021

Frankfurt Kurnit Klein & Selz

To print this article, all you need is to be registered or login on Mondaq.com.

Contested conservatorships, feuds over NFL feepayouts, Twitter battles making their way into court documents, and allegations of hundreds ofthousands of dollars in lottery ticket earnings being siphoned to a"Real Housewives" star's coffers: this summer hasbrought a cascade of lessons for ethics practitioners in thebankruptcy action facing plaintiffs' firm Girardi Keese,formerly headed by Thomas Girardi.

Both the firm and Mr. Girardi are currently embroiled ininvoluntary chapter 7 bankruptcy proceedings in U.S. BankruptcyCourt in the Central District of California, after Mr. Girardi wasfound last year to have failed to distribute$2 million in settlement monies to the families of plane crashvictims he was representing. Since then, a deluge of former clients have come forwardto accuse the firm of similarly misappropriating settlement funds.Thomas Girardi, famed for spearheading major class actionsand for appearing alongside ex-wife Erika Girardi on the reality TVshow "Real Housewives of Beverly Hills," was placed intoa conservatorship earlier this year after beingdiagnosed with Alzheimer's disease and dementia. TheState Bar of California also deactivated Mr. Girardi's law license.

Despite the firm's size and renown after decades inpractice, however, Girardi Keese did not carry professionalliability insurance. The bankruptcy proceedings must nowattempt to disburse recoupments to lenders, shareholders, andindividual creditors in turn. In sum, the creditors'claims against the firm total $130 million, according to documentsfiled in the action. In the absence of insurance, Ms. Girardihas recently attempted to convince the court to keep certain feearrangements in place on current firm clients, given the value ofthose legal fee arrangements as a source of potential income thatcould be redirected to creditors.

Last month, Ms. Girardi objected to the transition ofoutstanding cases on the firm's docket to other law firms.She argued that given the value of Girardi Keese'sremaining cases, she believed that the firm may be able to pay offits liabilities to outstanding debtors from attorney's feesrecouped in those pending actions. In her pleadings, Ms.Girardi made her interest in the proceedings clear: although shefiled for divorce from Mr. Girardi in November 2020, "therewas no pre-nuptial agreement" and under California laws, sheargued that she has an interest in any distributions due to Mr.Girardi after accounting for the firm's creditors.

Girardi objected specifically to the transference of two majorcases held by Girardi Keese. In one, Girardi Keeserepresented plaintiffs in 100 cases associated with the now-settledNFL concussion litigation, In re National Football LeaguePlayers' Concussion Injury Litigation No. 2:12-md-02323(E.D. Pa.), pursuant to a joint client agreement with the law firmGoldberg Persky White P.C. In that matter, Ms. Girardiasserts that Girardi Keese could receive a windfall of up to $20million in contingent fees should the structure under the originaljoint client agreement remain in place.

In a second objection filed with the court, Ms. Girardicontested the transference of Girardi Keese's portfolio of 52cases in connection with a class action against Johnson &Johnson and Boston Scientific Corporation, whose plaintiffs allegepersonal injury from the use of pelvic mesh products. Underthe proposed transfer, Girardi Keese's cases would betransferred to two law firms currently representing otherplaintiffs in the mesh litigation. These matters arescheduled for a hearing on August 10, 2021.

Though it may not be salacious enough for network syndication,these developments have significant lessons for ethicspractitioners. The law firm's predicament is an extremeexample of the consequences that can follow from a law firm notcarrying adequate professional liability insurance. Althoughthere is certainly an open question of whether a malpracticecarrier would agree to cover any of the losses here (given theallegations of intentional misconduct), it would have at leastprovided the injured clients with a possible avenue of recovery.This predicament also adds to the debate over whetherjurisdictions impose rules requiring lawyers to carry legalmalpractice insurance.

In the absence of liability insurance or sufficient assets tomake the firm's creditors whole, this action will largelycenter on the firm's present and future legal fees, and onparsing how those are divided. The court's relativereceptiveness to Ms. Girardi's arguments will provide insightsinto how courts view legal fees as a potential commodity to be usedin satisfying creditors.

http://www.fkks.com

This alert provides general coverage of its subject area. Weprovide it with the understanding that Frankfurt Kurnit Klein &Selz is not engaged herein in rendering legal advice, and shall notbe liable for any damages resulting from any error, inaccuracy, oromission. Our attorneys practice law only in jurisdictions in whichthey are properly authorized to do so. We do not seek to representclients in other jurisdictions.

POPULAR ARTICLES ON: Insolvency/Bankruptcy/Re-structuring from United States

Read more:

Real Litigation Of Beverly Hills: Ethics Lessons From The Thomas Girardi Bankruptcy Case - Insolvency/Bankruptcy/Re-structuring - United States -...

Skip Transport Inc., one of the first electric scooter companies to operate in San Francisco, has filed for Chapter 7 bankruptcy, according to the San Francisco Business Times.

The company was originally founded as Waybots Inc. before launching as Skip in 2018 with seed funding. In August 2018, Skip was one of only two scooter companies (the other was Scoot) allotted one-year permits to operate in San Francisco. But by the end of 2019, the company's scooters were no longer permitted to operate in the city, which may have something to do with several incidents of their scooters bursting into flames.

In December 2020, Skip announced they had been acquired by competitor Helbiz, a New York-based startup that operates e-bikes, e-scooters and mopeds. Most recently, Skip's scooters were available in Long Beach, Portland and Washington, D.C. It is unclear how the bankruptcy filing will affect scooter availability, but at time of publication, Skip scooters are not available anywhere in the Bay Area, according to a search on the app.

The pandemic caused a dramatic drop in ridership for e-scooter companies across the board, but towards the end of last year, it had rebounded to within 20% of the previous years levels, according to the 2020 North American Bikeshare and Scootershare Association (NABSA) State of the Industry Report. Currently, four companies hold permits to operate in San Francisco: Lime, Scoot, Spin and Jump (a former Uber subsidiary that has since been folded into Lime).

While Skip has filed for bankruptcy, other e-scooter companies still operating in San Francisco are chugging along.

"While COVID-19 was certainly a challenge for Lime at its height, we've seen demand return well beyond expectations, leading to our first full-quarter of profitability in 2020," said a Lime representative in a statement to SFGATE. "Cities and riders quickly embraced shared electric bikes and scooters because they offer open-air, socially-distanced and sustainable travel options. We've continued to grow in 2021 and are excited about the future of micromobility as city officials increasingly recognize its value as a way to help residents connect to public transit and as a preferred alternative to cars."

SFGATE also reached out to Skip for comment but has not heard back at time of publication.

Read more:

One of the first e-scooter companies to operate in San Francisco files for bankruptcy - SF Gate

Calls for institutional risk sharing proposal to be dismissed from current legislation

Washington, D.C., Aug. 05, 2021 (GLOBE NEWSWIRE) -- UNCF (United Negro College Fund) opposes The FRESH START Through Bankruptcy Act of 2021 in its current form because the version for the 117th Congress includes institutional risk-sharing provisions. UNCF would support the baseline bill without these provisions.

I have spoken to Capitol Hill policy and decision makers on both sides of the aisle for years, and I have never been clearer about any issue, said Dr. Michael L. Lomax, president and CEO, UNCF. Institutional risk-sharing has a possibility of bankrupting historically Black colleges and universities (HBCUs) and keeping low-income students of color from attending college. Any proposal that does not take into account that higher education costs are rising each year, plus the fact that Black student borrowers are uniquely disadvantaged because of the lower amount of household wealth in Black families versus our majority counterparts, is just a non-starter for UNCF and HBCUs. If this bill was proposed as it was in other years without this provision, it would once again enjoy our strongest endorsement.

Institutional risk-sharing would have a disproportionately negative impact on HBCUs because they force colleges and universities to make financial payments to the United States Department of Education when their students default on their student loan without consideration for the background of the students, said Lodriguez Murray, senior vice president for public policy and government affairs at UNCF. Institutional risk-sharing is the opposite of comparing apples with apples. It is a proposal without nuance. While the base bill would help discharge debt, and that is needed; the institutional risk-sharing proposal would hurt HBCUs because they primarily serve low-income, first-generation and minority students who face challenges to college entry and completion.

Story continues

HBCUs are more likely to face risk-sharing penalties simply because they serve a high proportion (80%) of students who must borrow to attend college and have much greater student borrowing rate than the average (59%) borrowing rate at all public and private not-for-profit colleges and universities. Risk-sharing in effect penalizes HBCUs for ensuring the hardest-to-serve students have access to postsecondary education, while largely protecting the elite institutions that could most afford to send their students to college for free.

UNCF supports efforts to hold non-profit and for-profit colleges accountable, but there are better ways to achieve this goal. Institutional risk-sharing should be replaced with incentives that reward universities that serve at-risk students. For example, federal funding could be provided to institutions based on the number or percentage of Pell students they actually graduate. Policymakers should also double the Pell grant amount, helping to reduce the amount of student loans needed to complete college and going a long way towards leveling the playing field in higher education. Finally, interest rates should be lowered, and origination fees should be eliminated for federal student loans to reduce the cost of borrowing.

To learn more about UNCFs positions on this or other similar issues, please contact UNCFs Government Affairs team at UNCF.org/ContactUs.

###

About UNCFUNCF (United Negro College Fund) is the nations largest and most effective minority education organization. To serve youth, the community and the nation, UNCF supports students education and development through scholarships and other programs, supports and strengthens its 37 member colleges and universities, and advocates for the importance of minority education and college readiness. UNCF institutions and other historically Black colleges and universities are highly effective, awarding nearly 20% of African American baccalaureate degrees. UNCF administers more than 400 programs, including scholarship, internship and fellowship, mentoring, summer enrichment, and curriculum and faculty development programs. Today, UNCF supports more than 60,000 students at over 1,100 colleges and universities across the country. Its logo features the UNCF torch of leadership in education and its widely recognized trademark, A mind is a terrible thing to waste. Learn more at UNCF.org or for continuous updates and news, follow UNCF on Twitter at @UNCF.

Here is the original post:

UNCF Opposes The FRESH START Through Bankruptcy Act of 2021 - Yahoo Finance

Foster Swift Collins & Smith PC

See all

The company and law firm names shown above are generated automatically based on the text of the article. We are improving this feature as we continue to test and develop in beta. We welcome feedback, which you can provide using the feedback tab on the right of the page.

July 27, 2021 - In the wake of the COVID-19 pandemic, Congress passed the much-needed Consolidated Appropriations Act of 2021 (CAA). The Bill, which supplements the sprawling Coronavirus Aid, Relief, and Economic Security (CARES) Act from March 2020 and creates economic relief for those impacted by the pandemic, was signed into law on December 27, 2020.

Beyond providing $900 billion in stimulus funding that was attached to a $1.4 trillion spending bill, there were also a slew of alterations to laws that resulted from the passage of the CAA. In particular, there were significant changes for both debtors and creditors as it relates to multiple sections of the Bankruptcy Code.

These temporary changes will have a ripple effect in the coming year, as it provides much needed relief to both individuals and businesses impacted by the pandemic. And though we have not quite yet seen how just these measures will play out, bankruptcy trustees should expect to see a major shift in a number of aspects of their duties and responsibilities over the coming year.

The first substantial change relates to alterations to Section 364 of the Bankruptcy Code. In particular, these changes would permit bankruptcy debtors to seek financing approval through the CARE Act's Paycheck Protection Program (PPP).

When it comes to PPP loans, the SBA's position is that debtors who are in bankruptcy are ineligible. Rather, in order for these PPP loans to become available, it is necessary for the Small Business Administration's (SBA) Administrator to send a letter to the Director of the Executive Office for United States Trustee that provides consent to PPP loans in bankruptcy, per the CAA.

Further, driving home the Administration's stance, there was an Interim Final Rule issued by the SBA in January that also stated the ineligibility of debtors in bankruptcy in respect to PPP loans.

Another change alters Section 365(d)(3) and changes a debtor's post-petition lease obligations when it comes to Subchapter V cases. Under this change, it is now possible to get an extension in upwards of 120 days after either the beginning of a case or the day the lease is assumed/rejected.

Under the terms of the CAA, this extension can be granted as long as the debtor is currently experiencing or has previously experienced financial issues related to the COVID-19 pandemic. The amendment allows for an initial 60-day extension, as well as the possible addition of another 60-day extension.

Similarly, there has been a change to Section 365(d)(4) that modifies the rules surrounding the deadline for debtors as it relates to the assumption of leases for nonresidential real property.

Pursuant to the CAA's temporary changes to the Bankruptcy Code, there is now an extension in time for debtors or trustees to either accept or reject an unexpired lease for nonresidential real estate. Now the CAA has extended this period from 120 to 210 days and it is also possible to get an additional extension of 90 days with a show of cause.

For individual debtors, Section 366 of the Bankruptcy Code has been amended to protect them from having their services cut off by utility companies. Under the rule change, there is a 20-day period after a bankruptcy case begins where a utility company is not permitted to end services for debtors who have been unable to "furnish adequate assurance of payment."

To be eligible, a debtor must make a payment to the utility "for any debt owed to the utility for service provided during the 20-day period beginning on the date of the order for relief." Additionally, they must make a payment to the utility "for services provided during the pendency of case when such a payment becomes due" following the day when the 20-day period ends.

Overall, there are a number of other key provisions in the CAA that provide protection against debtors as they navigate the fallout of the COVID-19 pandemic. For instance, the CAA has an impact on Section 525 of the Bankruptcy Code as it relates to the protection of debtors who have filed for bankruptcy from discriminatory treatment.

Prior to the passage of the CAA, 11.U.S.C. Section 525 said that "a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against" current or former debtors who have filed for bankruptcy.

Under Title X Section 1001(c) in the CAA, there is an amendment to the Bankruptcy Code that adds in that an individual cannot be denied relief through provisions of the CARES Act due to their debtor status, meaning that someone cannot be discriminated against for pursuing funding through the CARES Act. This includes receiving help through programs like the eviction moratorium and the foreclosure moratorium.

There was also a change to Section 541 of the Bankruptcy Code, which governs what is considered to be property of a debtor's estate in bankruptcy cases. Under the CAA, Section 541 is amended to exempt COVID-19 relief payments from being considered as property of a debtor's estate.

Per the law's language, this is for "recovery rebates made under Section 6428 of the Internal Revenue Code of 1986" which means that stimulus checks would not be considered to be part of a debtor's estate. However, according to a March article published by the National Consumer Law Center (NCLC), it could be possible "that a court may construe Section 6428B as a separate statute and therefore not a recovery rebate 'under Section 6428.'"

Yet the NCLC acknowledged that an interpretation such as that "would render meaningless the enactment of Code 541(b)(11) because even the stimulus payments under the December 27, 2020 Consolidated Appropriations Act would not be protected they were authorized under Section 6428A."

The NCLC added that "earlier stimulus payments under the CARES Act would have already been spent by debtors at the time Code 541(b)(11) became effective" and that ultimately such a ruling "would be contrary to Congress's intent to protect stimulus payments."

The CAA also amended Section 1328, changing the rules regarding certain aspects of debtor discharge. As a result of this amendment, debtors that are under a confirmed Chapter 13 plan can still receive a discharge if the debtor defaults on a maximum of three monthly residential mortgage payments.

The payments must have been due either on or after March 13, 2020, and the missed payments need to have resulted from the COVID-19 pandemic. According to the amendment, the debtor still needs to make payments to the lending party; however they still maintain the benefits resulting from a bankruptcy discharge for their other remaining debts.

Additionally, one of the more sizable amendments that will have an impact on so many businesses throughout the country is the CAA amendment to Section 547 of the Bankruptcy Code.

This section allows a debtor or trustee to recover "preferential payments", and the amendment to this section now provides protection to lessors of nonresidential real estate as well goods/services suppliers from having to return arrearage repayments.

By enacting this amendment, debtors are protected from arrearage payments that were made before the enactment of forbearance/deferral arrangements. This type of amendment provides much needed breathing room for debtors in a year where real estate leases proved to be a financial burden for many especially considering that so many offices were forced to go into a remote setting. It also should be noted that this specific amendment does not impact personal property.

The changes to the Bankruptcy Code through the CAA are not going to be permanent. In fact, a number of the provisions were slated to be sunsetted this past March. However, in an effort to extend these much needed amendments for a longer period of time, Senators Chuck Grassley (R-IA) and Dick Durbin (D-IL) introduced the bipartisan COVID-19 Bankruptcy Relief Extension Act, which was passed on March 27, mere hours before many of provisions were about to expire.

As a result of the passage of the COVID-19 Bankruptcy Relief Extension Act, the sunset dates of CARES Act and CAA amendments have been extended to either December 27, 2021 or March 27, 2022. These changes provide a buffer period for debtors who are rapidly nearing certain deadlines, providing them with an additional period of time to get their financial affairs in order as they continue dealing with the impact of the COVID-19 pandemic.

It goes without saying that the world was turned upside down by the pandemic and though the country has made significant strides in returning to a sense of normalcy, it has also required multiple acts by Congress to help so many in the United States stay afloat financially.

Legislation such as the CARES Act and the CAA created significant financial relief while also modifying many laws in an effort to alleviate the monetary burden caused by COVID-19.

Ultimately, given the amount of changes the CAA made to the Bankruptcy Code, bankruptcy trustees will have to navigate a new set of laws throughout the course of this year and into the early part of next and though it will be temporary, they will need to get used to seeing their roles and responsibilities shift as they resolve matters.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News.

Kelly Rathbun is regional director in the Denver office of Stretto, a bankruptcy technology and services firm that provides case-management solutions to facilitate the bankruptcy process. She brings more than 25 years of industry expertise to her role supporting bankruptcy trustees and professionals. She can be reached at Kelly.rathbun@stretto.com.

Scott Chernich, a shareholder at Foster Swift Collins & Smith PC in Lansing, Michigan, represents financial institutions in Chapter 11, 7 and 13 bankruptcy and handles commercial litigation and construction law. He can be reached at schernich@fosterswift.com.

Read the original:

The significance of the Consolidated Appropriations Act for bankruptcy trustees - Reuters