Articles
When A Solvent Debtor Files For Reorganization, Is The Filing "Per Se" Bad Faith?
[2005-09-01]:
In their article, Courts Reign in Solvent Debtor Bankruptcies by Handing Landlords Significant Victories, 5 NORTON BANKR_ L. ADVISER 3 (2005), John D. Fredericks and Eric E. Sagerman argue that In re Liberate Technologies, 314 B.R. 206 (Bankr. N.D. Cal. 2004), and NMSBPCSLDHB, L.P. v. Integrated Telecom Express, Inc. (In re Integrated Telecom Express, Inc.), 384 F.3d 108 (3d Cie 2004), cert. denied, 2005 WL 544094 (June 6, 2004), reflect a trend away from prior cases that allowed solvent debtors to reorganize. As explained here, these recent decisions depart from a long line of cases holding that a debtor's good faith should be determined from a "totality of circumstances" including solvency of the debtor but not determined exclusively by the debtor's solvency. Further, this excessive focus on the debtor's solvency creates an additional eligibility requirement not found in If U.S.C. § 109(d) or (e). It is too soon to declare that the courts have shifted away from or abandoned the "totality of circumstances" approach and instead adopted the holdings in Liberate and Integrated.
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The Elusive Meaning Of Impairment
[2004-03-01]:
"Impairment" is defined as "[t]he fact or state of being damaged, weakened, or diminished." However, judicial interpretation has expanded the meaning of the word beyond its plain definition. As a result, the concept of impairment has often been misunderstood and misapplied. The amendments contained in the Bankruptcy Reform Act of 1994 did little to change that.
Impairment is a crucial concept in every plan of reorganization or liquidation under chapter 11 since a plan proponent (and ultimately, the court) must determine whether a creditor is impaired and, therefore, arguably entitled to vote. Section 1129(a)(1)5 of the Bankruptcy 'Code requires that at least one impaired class vote to accept the plan. On the other hand, classes of unimpaired creditors are presumed to have accepted the plan, and therefore a proponent need not solicit their vote. Thus, a clear understanding of what is meant by "impairment" is essential.
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Procedural Pointers Regarding Non Dischargeability Complaints
[2003-02-01]:
Debtors usually file for bankruptcy protection to either reorganize or to liquidate their outstanding debt through what is commonly known as a "fresh start." "The principal purpose of the Bankruptcy Code is to grant a "'fresh start." to the 'honest but unfortunate debtor." This "fresh start" is ensured by a debtor obtaining a discharge after filing for bankruptcy protection. Individuals are entitled to a discharge in Chapter 7, Chapter 13, or Chapter 11 proceedings, but corporations can only receive a discharge under Chapter 11.
The majority of debts listed by a debtor are automatically discharged unless a complaint seeking to have the debt found to be non dischargeable is filed. Some debts, however, are deemed to be automatically nondischargeable even if a complaint is not filed seeking a court order determining dischargeability. Examples of these types of debts include: support, either child or spousal; priority taxes; student loans;8injury caused by operation of a motor vehicle, vessel or aircraft while intoxicated; and restitution orders. These examples are not an inclusive list and other types of debts that fall into this category can be found at § 523(a).
Other debts such as debts based upon fraud under 54 523(a)(2), (4) or (6) will be discharged unless a creditor files a complaint seeking to hold that particular debt non dischargeable. This article will focus on the time constraints contained in the Bankruptcy Code and Rules in filing a complaint to determine dischargeability of a debt under § 523(c)or a complaint seeking to deny a debtors discharge under § 727. It will also discuss the procedure and standards to obtain an extension of the deadline to file such a complaint and what effect the conversion of a case has on these deadlines.
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