All posts in Chapter 11

New Bankruptcy Case to be Argued at the Supreme Court Next Monday

By | April 18, 2012 | Cases, Chapter 11, Supreme Court | No comments

RadLAX Gateway Hotel, LLC v. Amalgamated Bank

Docket No. Op. Below Argument Opinion Vote Author Term
11-166 7th Cir. Apr 23, 2012 TBD TBD TBD OT 2011

 Issue: Whether a debtor may pursue a Chapter 11 plan that proposes to sell assets free of liens without allowing the secured creditor to credit bid, but instead providing it with the indubitable equivalent of its claim under Section 1129(b)(2)(A)(iii) of the Bankruptcy Code.

My Brief on Friedman

By | March 25, 2012 | Case Briefs, Chapter 11 | No comments

Friedman v. P&P, LLC (In re Friedman), —- B.R. —- (9th Cir. BAP, March, 2012)

Issue:   Does the absolute priority rule still apply, after BAPCPA, in individual chapter 11 cases?

Holding:   No.

Judges Philip Brant and James Marlar, Tucson, AZ

Jury, Kirscher, Clarkson

Opinion by Scott Clarkson, Dissent by Meredith Jury

The debtors filed chapter 11 to stop a foreclosure sale on real property they owned although not their principle residence.  The debtors filed a plan proposing to pay unsecured creditors $634 per month.  The largest unsecured creditor filed an objection to the plan on various grounds including that the plan violated the absolute priority rule.  The bankruptcy court conducted a hearing on the plan limited to the issue of whether it was unconfirmable because it violated the absolute priority rule.  The court ruled that it did and ordered the debtors to file an amended plan.  The debtors did not do that and the case was converted to chapter 7.  The debtors moved for a stay pending appeal which was granted by the bankruptcy court given the split on the issue.

Read more…

No More Absolute Priority Rule in Individual Chapter 11s Says Split BAP

By | March 19, 2012 | Cases, Chapter 11 | No comments

The Friedman Opinion regarding whether or not the absolute priority rule still applies in individual chapter 11 cases was published today.  You can access it here – Friedman decision.   I’ll have more comments in a little while.  I sure think they got this one right.  Judge Scott Clarkson wrote the majority opinion, Judge Meredith Jury dissented.

San Fernando Valley Bar Program – March 22, 2012

By | March 5, 2012 | Chapter 11, Programs | No comments

Jon,

On Thursday, March 22nd, from 12 noon until 1:15 p.m., the San Fernando Valley Bar Association will be putting on what I believe is a highly needed program, especially for bankruptcy attorneys new to chapter 11 practice or who are considering trying their hands at chapter 11.

As attorneys, we learn the law and how to apply it.  Chapter 11 is foremost not the practice of law; it is the practice of understanding.  Understanding people, e.g., the client or the client’s principal, understanding why they have failed and what we can do to help create success out of failure, understanding the creditors and seeing what we can do to bring them on board for the reorganization, and giving understanding the bankruptcy judge who will have reason to support the debtor too.

The attorney needs to set the rhythms of a case but the rhythms do not come from the law.  The things we learn in law school really do not help us in chapter 11.  What we learn in other areas of bankruptcy practice do not help us much in chapter 11 either.  We set the rhythms, we make a difference and we help our clients succeed by understanding business, understanding people and, of course, understanding the law.

Read more…

LA Dodgers Disclosure Statement Approved

By | February 23, 2012 | Chapter 11 | No comments

Judge Sends Dodgers Ch. 11 Plan To The Plate
A Delaware federal judge on Wednesday approved a disclosure statement for the Los Angeles Dodgers LLC’s Chapter 11 bankruptcy plan despite a large number of objections, including one by a fan who suffered severe injuries last year at a baseball game.

New Downtown UST Compliance Rules — Comments and Questions

By | February 9, 2012 | Chapter 11, U.S. Trustee | No comments

Comments and questions re new compliance requirements for Downtown U.S. Trustee’s Office (Woodland Hills has more detailed instructions for their new rules!):

-The instructions to the Debtor’s Declaration re Compliance state that the tax returns are to be provided to the UST at the Initial Debtor Interview, but does not give another option in the event the returns are not provided at the IDI. Are you supposed to email or snail-mail? The UST analysts in Woodland Hills are adamant that no documents are mailed, except for large MORs.

-The Debtor’s Declaration re Compliance states that the Debtor must attach a Real Property Questionnaire for each real property it has an interest in.  But the UST’s Guidelines and Requirements for Chapter 11 Debtors in Possession (LA Division Cases Only) – Appendix A states that the Real Property Questionnaire must be provided to the UST in a separate email, with the following in the subject line “CH 11 COMPLIANCE 2:11-bk-12345-QQ; ABCD, INC.; USTLA5.” Therefore, the Real Property Questionnaire CANNOT be attached to the Debtor’s Declaration re Compliance.

Read more…

New Chapter 11 Disclosure Statement and Plan Forms for Individuals

By | February 7, 2012 | Chapter 11 | No comments

I finally used the new Chapter 11 Disclosure Statement and Plan forms for individual cases.  They are required by Judge Kaufman and Judge Zurzolo.  They are on the bankruptcy court website, Forms F 2081-1.DISCLSR.STMT and F 2081-1.PLAN.  They are incredibly simple and easy to use.  In fact, I’m not sure the disclosure statement form has enough in it.  The only historical info required is the means test numbers and the net income from the MORs.  The only projections required are amended Schedules I and J, amended to reflect the current status and the plan payments.  The only information on liquidation required is amended Schedules A and B, amended to the date of the disclosure statement.  I added exhibits with projections and I would certainly add exhibits with historical info if available.

The bad news is you cannot save the forms once filled out.  So you have to do the perfect job on the first try or retype it on the second try.  Also, of course, the empty boxes for the treatment of secured creditors leave a lot to be desired.  I got around that (I hope) by saying “see attached for the treatment.”

Try it, you’ll like it!  Remember the forms apply only to individual cases.  Also remember to thank Dennis McGoldrick who did the yeoman’s work on these and got the judges to approve them.

9th Circuit Rulings From Last Week

By | January 28, 2012 | Case Briefs, Chapter 11 | No comments

United States Ninth Circuit, 01/24/2012
In the Matter of Thorpe Insulation Co.,  
Insurance companies that did not reach settlements with the debtors are allowed to challenge the Chapter 11 reorganization plan where: 1) the appeal was not equitably moot; 2) the appellants met statutory, constitutional, and prudential standing requirements; 3) the appellants had standing in bankruptcy court to object to confirmation of the plan; and 4) anti-assignment provisions contained in contracts between the appellants and debtors were preempted by federal bankruptcy law. 

United States Ninth Circuit, 01/27/2012
Matter of Meruelo Maddux Properties, Inc., 
Debtor is a single asset case where: 1) the debtor existed solely to operate a 92-unit apartment complex; 2) the Code gives no basis for a “whole business enterprise” exception to single asset real estate debtor status that would allow the court to consider parent corporation and sister subsidiaries; and 3) relief from the automatic stay appropriate even though questions left about whether the debtor took timely corrective action to the bankruptcy court in the first instance.

California Court of Appeal, 01/25/2012
Flores v. Kmart Corp., 
In a wrongful death action brought against a corporation that had filed for Chapter 11 bankruptcy and confirmed a Plan, demurrer not appropriate where on the limited record of bankruptcy proceedings provided by the corporation, and consistent with due process principles, the corporation failed to demonstrate, at the demurrer stage, that the approval of the reorganization plan barred all of the plaintiffs’ claims. 

Thanks to Findlaw.com

Absolute Priority Rule Roundup

By | January 28, 2012 | Chapter 11, Judges Corner | No comments

The absolute priority rule is one of the foundations of bankruptcy.  The debtor receives a discharge if he turns over all property that the creditors have the right to seize anyway.  The debtor can keep property as long as he pays the value of the property to his creditors.  Another way of saying this is that the plan must be “fair and equitable” to creditors.   Of course, this is “unless otherwise agreed,” meaning that the rule does not apply if the unsecured class votes for the plan.

BAPCPA apparently changed this basic rule in sction 1129(b)(2)(B) which provides that the debtor may keep “property included in the estate under section 1115.”  Property included in section 1115 is all property under section 541 and wages earned postpetition.

The argument that new 1129(b)(2)(B) did not change the apr is that apr is so foundational that if Congress is going to get rid of it, Congress should say so clearly.  The argument that it is gone is that the new language says the individual debtor can keep his stuff and anyway, Congress tried to make individual chapter 11s work like chapter 13s and there is certainly no apr in chapter 13.

Court opinions are all over the place on the issue.  In the 9th Circuit, the BAP is considering the issue in In re Friedman, No. 11-1149 (9th Cir. BAP) argued on January 18, in Phoenix.  Other cases addressing this issue that are currently in the courts include: In re Maharaj, 2011 WL 1753795 (Bankr. E.D. Va. May 9, 2011)(No. 11-217 (4th Cir.)); In re Kamell, 2011 WL 1760282 (Bankr. C.D. Cal. May 4, 2011)(No. 11-1246 (9th Cir. BAP)); In re Stephens, No. 11-29 (10th Cir. BAP); and In re Cobb, No. 09-25620 (Bankr. C.D. Cal.); SPCP Group LLC v. Biggins et al., 2011 WL 4389841 (M.D. Fla., Tampa Div. Sept. 21, 2011)(apr is gone); In re Gelin, 437 B.R. 435 (Bankr. M.D. Fla. 2010)(apr still applies).

Read more…

20th Annual Bankruptcy Battleground West

By | January 16, 2012 | Chapter 11, Programs | No comments

20th Annual Bankruptcy Battleground West

Hyatt Regency Century Plaza Los Angeles March 16, 2012

In its 20th year, ABI’s Bankruptcy Battleground West continues the tradition of bringing seasoned insolvency professionals together to discuss, debate and learn about leading issues of bankruptcy law. This year’s program offers concurrent sessions on commercial bankruptcy topics and a luncheon presentation on the growing number of interesting bankruptcy cases from the sports world.

American Bankruptcy Institute, 44 Canal Center Plaza, Suite 400, Alexandria, VA 22314 phone: (703) 739-0800 secure fax: 866-921-1027

← Older Entries
Newer Entries →