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“Consumer” Bankruptcy Attorney? Or “Business” Bankruptcy Attorney? Maybe a Little Clarification.

By | May 18, 2016 | Bankruptcy Data, Community | No comments

I completed the Judicial Performance Survey for two of the judges I have appeared before.  One of the questions gripes me because it shows the bias of the system.  The question is whether you are a consumer attorney or a business attorney or both.  But then it asks this question:

During the past three years, has your consumer bankruptcy work been concentrated in chapter 7 or in chapter 13? (Please select one.)

It assumes that consumer bankruptcy attorneys do only chapter 7s or 13s.  That is largely true but still much too restrictive in my opinion.  I would like to note that in 2015, there were 402 chapter 11 cases filed in the Central District of California.  (There were actually 426 but I am counting the multiple Freedom Communications cases as one rather than about 24.)  Of the 402 cases, 203 were individual chapter 11 cases, in other words, an individual trying to save his home or rental property (usually).  That is 50% of all chapter 11s!  Those are almost entirely consumer cases filed by consumer bankruptcy attorneys.

Of the 109 individual chapter 11 cases I have filed (or subbed into) since the beginning of 2012, only one case was filed by a person for the primary purpose of saving a business.   For whatever it’s worth, I have also filed 31 “corporate cases” since 2012.  In 16 of those cases, the entity owned an operating business it was trying to save.  (Of those 16, 6 cases were filed because of the debtor’s problems with its landlord, good luck with those eh?)  The remainder of the corporate cases dealt with real property issues.

So where does all this leave us?  I think its fair to say that most “consumer” attorneys do not do chapter 11s at all or very, very rarely.  But I consider myself a consumer attorney when I file chapter 11s for individuals trying to save their homes or rental properties, or sometimes because of tax problems or business problems.    I personally do very few chapter 7s and almost no chapter 13s.  Those are handled by a different department at the firm.  I still consider myself largely a consumer bankruptcy attorney.

Down with “Bankruptcy Remote Vehicles”

By | May 16, 2016 | Cases, Current Events | No comments

I was bitten by this concept once.  At the time I was stunned to learn that the courts seem to say that bankruptcy remote vehicles were appropriate and enforceable.  Finally Bankruptcy Judge Timothy Barnes, Northern District of Illinois, has ruled that public policy overrides the veto given to the lender that was appointed in a workout to be a “special member” of the debtor, a Michigan LLC.  The article can be accessed here.  The case is In re Lake Michigan Beach Pottawattamie Resort LLC, 2016 WL 1359697 (Bankr. N.D.Ill. April 5, 2016).  The court also denied the lender’s motion to dismiss the bankruptcy as a bad faith filing under section 1112 (b) of the Bankruptcy Code because the lender failed to meet its burden of showing bad faith.

So what’s this all about?  The lender agrees to lend to an LLC but only if the Operating Agreement provides that the lender or some third party be entitled to vote on whether the LLC may file a bankruptcy case.  In fact, the lender or the third party is given a complete veto on the issue.  This means that the members that owe fiduciary duties to the entity are prevented from voting for bankruptcy protection by a person whose sole interest is the lender.  Assuming the lender’s appointee has fiduciary duty of care to the LLC, Delaware law permits “exculpation from all fiduciary duties except the duty of loyalty.”

So the foreclosure sale of the LLC’s sole asset is next week.  The managing members are trying to figure out the best course for the LLC.  The third person is not involved in this.  It is only when the members decide to vote on a bankruptcy filing that they must give notice to the new person, appointed by the bank, who then gives a thumbs up or thumbs down.  This is simply a waiver in advance of the right to file bankruptcy!  That violates public policy but is largely, hopefully until now at least, permitted by the courts.

Sheryl Sandberg at the University of California at Berkeley 2016 Commencement

By | May 15, 2016 | Community | No comments

Such a moving Commencement Address.  Click here.  I didn’t know this lady until I read about her husband suddenly dying about a year ago.  Her remarks start at 1.24 of the tape.

I’m going to try this tonight.

Finding gratitude and appreciation is key to resilience.  People who take the time to list things they are grateful for are happier and healthier.  It turns out that counting your blessings can actually increase your blessings.  My New Year’s resolution this year is to write down three moments of joy before I go to bed each night.  This simple practice has changed my life.  Because no matter what happens each day, I go to sleep thinking of something cheerful.  Try it. Start tonight when you have so many fun moments to list— although maybe do it before you hit Kip’s and can still remember what they are.

San Fernando Valley Bar Assn Program on Chapter 13 Plans, May 20, 2016

By | May 12, 2016 | Programs | No comments

Dear All:

The next Bankruptcy Section program on May 20th at lunch is a rare combination of fun and learning. We did this program last year. People learned a lot and people laughed a lot as well.

This program is the flawed chapter 13 plan. Teams of attorneys have been working for months on putting together a new plan which has subtle flaws and obvious flaws…. a lot of flaws. We break the attending attorneys up into small groups and each group works as a team to find and to list as many mistakes as possible. After perhaps 20 to 30 minutes of group work, we reconvene as a whole and see how many flaws the different groups have found.

Sometimes groups find new undiscovered flaws. It is in fun. It is educational. You get MCLE for this! Read more…

David Gould’s Rules – From the Grand Old Man of Bankruptcy

By | May 11, 2016 | Community | No comments

 
GOULD’S RULES

(which are the result of 50 years of making mistakes  and learning from them)

1.         Remember, if you wish the court to do something for you/your client, give the court the admissible evidence and the law to support the request.  Speaking at the podium is not evidence!

2.         The more notice you give as far as time and the number of parties who receive the notice the more likely it will be that you will get what you request.  If all creditors received notice and had a month to think about it and no one objects, it is likely that the court will be willing to give you what you ask. If what you were seeking were not proper someone would likely file a pleading saying just that.

3.         The party having the burden takes the side closest to witness box or jury box.

4.         Assume that the microphones in the courtroom are on at all times and sometimes the judges while in chambers may hear what you say.  Don’t say anything that you would not be willing to say on the record at the podium.  Read more…

MCLE for Bankruptcy Specialists

By | May 6, 2016 | Specialist Information | No comments

At the last state bar specialist commission meeting I inquired about the MCLE requirements for BK Specialists.  The hours of bankruptcy needed must be bankruptcy oriented but that doesn’t mean specifically designated as specialist approved.  The program must be bankruptcy specifically and not something that is general law that helps bankruptcy lawyers but only in general.  For example, a program on how to do depositions helps bk lawyers but would not count as bk specialist hours.

Program on the New Bankruptcy Forms – Michael O’Halloran

By | April 21, 2016 | Programs | No comments

I have signed up for this program.  Michael O’Halloran is a great speaker and worth listening to.   The registration link is here.

The New Bankruptcy Forms – What Both Debtors and Creditors Need to Know About the New Forms
Thursday, May 12, 2016, 12 noon – 1 p.m.This program offers 1 hour participatory MCLE credit and 1 hour legal specialization credit in Bankruptcy Law.  

This program will highlight the differences between the new national bankruptcy forms applicable as of December 1, 2015 and those that had been in use for the past 20 years.  There are many new questions that ask for information that was not expressly called for previously.  Creditors and trustees will learn new facts and should have a more complete view of the debtor, her life and previous personal and financial activity. Speaker: Michael O’Halloran

Out of the Mouths of Babes – and a Response from the Cynical Old Lawyer

By | April 20, 2016 | Community | No comments

A young lawyer, working in a big firm – marble floors – $47 bucks to park type firm – told me recently that he likes the writing part of his job and the analysis, appeals, motions.  He said “the fact development part of the job isn’t as fun.”  I laughed, “That’s 80% of what we do.”  We work and work, trying to figure out what the real story is/was – what really happened.  My favorite part is finding out what really happened from your client for the first time at trial on the witness stand when he suddenly decides he better tell the truth.  And – the old guy wails, “the story will never be better than the first day you hear it, the initial meeting with your new client.”  That day the client tells you “what happened,” and you say, “Well based on all of that, you have a great case.”  The only thing the client will ever remember is you said it was a great case.

He cleared up the whole world for me calling it “the fact development part of the job.”  The skies opened.

Kings game is about to start.  Go Kings Go!

Why Not Go With Eight Members on the Supreme Court?

By | April 18, 2016 | Courts, Programs, Supreme Court | No comments

I had the huge privilege of attending the Central District Judicial Conference annual meeting in Ojai last weekend.  I took a bunch of notes and have some interesting stuff to write about.  I will put it all into a couple of blog posts over the next few days.

The first program was called “Panel Discussion: Top Supreme Court Cases to Watch” featuring Deanell Tacha, Duane and Kelly Roberts Dean and Professor of Law at Pepperdine Law School, and Professors Robert J. Pushaw and Barry P. McDonald – all three obvious constitutional pros with the ability to talk constitutional law talk in plain English.  The cases they discussed will be a separate blog.   Read more…

Law Week at the L.A. Law Library

By | April 18, 2016 | Programs | No comments

email from Maggie Bourdeaux,

Hi,

We would greatly appreciate your help in spreading the word about Law Week at the L.A. Law Library.

DAP will be doing a bankruptcy basics overview on Thurs., 4/28 at 12:00.  However, there are many interesting programs in different areas of law–including landlord tenant law, criminal law, immigration law, and probate law. You can find more information about Law Week and how to register at:

This is a great opportunity for you and/or your staff to learn about a new area of law and all the programs are FREE.

Thank you!

Maggie

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