When a business becomes unable to meet obligations such as employee salaries, day to day invoices, and bank debt, management may turn to Bankruptcy law to liquidate or reorganize. As a rule, Courts prefer reorganization over liquidation, provided reorganization would be viable, preserve jobs, keep assets productive, and enhance the local economy. To begin with...Read More
In this case the value of unexpired commercial leases was put to the test. When a popular auto-repair/oil-change franchise went into Chapter 11, its unsecured creditors sought to recoup of the value of 2 unexpired leases it relinquished just before filing. The 7th Circuit analyzed the issue under 2 provisions of the Bankruptcy Code and...Read More
The “good faith” defense articulated in 11 U.S.C. 550(b)(1) applies as long as the transferee: (1) is an immediate or mediate transferee under §550(a)(2); (2) took the transfers for value; (3) took the transfers “in good faith;” and (4) took the transfers “without knowledge of the voidability of the transfer avoided.”Read More
The Attorney for Defendants in the District Court filed a lien on proceeds in a related State case and attempted to jump the line in terms of priority. When the District Court stopped him he sought relief in the 7th Circuit. The Appellate Court not only disagreed with his actions but actually sanctioned him for...Read More
Debtor Hospital filed an adversary complaint claiming that a prepetition government claim should be subject to the Automatic Stay. The Bankruptcy Court agreed citing 11 U.S.C. 362(a)(6). District Court reversed in part. The 7th Circuit Reversed again.Read More
As stated by the Supreme Court: requiring Bankruptcy Attorneys to bear the costs of their fee-defense litigation under 330(a)(1) "creates no disincentive to bankruptcy practice." Hear that Bankruptcy lawyers? You're on your own.Read More
On February 9, 2015 the Bankruptcy Court for the Northern District of Illinois, Eastern Division ruled in the case of Brandt vs. Rohr-Alpha, a case involving fraudulent transfers and whether certain debts can be avoided in Bankruptcy.Read More
For Debtors, Chapter 7 Liquidation is the ultimate relief, while Chapter 13 and 11 Reorganization offers an opportunity to reduce their Debtor’s payments in light of their income. In either type of case however, the Creditor is not entitled to anything until it has filed is Proof of Claim.Read More
Domestic support obligations are exempt from discharge in Bankruptcy and entitled to priority payment in a plan of reorganization. The tricky part is determining just what constitutes a "domestic support obligation" entitled to special treatment. Would a spouse's Attorneys' Fees be entitled to special treatment? Interest on unpaid sums? Court sanctions for unpaid support?Read More
This Opinion from Northern District of Illinois Bankruptcy Judge Jack Schmetterer showcases the interplay of Federal and State law in a complex commercial scenario. It also displays the characteristic desire of Federal Courts to keep things clear and simple: which is unfortunately the opposite of how convoluted factual and legal situations play out in State...Read More
