A. OVERVIEW OF BANKRUPTCY PROCESS
The filing of a bankruptcy petition, whether by an individual or a business, is usually a major event to that person or business. Upon the filing of a bankruptcy petition, all non-exempt legal and equitable interests of the debtor, including property rights, become part of the so-called “bankruptcy estate” under 11 U.S.C. § 541. Property of the estate also includes other property interests that the debtor acquires post petition (see § 541 (a)(5) and (7)) as well as proceeds, profits and other similar property. However, as § 541 (a)(6) indicates, an individual debtor’s future earnings are not ordinarily property of the estate. Also, § 541 also provides that certain beneficial interests in trusts, like ERISA qualified pension plans and spendthrift trusts, are not part of the estate.
Unless a particular federal interest requires a different result, property interests are created and defined by state law. SeeButner v. United States, 440 U.S. 48, 55 (1979).
Upon the filing of a petition under any chapter of the Code, a stay arises automatically pursuant to 11 U.S.C. § 362(a). The stay is an injunction against the commencement or continuation of actions against the debtor and its property. Foreclosure, collections and certain set-off rights are enjoined and actions in violation of the automatic stay are generally void and of no effect. SeeIn re Soares, 107 F.3d 969 (1stCir. 1997). Seealso, In re A& J Auto Sales, Inc., 223 B.R. 839 (D.N.H. 1998)(post petition towing of cars seized by the IRS pre-petition violated stay). The basic idea of the stay is to give the debtor a temporary break from their creditors so that they can both formulate and propose a reorganization plan or time for the orderly administration and liquidation of assets.
There are over twenty-five exceptions to the stay. See11 U.S.C § 362(b). Among these exceptions are actions taken to perfect or maintain the continuance of perfections of liens. See11 U.S.C. § 546(b), actions by lessors against debtors of non-residential real property when the lease term expires pre-petition or during the case to obtain possession, the commencement of any action by the Secretary of Housing and Urban Development to foreclose a mortgage or deed of trust in any case in which the mortgage or deed of trust held by the Secretary is insured or was formerly insured under the National Housing Act and covers property, or combinations thereof, of five or more living units. 11 U.S.C. § 362(b)(22) excepts from the stay, the continuation of any eviction, unlawful detainer action, or similar proceeding by a lessor against a debtor involvingresidentialproperty in which the debtor resides as a tenant under a lease or rental agreement and with respect to which the lessor has obtained, before the filing of the bankruptcy petition, a judgment for possession against the debtor. However, a debtor-tenant may take steps to prevent the exception (thus preserving the automatic stay) by (1) filing and serving with the bankruptcy petition, a certification under the pains and penalties of perjury as to why, under non-bankruptcy law, the debtor is entitled to cure the monetary default AND the debtor files with the Bankruptcy Clerk, any rent that would become due within thirty (30) days after the petition date and (2) file within thirty (30) days of the petition, a certification to the Court that the debtor has in fact cured the monetary default. If the debtor meets these obligations, the lessor may file an objection and the Court will hold a hearing within ten (10) days.
11 U.S.C. § 362(b)(23) provides an exception for residential eviction actions based upon the endangerment of the property or when illegal, controlled substances are used on the property.
§ 365 provides specific time frames within which executory contracts and unexpired leases must either be assumed or rejected. It requires a debtor (or trustee) to perform under the contract or lease until it has been assumed or rejected and to cure past defaults prior to assumption.
§ 365 (d)(3) carves out an exception to the Automatic Stay discussed above. It states, in relevant part as follows: The trustee shall timely perform all the obligations of the debtor…arising from and after the order for relief under any unexpired lease ofnon-residentialreal property, until such lease is assumed or rejected… So, § 365 (d)(3) protects landlords by allowing them to enforce the lease post-petition without having to resort to the automatic stay process. However, the debtor is not without protection either. Under the 2005 Amendments to the Code (BAPCPA), a debtor-tenant is allowed to reject a lease and to limit the damages his landlord can claim and receive.
§ 365 (d)(3) requires that a debtor timely performs all of its obligations under a lease that occur from the time it files bankruptcy to the time it assumes or rejects. If real estate taxes are assessed during that period, then under the so-called “proration rule”, a debtor would only have to pay for amounts thataccruedpost-petition. SeeIn re Learningsmith, Inc., 253 B.R. 131 (Bankr. D. Mass. 2000).
Another school of thought, referred to as the “performance rule”, holds that § 365 (d)(3) requires a debtor to pay for all of its obligations that accrued up to the time it either assumes or rejects (including pre and post amounts). New Hampshire seems to follow the minority view’s performance rule, at least in one specific instance. SeeIn re Lakeshore Construction Co. of Wolfeboro, Inc., 390 B.R. 751 (Bkrtcy. D.N.H. 2008).
BAPCPA has left unaltered, the time a debtor has in which to assume or reject a residentialreal property lease or a lease of personal property-the trustee/debtor still has sixty (60) days from the petition date to assume or reject. Revised § 365 (d)(4) gives a maximum of two hundred and ten (210) days from the petition date, for the debtor to assume or reject a commercial (a/k/a nonresidential) lease. In order to extend that time, a debtor will need the consent of the landlord.
The legal standard a debtor must demonstrate in order to assume or reject a lease is the business judgment test. SeeGroup of Institutional Investors v. Chicago, Milwaukee, St. Paul, and Pacific R. Co.,318 U.S. 523 (1943); In re Trans World Airlines, Inc.,261 B.R. 103, 120-121 (Bankr.D.Del.2001); Wheeling-Pittsburgh Steel Corp. v. West Penn Power Co. (In re Wheeling-Pittsburgh Steel Corp.),72 B.R.845-846 (Bankr.W.D.Pa.1987).
A court is required to examine whether a reasonable business person would make a similar decision under similar circumstances. SeeIn re Exide Technologies, 340 B.R. 222 (Bkrtcy. D. Del. 2006). This is not a difficult standard to satisfy and requires only a showing that rejection will benefit the estate. SeeIn re Patterson,119 B.R. 59, 60 (E.D.Pa.1990); In re Blackstone Potato Chip Co., Inc., 109 B.R. 557 (D. R.I. 1990).
An assumed lease becomes a binding, post-petition obligation on the bankruptcy estate. Accordingly, debtors/trustees and creditors’ committees are usually hesitant to assume a lease too soon, without knowing the likely benefits and burdens to the bankruptcy estate. As discussed above, a debtor has a maximum of two hundred and ten (210) days to assume or reject under § 365(d)(4). If the debtor wants to seek an extension of time of the initial one hundred and twenty (120) day deadline imposed by the statute, it must do so within the one hundred and twenty (120) days. SeeIn re Tubular Technologies, LLC,362 B.R. 243 (Bankr. D. S.C. 2006).
If a lease is in default at the time of the petition, the debtor must cure all monetary defaults or provide adequate assurance that the monetary defaults will be promptly cured. 11 U.S.C. § 365(b)(1). However, non-monetary defaults (e.g. “going dark clauses or other non-monetary disputes or defaults) do not necessarily need to be cured prior to assumption. The First Circuit so held in In re BankVest Capital Corp., 360 F.3d 291 (1stCir. 2004). Congress redrafted § 365(b)(2)(D) and (b)(1)(A) to codify the essential holding of BankVestso that the debtor/trustee need not cure defaults that relate to a breach of a nonmonetary obligation on nonresidential leases if it is impossible to do so. Nonmonetary breaches of executory contracts and personal property leases still have to be cured before assumption.
If a debtor assumes the lease but then defaults, the landlord’s claim is treated as an administrative claim against the estate. See11 U.S.C. 503(b)(7). The administrative claim is limited (so as not to afford the landlord a super-priority to the detriment of other unsecureds). The statute caps a landlords’ claim at sums that would be due over a two (2) year period (instead of the entire remaining lease term).
Permitting debtors to shed disadvantageous contracts while keeping beneficial ones is one of the core purposes of the Code-to give worthy debtors a fresh start. In re Carp, 340 F.3d 15 (1stCir. 2003).
A landlord’s claim is potentially comprised of two parts, (1) a claim for pre-petition rent and a claim for damages for rejecting/breaching the lease. § 502(b)(6) provides a mechanism for a party to object to a landlord’s rejection claim. More specifically, § 502(b)(6)(A), limits a landlord’s rejection for future rent to the lesser of one years’ worth of rent or 15% of the rent over a three (3) year period.
§ 356 (h) addresses the situation where the lessor is the debtor. A tenant faced with this situation has two choices: (1) treat the lease as terminated and make a claim for damages or (2) continue in possession and pay rent in accordance with the lease. § 356 (h)(1)(B) allows the tenant to offset damages arising from its landlord’s rejection against future rent due under the lease. If the tenant chooses to treat the lease as terminated, it is released from its obligations, in addition to being able to make a claim for damages. SeeIn re Nickles Midway Pier, LLC, 372 B.R. 218 (D. N.J. 2007).
Whether you are a residential or commercial landlord, communication with your tenant and diligence about the marketplace is probably the best strategy to guard against a loss due to the rejection of a lease. It might be advisable in some circumstances to negotiate only triple net leases (where the tenant pays directly for all maintenance costs, utilities, taxes and insurance). Also, the Golden Rule seems to apply, treat your debtor as you would want to be treated. In other words, if the going lease rates in your market are much lower than what you are charging, don’t be surprised if the lease is rejected. Put yourself in the debtor’s shoes and try to negotiate in a way that meets either the monetary or nonmonetary needs of your tenant. Maybe a longer or shorter term or renegotiation of other terms would be attractive to the debtor and better for you than rejection. Also, with respect to security deposits, they become part of the bankruptcy estate upon filing. The best approach is not to apply security deposits to post-petition, pre assumption amounts that may come due; instead, hold the deposit so it can be applied to any potential rejection damages.
If you have decided that assuming the lease, even on different terms, is not feasible for you or the debtor then be diligent about how your rights may be affected by the bankruptcy case. There are a myriad of events in a case which can affect a debtor’s ability to reorganize and how assets and claims will be handled. Whether you are a tenant or a landlord, I strongly recommend that you seek legal advice at the earliest signs of financial distress.
Judgment, in this section, means a final, non appealable judgment. In,In re Alberts, the exception did not apply when the eviction judgment had been timely appealed for de novotrial on the merits. SeeHousing Authority of Beaver County v. Alberts, 381 B.R. 171 (Bankr. W.D. Pa. 2008).
Justice Before Generosity: What Constitutes an Impermissible Transfer Under the New Hampshire Fraudulent Transfer Act
The New Hampshire Fraudulent Transfer Act’s somewhat foreboding title intimates that it applies to transfers made with a specific intent to defraud. While the Act does apply to transfers intended to escape creditors, the act also applies to transfers made with perfectly innocent motives if made by an insolvent debtor for less than adequate consideration. These kinds of transfers are considered to be constructively fraudulent. Examples of such “innocent” transactions can include spousal transfers pursuant to estate planning or divorce and to charitable donations. The policy rationale is obvious-if a debtor transfers valuable property while receiving nothing or little in return, the debtor’s creditors may be left without sufficient assets from which to satisfy their claims. “Debtors must first be just before they can be generous.”
The Congressional Conference of Commissioners on Uniform State Laws first promulgated the Uniform Fraudulent Conveyance Act in 1918. New Hampshire adopted the Act in 1919. With the advent of the Bankruptcy Reform Act in 1978 and the adoption of the Uniform Commercial Code (UCC) and the Model Corporation Act in the late 1970’s, the word “conveyance” was replaced by the word “transfer” in the Act’s title to clarify that the act applied to transfers of personal property, as well as real property. New Hampshire adopted the Uniform Fraudulent Transfer Act in 1988 and codified it at RSA 545:A.
RSA 545:A contains twelve sections. Section one is the primary definitional section and defines, for purposes of the Act, what qualifies as an asset, claim, debtor, creditor, affiliate or an insider. Sections two and three define insolvency and value. Sections four, five and six, the heart of the Act, set forth the conditions and elements of transfers that are deemed fraudulent to creditors. Section four contains a laundry list of so-called “badges of fraud”-factors that a court can consider when determining the intent of the transfer. In determining intent, consideration may be given, among other factors, to whether: (1) a transfer was to a family member or business partner; (2) the debtor retained possession or control of the property transferred; (3) the transfer was made while a lawsuit was pending against the debtor; and (4) the transfer was of substantially all of his or her assets.
Sections seven and eight relate to creditor remedies and to defenses. Remedies can include the avoidance of transfers, attachments against transferred assets, injunctions prohibiting further transfers and in extreme cases, the appointment of a receiver. Even if a transfer is found to be void, a good-faith transferee is typically entitled, to the extent value was given, to a lien on or a right in the transferred asset. Moreover, a defense exists for transfers made in the ordinary course of business, under certain conditions. Generally, a transfer is not deemed to be fraudulent against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee. Section nine plainly states the time limits in which claims under the Act must be commenced; claims under section four must be made within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligations was or could reasonably have been discovered by the claimant. Claims under section five must be made within one year after the transfer was made or the obligation incurred.
In these times of economic turmoil, it’s quite conceivable that you or your business may encounter a transfer reachable under the Act. Litigation concerning transfers and defenses under the Act can be highly technical and complex. Seek the advice of legal counsel in the earliest stages of any claim or defense under the Act.
Attorney Bill Amann works in the firm’s Bankruptcy Department and can be reached at 603.486.1530 or at email@example.com.
See Boston Trading Group v. Burnazos, 835 F.2d 1504, 1508 (1st Cir. 1987)) (interpreting Massachusetts law).
See In re Jackson, 318 B.R. 5 (2004) affirmed at 459 F.3d 117, C.A.1 (N.H.) 2006.
Section FIVE: What the U.S. Trustee is Looking for in Your Chapter 11 Filing 2:15 - 2:45, William J. Amann, Esq.
The U.S. trustee plays a major role in monitoring the progress of a chapter 11 case and supervising its administration. The U.S. trustee is responsible for monitoring the debtor in possession's operation of the business and the submission of operating reports and fees. Additionally, the U.S. trustee monitors applications for compensation and reimbursement by professionals, plans and disclosure statements filed with the court, and creditors' committees. The U.S. trustee conducts a meeting of the creditors, often referred to as the "section 341 meeting," in a chapter 11 case. 11 U.S.C. § 341. The U.S. trustee and creditors may question the debtor under oath at the section 341 meeting concerning the debtor's acts, conduct, property, and the administration of the case.
The U.S. trustee also imposes certain requirements on the debtor in possession concerning matters such as reporting its monthly income and operating expenses, establishing new bank accounts, and paying current employee withholding and other taxes. By law, the debtor in possession must pay a quarterly fee to the U.S. trustee for each quarter of a year until the case is converted or dismissed. 28 U.S.C. § 1930(a)(6). The amount of the fee, which may range from $325 to $30,000, depends on the amount of the debtor's disbursements during each quarter. Should a debtor in possession fail to comply with the reporting requirements of the U.S. trustee or orders of the bankruptcy court, or fail to take the appropriate steps to bring the case to confirmation, the U.S. trustee may file a motion with the court to have the debtor's chapter 11 case converted to another chapter of the Bankruptcy Code or to have the case dismissed.
Although the appointment of a case trustee is a rarity in a chapter 11 case, a party in interest or the U.S. trustee can request the appointment of a case trustee or examiner at any time prior to confirmation in a chapter 11 case. The court, on motion by a party in interest or the U.S. trustee and after notice and hearing, shall order the appointment of a case trustee for cause, including fraud, dishonesty, incompetence, or gross mismanagement, or if such an appointment is in the interest of creditors, any equity security holders, and other interests of the estate. 11 U.S.C. § 1104(a). Moreover, the U.S. trustee is required to move for appointment of a trustee if there are reasonable grounds to believe that any of the parties in control of the debtor "participated in actual fraud, dishonesty or criminal conduct in the management of the debtor or the debtor's financial reporting." 11 U.S.C. § 1104(e). The trustee is appointed by the U.S. trustee, after consultation with parties in interest and subject to the court's approval. Fed. R. Bankr. P. 2007.1. Alternatively, a trustee in a case may be elected if a party in interest requests the election of a trustee within 30 days after the court orders the appointment of a trustee. In that instance, the U.S. trustee convenes a meeting of creditors for the purpose of electing a person to serve as trustee in the case. 11 U.S.C. § 1104(b).
The case trustee is responsible for management of the property of the estate, operation of the debtor's business, and, if appropriate, the filing of a plan of reorganization. Section 1106 of the Bankruptcy Code requires the trustee to file a plan "as soon as practicable" or, alternatively, to file a report explaining why a plan will not be filed or to recommend that the case be converted to another chapter or dismissed. 11 U.S.C. § 1106(a)(5).
Upon the request of a party in interest or the U.S. trustee, the court may terminate the trustee's appointment and restore the debtor in possession to management of bankruptcy estate at any time before confirmation.11 U.S.C. § 1105.
The appointment of an examiner in a chapter 11 case is rare. The role of an examiner is generally more limited than that of a trustee. The examiner is authorized to perform the investigatory functions of the trustee and is required to file a statement of any investigation conducted. If ordered to do so by the court, however, an examiner may carry out any other duties of a trustee that the court orders the debtor in possession not to perform. 11 U.S.C. § 1106. Each court has the authority to determine the duties of an examiner in each particular case. In some cases, the examiner may file a plan of reorganization, negotiate or help the parties negotiate, or review the debtor's schedules to determine whether some of the claims are improperly categorized. Sometimes, the examiner may be directed to determine if objections to any proofs of claim should be filed or whether causes of action have sufficient merit so that further legal action should be taken. The examiner may not subsequently serve as a trustee in the case. 11 U.S.C. § 321.
The debtor (unless a "small business debtor") has a 120-day period during which it has an exclusive right to file a plan. 11 U.S.C. § 1121(b). This exclusivity period may be extended or reduced by the court. But in no event may the exclusivity period, including all extensions, be longer than 18 months. 11 U.S.C. § 1121(d). After the exclusivity period has expired, a creditor or the case trustee may file a competing plan. The U.S. trustee may not file a plan. 11 U.S.C. § 307.
A chapter 11 case may continue for many years unless the court, the U.S. trustee, the committee, or another party in interest acts to ensure the case's timely resolution. The creditors' right to file a competing plan provides incentive for the debtor to file a plan within the exclusivity period and acts as a check on excessive delay in the case.
The debtor in possession or the trustee, as the case may be, has what are called "avoiding" powers. These powers may be used to undo a transfer of money or property made during a certain period of time before the filing of the bankruptcy petition. By avoiding a particular transfer of property, the debtor in possession can cancel the transaction and force the return or "disgorgement" of the payments or property, which then are available to pay all creditors. Generally, and subject to various defenses, the power to avoid transfers is effective against transfers made by the debtor within 90 days before filing the petition. But transfers to "insiders" (i.e., relatives, general partners, and directors or officers of the debtor) made up to a year before filing may be avoided. 11 U.S.C. §§ 101(31), 101(54), 547, 548. In addition, under 11 U.S.C. § 544, the trustee is authorized to avoid transfers under applicable state law, which often provides for longer time periods. Avoiding powers prevent unfair prepetition payments to one creditor at the expense of all other creditors.
Although the preparation, confirmation, and implementation of a plan of reorganization is at the heart of a chapter 11 case, other issues may arise that must be addressed by the debtor in possession. The debtor in possession may use, sell, or lease property of the estate in the ordinary course of its business, without prior approval, unless the court orders otherwise. 11 U.S.C. § 363(c). If the intended sale or use is outside the ordinary course of its business, the debtor must obtain permission from the court.
A debtor in possession may not use "cash collateral" without the consent of the secured party or authorization by the court, which must first examine whether the interest of the secured party is adequately protected. 11 U.S.C. § 363. Section 363 defines "cash collateral" as cash, negotiable instruments, documents of title, securities, deposit accounts, or other cash equivalents, whenever acquired, in which the estate and an entity other than the estate have an interest. It includes the proceeds, products, offspring, rents, or profits of property and the fees, charges, accounts or payments for the use or occupancy of rooms and other public facilities in hotels, motels, or other lodging properties subject to a creditor's security interest.
When "cash collateral" is used (spent), the secured creditors are entitled to receive additional protection under section 363 of the Bankruptcy Code. The debtor in possession must file a motion requesting an order from the court authorizing the use of the cash collateral. Pending consent of the secured creditor or court authorization for the debtor in possession's use of cash collateral, the debtor in possession must segregate and account for all cash collateral in its possession. 11 U.S.C. § 363(c)(4). A party with an interest in property being used by the debtor may request that the court prohibit or condition this use to the extent necessary to provide "adequate protection" to the creditor.
Adequate protection may be required to protect the value of the creditor's interest in the property being used by the debtor in possession. This is especially important when there is a decrease in value of the property. The debtor may make periodic or lump sum cash payments, or provide an additional or replacement lien that will result in the creditor's property interest being adequately protected. 11 U.S.C. § 361.
When a chapter 11 debtor needs operating capital, it may be able to obtain it from a lender by giving the lender a court-approved "superpriority" over other unsecured creditors or a lien on property of the estate. 11 U.S.C. § 364.
Creditors' committees can play a major role in chapter 11 cases. The committee is appointed by the U.S. trustee and ordinarily consists of unsecured creditors who hold the seven largest unsecured claims against the debtor. 11 U.S.C. § 1102. Among other things, the committee: consults with the debtor in possession on administration of the case; investigates the debtor's conduct and operation of the business; and participates in formulating a plan. 11 U.S.C. § 1103. A creditors' committee may, with the court's approval, hire an attorney or other professionals to assist in the performance of the committee's duties. A creditors' committee can be an important safeguard to the proper management of the business by the debtor in possession.
In some smaller cases the U.S. trustee may be unable to find creditors willing to serve on a creditors' committee, or the committee may not be actively involved in the case. The Bankruptcy Code addresses this issue by treating a "small business case" somewhat differently than a regular bankruptcy case. A small business case is defined as a case with a "small business debtor." 11 U.S.C. § 101(51C). Determination of whether a debtor is a "small business debtor" requires application of a two-part test. First, the debtor must be engaged in commercial or business activities (other than primarily owning or operating real property) with total non-contingent liquidated secured and unsecured debts of $2,490,925 or less. Second, the debtor's case must be one in which the U.S. trustee has not appointed a creditors' committee, or the court has determined the creditors' committee is insufficiently active and representative to provide oversight of the debtor. 11 U.S.C. § 101(51D).
In a small business case, the debtor in possession must, among other things, attach the most recently prepared balance sheet, statement of operations, cash-flow statement and most recently filed tax return to the petition or provide a statement under oath explaining the absence of such documents and must attend court and the U.S. trustee meeting through senior management personnel and counsel. The small business debtor must make ongoing filings with the court concerning its profitability and projected cash receipts and disbursements, and must report whether it is in compliance with the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure and whether it has paid its taxes and filed its tax returns. 11 U.S.C. §§ 308, 1116.
In contrast to other chapter 11 debtors, the small business debtor is subject to additional oversight by the U.S. trustee. Early in the case, the small business debtor must attend an "initial interview" with the U.S. trustee at which time the U.S. trustee will evaluate the debtor's viability, inquire about the debtor's business plan, and explain certain debtor obligations including the debtor's responsibility to file various reports. 28 U.S.C. § 586(a)(7). The U.S. trustee will also monitor the activities of the small business debtor during the case to identify as promptly as possible whether the debtor will be unable to confirm a plan.
Because certain filing deadlines are different and extensions are more difficult to obtain, a case designated as a small business case normally proceeds more quickly than other chapter 11 cases. For example, only the debtor may file a plan during the first 180 days of a small business case. 11 U.S.C. § 1121(e). This "exclusivity period" may be extended by the court, but only to 300 days, and only if the debtor demonstrates by a preponderance of the evidence that the court will confirm a plan within a reasonable period of time. When the case is not a small business case, however, the court may extend the exclusivity period "for cause" up to 18 months.
A chapter 11 case begins with the filing of a petition with the bankruptcy court serving the area where the debtor has a domicile or residence. A petition may be a voluntary petition, which is filed by the debtor, or it may be an involuntary petition, which is filed by creditors that meet certain requirements. 11 U.S.C. §§ 301, 303. A voluntary petition must adhere to the format of Form 1 of the Official Forms prescribed by the Judicial Conference of the United States. Unless the court orders otherwise, the debtor also must file with the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a schedule of executory contracts and unexpired leases; and (4) a statement of financial affairs. Fed. R. Bankr. P. 1007(b). If the debtor is an individual (or husband and wife), there are additional document filing requirements. Such debtors must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts.11 U.S.C. § 521. A husband and wife may file a joint petition or individual petitions.
The courts are required to charge a $1,167 case filing fee and a $550 miscellaneous administrative fee. The fees must be paid to the clerk of the court upon filing or may, with the court's permission, be paid by individual debtors in installments. 28 U.S.C. § 1930(a); Fed. R. Bankr. P. 1006(b); Bankruptcy Court Miscellaneous Fee Schedule, Item 8. Fed. R. Bankr. P. 1006(b) limits to four the number of installments for the filing fee. The final installment must be paid not later than 120 days after filing the petition. For cause shown, the court may extend the time of any installment, provided that the last installment is paid not later than 180 days after the filing of the petition. Fed. R. Bankr. P. 1006(b). The $550 administrative fee may be paid in installments in the same manner as the filing fee. If a joint petition is filed, only one filing fee and one administrative fee are charged. Debtors should be aware that failure to pay these fees may result in dismissal of the case. 11 U.S.C. § 1112(b)(10).
The voluntary petition will include standard information concerning the debtor's name(s), social security number or tax identification number, residence, location of principal assets (if a business), the debtor's plan or intention to file a plan, and a request for relief under the appropriate chapter of the Bankruptcy Code. Upon filing a voluntary petition for relief under chapter 11 or, in an involuntary case, the entry of an order for relief, the debtor automatically assumes an additional identity as the "debtor in possession." 11 U.S.C. § 1101. The term refers to a debtor that keeps possession and control of its assets while undergoing a reorganization under chapter 11, without the appointment of a case trustee. A debtor will remain a debtor in possession until the debtor's plan of reorganization is confirmed, the debtor's case is dismissed or converted to chapter 7, or a chapter 11 trustee is appointed. The appointment or election of a trustee occurs only in a small number of cases. Generally, the debtor, as "debtor in possession," operates the business and performs many of the functions that a trustee performs in cases under other chapters. 11 U.S.C. § 1107(a).
Generally, a written disclosure statement and a plan of reorganization must be filed with the court. 11 U.S.C. §§ 1121, 1125. The disclosure statement is a document that must contain information concerning the assets, liabilities, and business affairs of the debtor sufficient to enable a creditor to make an informed judgment about the debtor's plan of reorganization. 11 U.S.C. § 1125. The information required is governed by judicial discretion and the circumstances of the case. In a "small business case" (discussed below) the debtor may not need to file a separate disclosure statement if the court determines that adequate information is contained in the plan. 11 U.S.C. § 1125(f). The contents of the plan must include a classification of claims and must specify how each class of claims will be treated under the plan. 11 U.S.C. § 1123. Creditors whose claims are "impaired," i.e., those whose contractual rights are to be modified or who will be paid less than the full value of their claims under the plan, vote on the plan by ballot. 11 U.S.C. § 1126. After the disclosure statement is approved by the court and the ballots are collected and tallied, the court will conduct a confirmation hearing to determine whether to confirm the plan. 11 U.S.C. § 1128.
In the case of individuals, chapter 11 bears some similarities to chapter 13. For example, property of the estate for an individual debtor includes the debtor's earnings and property acquired by the debtor after filing until the case is closed, dismissed or converted; funding of the plan may be from the debtor's future earnings; and the plan cannot be confirmed over a creditor's objection without committing all of the debtor's disposable income over five years unless the plan pays the claim in full, with interest, over a shorter period of time. 11 U.S.C. §§ 1115, 1123(a)(8), 1129(a)(15).
Chapter 11 is typically used to reorganize a business, which may be a corporation, sole proprietorship, or partnership. A corporation exists separate and apart from its owners, the stockholders. The chapter 11 bankruptcy case of a corporation (corporation as debtor) does not put the personal assets of the stockholders at risk other than the value of their investment in the company's stock. A sole proprietorship (owner as debtor), on the other hand, does not have an identity separate and distinct from its owner(s). Accordingly, a bankruptcy case involving a sole proprietorship includes both the business and personal assets of the owners-debtors. Like a corporation, a partnership exists separate and apart from its partners. In a partnership bankruptcy case (partnership as debtor), however, the partners' personal assets may, in some cases, be used to pay creditors in the bankruptcy case or the partners, themselves, may be forced to file for bankruptcy protection.
Section 1107 of the Bankruptcy Code places the debtor in possession in the position of a fiduciary, with the rights and powers of a chapter 11 trustee, and it requires the debtor to perform of all but the investigative functions and duties of a trustee. These duties, set forth in the Bankruptcy Code and Federal Rules of Bankruptcy Procedure, include accounting for property, examining and objecting to claims, and filing informational reports as required by the court and the U.S. trustee or bankruptcy administrator (discussed below), such as monthly operating reports. 11 U.S.C. §§ 1106, 1107; Fed. R. Bankr. P. 2015(a). The debtor in possession also has many of the other powers and duties of a trustee, including the right, with the court's approval, to employ attorneys, accountants, appraisers, auctioneers, or other professional persons to assist the debtor during its bankruptcy case. Other responsibilities include filing tax returns and reports which are either necessary or ordered by the court after confirmation, such as a final accounting. The U.S. trustee is responsible for monitoring the compliance of the debtor in possession with the reporting requirements.
Railroad reorganizations have specific requirements under subsection IV of chapter 11, which will not be addressed here. In addition, stock and commodity brokers are prohibited from filing under chapter 11 and are restricted to chapter 7. 11 U.S.C. § 109(d).
Structuring the Chapter 11 Repayment Plan
4:00 - 4:30, William J. Amann, Esq.
A. Standards of Confirmation
To confirm a plan of reorganization, a debtor must either satisfy all of the requirements of 11 U.S.C. § 1129(a) or, where an impaired creditor rejects the plan of reorganization, satisfy the requirements of section 1129(b). Under section 1129(b)(1), a plan can be confirmed over the objection of an impaired class of secured claims if the plan does not discriminate unfairly and is fair and equitable. A plan is fair and equitable as to a class of secured claim holders if the holders of such claims retain the liens securing the claims to the extent of the allowed claim amount and receive on account of such claims deferred cash payments totaling at least the allowed amount of the claims, of value, as of the effective date of the plan, of at least the value of such holder’s interest in the estate’s interest in such property. § 1129(b)(2)(A)(i)(I) & (II).
Simply stated, a debtor can restructure a secured creditor’s debt over the creditor’s objection as long as the creditor retains its lien and receives deferred cash payments equal to the present value of its secured claim as of the effective date of the plan. “Present value” is the current value of a future payment, and takes into account various risks that may arise between the present and future payment dates. To compensate the creditor, an additional rate of interest, i.e., the discount rate, is added to take into account the time value of money and the risk or uncertainty of the anticipated payments. See Till, 541 U.S. at 474 (“A debtor’s promise of future payment is worth less than an immediate payment of the same total amount because the creditor cannot use the money right away, inflation may cause the value of the dollar to decline before the debtor pays, and there is always some risk of nonpayment.”). The appropriate interest rate used in a cramdown loan (the “cramdown interest rate”) is a factual determination made on a case-by-case basis. In re Moultonborough Hotel Grp., LLC, 2012 BNH 006, at *11, aff’d sub nom. ROK Builders, LLC v. 2010-1 SFG Venture, LLC, 2013 DNH 095 (D.N.H. July 16, 2013). In many chapter 11 cases, courts have followed the approach set out in Bank of Montreal v. Official Committee of Unsecured Creditors (In re American HomePatient, Inc.), 420 F.3d 559 (6th Cir. 2005), namely first to identify whether there is an efficient market from which to take the appropriate interest rate, and if not, then progress to the Till formula approach. The burden of proof on any upward adjustment to the prime rate is on the creditor. Till, 541 U.S. at 479-80.
When deciding to propose a Plan, review §1121 for time periods. Then look at §1122 dealing with classification of claims to see if any claims are substantially similar. Go on to study § 1123, which deals with what can go into a Plan. Use this section as a checklist. §1124 defines impairment of claims and how you structure the Plan is important since impaired classes are entitled to vote on the Plan. Next check out §1125 dealing with disclosure statements, discussed later in this article.
Section 1129(a)(11) provides that courts shall confirm a plan only if “[c]onfirmation of the plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor or any successor to the debtor under the plan, unless such liquidation or reorganization is proposed in the plan.” 11 U.S.C. § 1129(a)(11). This confirmation requirement is referred to as the feasibility requirement. See Fin. Sec. Assurance Inc. v. T-H New Orleans Ltd. P’ship (In re T-H New Orleans Ltd. P’ship), 116 F.3d 790, 801 (5th Cir. 1997). A plan of reorganization is feasible if it offers “a reasonable assurance of success.” Kane v. Johns-Manville Corp. (In re Johns-Manville Corp.), 843 F.2d 636, 649 (2nd Cir. 1988). “Success need not be guaranteed.” In re Johns-Manville Corp., 843 F.2d at 649. “The standard of proof required by the debtor to prove a Chapter 11 plan's feasibility is by a preponderance of the evidence.” In re T-H New Orleans Ltd. P’ship, 116 F.3d at 801. § 1129(a)(8)(A) deals with how to solicit and obtain votes of class members. You can confirm if you get the majority in number and 2/3 in amount of the claims which vote.
A plan of reorganization can only be confirmed if it is proposed in good faith. 11 U.S.C.§ 1129(a)(3). The term “good faith” is not defined but “is generally interpreted to mean that there exists a “reasonable likelihood that the plan will achieve a result consistent with the purposes and objectives of the Bankruptcy Code.” In re River Valley Fitness One Ltd. P’ship, 2003 BNH 031, 6 (Bankr. D.N.H. 2003) (citing In re Madison Hotel Assocs., 749 F.2d 410, 424 (7th Cir. 1983)). “The purpose of a Chapter 11 reorganization proceeding is to enable a business to rehabilitate itself and become a profitable going concern.” In re Maxim Indus., Inc., 22 B.R. 611, 613 (Bankr. D. Mass. 1982); see Madison, 749 F.2d at 426 (noting chapter 11 was intended to allow a financially troubled company the ability to restructure its debt and become a viable company that can pay its creditors). “The Courts determination that a plan was ‘proposed in good faith’ is a finding of fact that should be made in light of the totality of the circumstances surrounding the formulation of the plan.” River Valley, 2003 BNH 31, 6.
The Debtors’ Plan must be fair and equitable in order to be confirmed. A debtor can confirm a chapter 11 plan by satisfying all of the requirements of 11 U.S.C. § 1129(a). Among those requirements is acceptance of the plan by all impaired classes of creditors. 11 U.S.C. § 1129(a)(8). When an impaired class rejects the plan, the debtor may still “cramdown” the plan over that class’s dissenting vote under 11 U.S.C. § 1129(b) . There are two conditions to confirm a plan pursuant to § 1129(b). First, the debtor must satisfy all of the requirements of §1129(a), except for § 1129(a)(8). Second, the plan must not discriminate unfairly and must be“fair and equitable” to the class that rejected the plan. 11 U.S.C. § 1129(b); see Bank of America v. 203 N. LaSalle St. P’ship., 526 U.S. 434, 441 (1999). For a plan to be fair and equitable to a dissenting class of impaired unsecured creditors, the class must either be paid in full or “the holder of any claim or interest that is junior to the claims of such class [cannot] receive or retain under the plan on account of such junior claim or interest any property.” 11 U.S.C. § 1129(b)(2)(B). This section is often referred to as the “absolute priority rule.” The absolute priority rule prevents a junior claim holder from receiving value before a non-accepting senior claim is paid in full, i.e. subordinated debt and old equity cannot receive stock in the reorganized debtor if unsecured creditors are not paid in full.
B. Payment of Priority Claims and Secured Claims on Personal Property
The Bankruptcy Code defines a claim as: (1) a right to payment; (2) or a right to an equitable remedy for a failure of performance if the breach gives rise to a right to payment. 11 U.S.C. § 101(5). Generally, any creditor whose claim is not scheduled (i.e., listed by the debtor on the debtor's schedules) or is scheduled as disputed, contingent, or unliquidated must file a proof of claim (and attach evidence documenting the claim) in order to be treated as a creditor for purposes of voting on the plan and distribution under it. Fed. R. Bankr. P. 3003(c)(2). But filing a proof of claim is not necessary if the creditor's claim is scheduled (but is not listed as disputed, contingent, or unliquidated by the debtor) because the debtor's schedules are deemed to constitute evidence of the validity and amount of those claims. 11 U.S.C. § 1111. If a scheduled creditor chooses to file a claim, a properly filed proof of claim supersedes any scheduling of that claim. Fed. R. Bankr. P. 3003(c)(4). It is the responsibility of the creditor to determine whether the claim is accurately listed on the debtor's schedules. The debtor must provide notification to those creditors whose names are added and whose claims are listed as a result of an amendment to the schedules. The notification also should advise such creditors of their right to file proofs of claim and that their failure to do so may prevent them from voting upon the debtor's plan of reorganization or participating in any distribution under that plan. When a debtor amends the schedule of liabilities to add a creditor or change the status of any claims to disputed, contingent, or unliquidated, the debtor must provide notice of the amendment to any entity affected. Fed. R. Bankr. P. 1009(a).
An equity security holder is a holder of an equity security of the debtor. Examples of an equity security are a share in a corporation, an interest of a limited partner in a limited partnership, or a right to purchase, sell, or subscribe to a share, security, or interest of a share in a corporation or an interest in a limited partnership. 11 U.S.C. § 101(16), (17). An equity security holder may vote on the plan of reorganization and may file a proof of interest, rather than a proof of claim. A proof of interest is deemed filed for any interest that appears in the debtor's schedules, unless it is scheduled as disputed, contingent, or unliquidated. 11 U.S.C. § 1111. An equity security holder whose interest is not scheduled or is scheduled as disputed, contingent, or unliquidated must file a proof of interest in order to be treated as a creditor for purposes of voting on the plan and distribution under it. Fed. R. Bankr. P. 3003(c)(2). A properly filed proof of interest supersedes any scheduling of that interest. Fed. R. Bankr. P. 3003(c)(4). Generally, most of the provisions that apply to proofs of claim, as discussed above, are also applicable to proofs of interest.
C. Conversion or Dismissal
A debtor in a case under chapter 11 has a one-time absolute right to convert the chapter 11 case to a case under chapter 7 unless: (1) the debtor is not a debtor in possession; (2) the case originally was commenced as an involuntary case under chapter 11; or (3) the case was converted to a case under chapter 11 other than at the debtor's request. 11 U.S.C. § 1112(a). A debtor in a chapter 11 case does not have an absolute right to have the case dismissed upon request.
A party in interest may file a motion to dismiss or convert a chapter 11 case to a chapter 7 case "for cause." Generally, if cause is established after notice and hearing, the court must convert or dismiss the case (whichever is in the best interests of creditors and the estate) unless it specifically finds that the requested conversion or dismissal is not in the best interest of creditors and the estate. 11 U.S.C. § 1112(b). Alternatively, the court may decide that appointment of a chapter 11 trustee or an examiner is in the best interests of creditors and the estate. 11 U.S.C. § 1104(a)(3). Section 1112(b)(4) of the Bankruptcy Code sets forth numerous examples of cause that would support dismissal or conversion. For example, the moving party may establish cause by showing that there is substantial or continuing loss to the estate and the absence of a reasonable likelihood of rehabilitation; gross mismanagement of the estate; failure to maintain insurance that poses a risk to the estate or the public; or unauthorized use of cash collateral that is substantially harmful to a creditor.
Cause for dismissal or conversion also includes an unexcused failure to timely compliance with reporting and filing requirements; failure to attend the meeting of creditors or attend an examination without good cause; failure to timely provide information to the U.S. trustee; and failure to timely pay post-petition taxes or timely file post-petition returns Fed. R. Bankr. P. 2004. Additionally, failure to file a disclosure statement or to file and confirm a plan within the time fixed by the Bankruptcy Code or order of the court; inability to effectuate a plan; denial or revocation of confirmation; inability to consummate a confirmed plan represent "cause" for dismissal under the statute. In an individual case, failure of the debtor to pay post-petition domestic support obligations constitutes "cause" for dismissal or conversion.
Section 1112(c) of the Bankruptcy Code provides an important exception to the conversion process in a chapter 11 case. Under this provision, the court is prohibited from converting a case involving a farmer or charitable institution to a liquidation. In 2013, the New Hampshire Bankruptcy Court dismissed a chapter 11 case pursuant to 11 U.S.C. § 1112 (b). SeeIn re PM Cross, LLC, 2013 BNH 4 (2013). In doing so, it enumerated eight (8) factors that led the Court to dismiss the case. Those factors were analyzed in In re C-TC 9thAve. P’ship, 113 F.3d 1304, 1311 (2d Cir. 1997) and are as follows:
(1) The debtor has only one asset;
(2) The debtor has few unsecured creditors whose claims are small in relation to those of the secured creditors;
(3) The debtor’s one asset is the subject of a foreclosure action as a result of arrearages or default on the debt;
(4) The debtor’s financial condition is, in essence, a two party dispute between the debtor and secured creditor(s) which can be resolved in the pending foreclosure action;
(5) The timing of the debtor’s filing evidences an intent to delay or frustrate the legitimate efforts of the debtor’s secured creditors to enforce their rights;
(6) The debtor has little or no cash flow;
(7) The debtor cannot meet current expenses, including the payment of personal property and real estate taxes;
(8) The debtor has no employees.
Upon approval of a disclosure statement, the plan proponent must mail the following to the U.S. trustee and all creditors and equity security holders: (1) the plan, or a court approved summary of the plan; (2) the disclosure statement approved by the court; (3) notice of the time within which acceptances and rejections of the plan may be filed; and (4) such other information as the court may direct, including any opinion of the court approving the disclosure statement or a court-approved summary of the opinion. Fed. R. Bankr. P. 3017(d). In addition, the debtor must mail to the creditors and equity security holders entitled to vote on the plan or plans: (1) notice of the time fixed for filing objections; (2) notice of the date and time for the hearing on confirmation of the plan; and (3) a ballot for accepting or rejecting the plan and, if appropriate, a designation for the creditors to identify their preference among competing plans. Id. But in a small business case, the court may conditionally approve a disclosure statement subject to final approval after notice and a combined disclosure statement/plan confirmation hearing. 11 U.S.C. § 1125(f).
If the exclusive period expires before the debtor has filed and obtained acceptance of a plan, other parties in interest in a case, such as the creditors' committee or a creditor, may file a plan. Such a plan may compete with a plan filed by another party in interest or by the debtor. If a trustee is appointed, the trustee must file a plan, a report explaining why the trustee will not file a plan, or a recommendation for conversion or dismissal of the case. 11 U.S.C. § 1106(a)(5). A proponent of a plan is subject to the same requirements as the debtor with respect to disclosure and solicitation.
In a chapter 11 case, a liquidating plan is permissible. Such a plan often allows the debtor in possession to liquidate the business under more economically advantageous circumstances than a chapter 7 liquidation. It also permits the creditors to take a more active role in fashioning the liquidation of the assets and the distribution of the proceeds than in a chapter 7 case.
Section 1123(a) of the Bankruptcy Code lists the mandatory provisions of a chapter 11 plan, and section 1123(b) lists the discretionary provisions. Section 1123(a)(1) provides that a chapter 11 plan must designate classes of claims and interests for treatment under the reorganization. Generally, a plan will classify claim holders as secured creditors, unsecured creditors entitled to priority, general unsecured creditors, and equity security holders.
Under section 1126(c) of the Bankruptcy Code, an entire class of claims is deemed to accept a plan if the plan is accepted by creditors that hold at least two-thirds in amount and more than one-half in number of the allowed claims in the class. Under section 1129(a)(10), if there are impaired classes of claims, the court cannot confirm a plan unless it has been accepted by at least one class of non-insiders who hold impaired claims (i.e., claims that are not going to be paid completely or in which some legal, equitable, or contractual right is altered). Moreover, under section 1126(f), holders of unimpaired claims are deemed to have accepted the plan.
Under section 1127(a) of the Bankruptcy Code, the plan proponent may modify the plan at any time before confirmation, but the plan as modified must meet all the requirements of chapter 11. When there is a proposed modification after balloting has been conducted, and the court finds after a hearing that the proposed modification does not adversely affect the treatment of any creditor who has not accepted the modification in writing, the modification is deemed to have been accepted by all creditors who previously accepted the plan. Fed. R. Bankr. P. 3019. If it is determined that the proposed modification does have an adverse effect on the claims of non-consenting creditors, then another balloting must take place.
Because more than one plan may be submitted to the creditors for approval, every proposed plan and modification must be dated and identified with the name of the entity or entities submitting the plan or modification. Fed. R. Bankr. P. 3016(b). When competing plans are presented that meet the requirements for confirmation, the court must consider the preferences of the creditors and equity security holders in determining which plan to confirm.
Any party in interest may file an objection to confirmation of a plan. The Bankruptcy Code requires the court, after notice, to hold a hearing on confirmation of a plan. If no objection to confirmation has been timely filed, the Bankruptcy Code allows the court to determine whether the plan has been proposed in good faith and according to law. Fed. R. Bankr. P. 3020(b)(2). Before confirmation can be granted, the court must be satisfied that there has been compliance with all the other requirements of confirmation set forth in section 1129 of the Bankruptcy Code, even in the absence of any objections. In order to confirm the plan, the court must find, among other things, that: (1) the plan is feasible; (2) it is proposed in good faith; and (3) the plan and the proponent of the plan are in compliance with the Bankruptcy Code. In order to satisfy the feasibility requirement, the court must find that confirmation of the plan is not likely to be followed by liquidation (unless the plan is a liquidating plan) or the need for further financial reorganization.
There are, of course, exceptions to the general rule that an order confirming a plan operates as a discharge. Confirmation of a plan of reorganization discharges any type of debtor – corporation, partnership, or individual – from most types of prepetition debts. It does not, however, discharge an individual debtor from any debt made nondischargeable by section 523 of the Bankruptcy Code. (1) Moreover, except in limited circumstances, a discharge is not available to an individual debtor unless and until all payments have been made under the plan. 11 U.S.C. § 1141(d)(5). Confirmation does not discharge the debtor if the plan is a liquidation plan, as opposed to one of reorganization, unless the debtor is an individual. When the debtor is an individual, confirmation of a liquidation plan will result in a discharge (after plan payments are made) unless grounds would exist for denying the debtor a discharge if the case were proceeding under chapter 7 instead of chapter 11. 11 U.S.C. §§ 727(a), 1141(d).
As discussed in In re Tillotson, 266 B.R. 565 (Bankr. W. D. N.Y. 2001), the terms of a confirmed plan are binding upon all parties in the interests of finality. That, it can be said, is the rule. However, as in many areas of the law, there are exceptions and in the context of successive chapter 11 petitions, the courts have recognized an exception if the debtor proceeds in good faith which is manifested only if the debtor can show the existence of changes that, “…were unanticipated and not reasonably foreseeable at the time of the confirmation or substantial consummation…” Id. at 569. In other words, “the occurrence of ordinary, foreseeable risks of doing business should not relieve the debtor of the terms of its confirmed plan.” Id.at 569. The Seventh Circuit Court of Appeals was faced with a debtor that filed a second Chapter 11 petition for the purpose of liquidation after a first Chapter 11 reorganization attempt failed, and it stated matter-of-factly that "serial Chapter 11 filings are permissible under the Code if filed in good faith," In re Jartran, Inc.,886 F.2d 859, 866(7th Cir.1989). “Changes associated with the realities of economic change are an insufficient reason to allow a new bankruptcy case…the debtor is charged with crafting a plan that could absorb economic changes, and failing that, the debtor understood its risk in proceeding to confirmation under terms and assumptions that could change. Even extraordinary and unforeseeable changes will not support a new Chapter 11, if these changes do not substantially impair the debtor’s performance under the confirmed plan.” In re Tillotson, 266 B.R. 565, 569-570 (Bankr. W. D. N.Y. 2001) quotingIn re Adams, 218 B.R. 597, 600-602 (Bankr. D. Kan. 1998).
Notwithstanding the entry of the confirmation order, the court has the authority to issue any other order necessary to administer the estate. Fed. R. Bankr. P. 3020(d). This authority would include the postconfirmation determination of objections to claims or adversary proceedings, which must be resolved before a plan can be fully consummated. Sections 1106(a)(7) and 1107(a) of the Bankruptcy Code require a debtor in possession or a trustee to report on the progress made in implementing a plan after confirmation. A chapter 11 trustee or debtor in possession has a number of responsibilities to perform after confirmation, including consummating the plan, reporting on the status of consummation, and applying for a final decree. Revocation of the confirmation order is an undoing or cancellation of the confirmation of a plan. A request for revocation of confirmation, if made at all, must be made by a party in interest within 180 days of confirmation. The court, after notice and hearing, may revoke a confirmation order "if and only if the [confirmation] order was procured by fraud." 11 U.S.C. § 1144. A final decree closing the case must be entered after the estate has been "fully administered." Fed. R. Bankr. P. 3022. Local bankruptcy court policies generally determine when the final decree is entered and the case closed.
Attorney Amann featured in National Business Institute Webcast Seminar – The New Rules in Bankruptcy: Top Mistakes Attorneys are Currently Making
Partner William J. Amann, Esq. will be a featured speaker in the National Business Institute’s upcoming video webcast, The New Rules in Bankruptcy: Top Mistakes Attorneys are Currently Making. The webcast will be broadcast nationwide on Thursday, August 30th, and will evaluate the major errors being made in today’s bankruptcy environment and offer expert advice on how they can be avoided.
Attorney Amann will be covering three different sections of the webcast, including the top violations with the new CFPB rules, regulations and requirements regarding FDCPA and bankruptcy, the top violations with RESPA/TILA (TRID), and creditor compliance oversights regarding Rules 3001(c) and 3002.
Other topics will include common mistakes being made with the new processes in lien stripping, filing proofs of claim, collecting student loan defaults, and bankruptcy litigation.
Not only will this course provide invaluable knowledge on how to side-step bankruptcy pitfalls, but it also qualifies for continuing legal education credits.
To register or to learn more about this NBI webcast, simply click on the link provided in this article. Additional registration options are summarized below:
PHONE: (800) 930-6182
FAX: (715) 835-1405
MAIL: NBI, Inc.
P.O. Box 3067
Eau Claire, WI 54702