All posts in Chapter 11

Vendor’s Right to Reclaim

Put this in the category of “stuff I didn’t know.”  I knew that vendors have a right to reclaim goods from an entity that files a bankruptcy petition.  I thought it was goods shipped within 20 days of the petition – typical sort of right.

There are two code sections that deal with this issue.

Section 503(b)(9):  A vendor has an administrative claim for “the value of any goods received by the debtor within 20 days before the date of commencement of a case under this title in which the goods have been sold to the debtor in the ordinary course of such debtor’s business.”  This is really nice.  Read more…

The Chapter 13 Rights and Responsibilities Agreement (RARA) Form Allows For What?!

When the Law Offices of M. Jonathan Hayes merged with Simon & Resnik in 2012 (has it really been 5 years!?) I began to work exclusively on petitions filed under my beloved chapter of the Bankruptcy Code, 11.  I recently began to again work on Chp. 13 cases, albeit on a fairly limited basis, and I am continually amazed at the differences between these two most popular reorganizing chapters of the code.

Take a look at the “no-look” fee form we use here in the Central District, the Rights and Responsibilities Agreement between Chapter 13 Debtors and their Attorneys (“RARA”) [court form F3015-1.7.RARA], specifically pages 5-6 (I have added emphasis):

The guidelines in this district for payment of costs incurred in performing the services described in bold face type in this agreement (“Included Costs”) and attorneys’ fees in chapter 13 cases without a detailed fee application provide for the following maximum Included Costs and fees for the services described in this agreement in bold face type (that is, the services described on pages 3 through 5 of this agreement)…

Other than the initial retainer, the attorney may not receive fees directly from the Debtor prior to confirmation. All other fees due through confirmation shall be paid through the plan unless otherwise ordered by the court. Read more…

Is Continuance of Hearing on MSJ a Violation of the Automatic Stay?

From the California Bankruptcy Specialists listserve:

Question:  Is it a violation to continue a hearing on a motion for summary judgment if a notice of stay is given to the Court before the hearing on the motion for summary judgment?

Answer from Wayne Silver, Santa Clara:

Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210 (9th Cir. 2002)
Under § 362(a), the prohibition against continuation of judicial actions requires that the action be automatically dismissed or stayed, and not merely that it not be pursued.

Toys R Us Files Chapter 11

U.S. Bankruptcy Court
Eastern District of Virginia (Richmond)
Bankruptcy Petition #: 17-34665-KLP


Assigned to: Keith L. Phillips
Chapter 11
Voluntary
Asset

Date filed:   09/19/2017
Deadline for filing claims (govt.):   03/19/2018

 

Debtor
Toys R Us, Inc.
One Geoffrey Way
Wayne, NJ 07470
PASSAIC-NJ
Tax ID / EIN: 22-3260693

represented by Peter J. Barrett
Kutak Rock L.L.P.
901 East Byrd Street
Suite 1000
Richmond, VA 23219-4071
804-644-1700
Fax : 804-783-6192
Email: peter.barrett@kutakrock.com

Prof. Dan Schechter Comments on Sunnyslope – Says Decision is “Shockingly Wrong!”

Below are the comments of Prof. Dan Schechter (from my alma mater, Loyola Law) to the 9th Circuit’s en banc ruling in In re Sunnyslope Housing Ltd. Partnership, 818 F.3d 937 (9th Cir. 2017).  The due date for the petition for cert is now September 22, 2017.  The bank’s attorney is Craig Goldblatt from the Wilmer Hale firm in Washington DC.

My thoughts on why the 9th Circuit got Sunnyslope right are here, here and here.   The en banc decision is here.

Prof. Schechter commented on the Insolvency Law e-Bulletin:

AUTHOR’S COMMENT: This decision is shockingly wrong.  If the lender in this case seeks and obtains certiorari (a big “if”), I predict reversal by the Supreme Court. (As long as I am making rash predictions, I also predict a 6-3 decision, with Justice Breyer joining the majority.) Read more…

9th Cir En Banc Gets It Right in Sunnyslope

The 9th Circuit en banc panel has reversed the three judge panel in Sunnyslope thankfully.  The issue was how to value a building that had restrictive covenants that reduced the value of the property to the debtor.  The en banc panel said that the words in section 506(a) that the value is “determined in light of the purpose of the valuation and of the proposed disposition or use of such property,” have meaning.  The previous panel and the dissent to the en banc ruling tried to squeeze the Supreme Court ruling on valuation of a truck in Rash into the valuation of a building with affordable care covenants.

It took me a while to understand the Rash argument.  I had a hard time getting past what seemed to be the obvious and straight forward language of the code.   Read more…

Here comes the split re: trustee reach back for 10 years!

The circuit split starts!  Following up on my post below, this 10 year reach-back period for trustees is starting to garner some traction!  Judge Pappas, one of the nicest and astute judges I have met, recently issued an extremely thorough 76-page opinion siding with the Florida bankruptcy judge that allowed the trustee to step in the shoes of the IRS and reach back much farther than the 4-year limitation to avoid a fraudulent transfer.

I love it when courts cite nullum tempus occurrit regi meaning “no time runs against the king” (gives me goosebumps) which implies that the United States (i.e. IRS) is not bound by state statutes of limitation in enforcing its rights.

Read more…

Chapter 11 Doesn’t Have To Be Quite So Paper Intensive

My oldest son asked me to look up a case in North Dakota.  A related case called J&J Oilfield Services, Inc. caught my eye.  The docket was some 479 items resulting in a confirmed plan.  So the case is nice and complicated.  But take a look at the employment app debtor’s counsel filed.  Employ App North Dakota  One page!  And one page for the Statement of Disinterestedness.  The Motion for Final Decree is here.  Final Decree North Dakota  One page.  It doesn’t have to be that complicated.

Sunnyslope Oral Argument En Banc Set for January 17, 2017: 3:30 pm

My discussion, What is the Value of Property in a Chapter 11 Plan? The 9th Circuit Goofs, of the debacle known as Sunnyslope is here and here.  Thankfully, the 9th Circuit decided to rehear the matter en banc.  The en banc hearing will take place in San Francisco on January 17, 2017 at 3:30 pm.  See you there?

Edict From Judge Maureen Tighe

Judge Maureen Tighe announced in court today that she is going to start sanctioning attorneys and chapter 11 debtors when the debtor does not appear personally at the Status Conference – per her status conference order.