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Benjamin Franklin is quoted as having said “in this world nothing can be said to be certain, except death and taxes.”  No offense to Mr. Franklin, but we had always thought that there was at least one other certainty in this world—in a bankruptcy case, creditors get paid pursuant to the priority scheme under section 507(a) of the Bankruptcy Code.  It turns out, however, that Mr. Franklin was correct.  In In re Jevic Holding Corp., the United States Court of Appeals for the Third Circuit found that in rare instances, a case arising under chapter 11 may be resolved through a structured dismissal that deviates from the Bankruptcy Code’s priority scheme.  An overview of structured dismissals and a discussion of the Third Circuit’s analysis in this case as to whether such dismissals are generally permissible under the Bankruptcy Code is provided in Part I here.  In this Part II, we discuss whether bankruptcy courts have the power to approve settlements, in the context of structured dismissals, which deviate from the priority scheme of the Bankruptcy Code.  Background
11 hours 2 min ago
Manu Fernandez/Associated Press
A volunteer fire department in rural Pennsylvania filed for bankruptcy to protect its main pipeline of revenue: not firefighting, but Friday night bingo games. Officials who put the nonprofit Madera Volunteer Fire Co. into bankruptcy on Tuesday urged a judge to let them spend restricted cash needed for “[hosting] bingo games, fuel, propane, telephone services, insurance and other normal and necessary costs of business,” according to documents filed in U.S. Bankruptcy in Johnstown, Pa. The fire department has contracts to provide fire protection to Bigler Township (population: 1,289) and Knox Township (population: 1,042), but most of its $280,000 in revenue last year came from bingo and other fundraisers like poker runs, an annual gun raffle and community dinners. The profit from social events, however, wasn’t enough to keep them out of recent financial trouble. Earlier fire department leaders overspent on renovations to the fire hall located at 2720 Main St., said bankruptcy lawyer Kevin Petak. To make the improvements, the fire department took out a loan through a U.S. Department of Agriculture rural development program in 2007. It still owes about $2.1 million.

Read More from: WSJ.com: Bankruptcy Beat

12 hours 32 min ago
John Rogers:
The 5% Chapter 13 Telecom Rule in The Bankruptcy Court of the Western District of Kentucky, Judge Joan Lloyd
Originally posted on Kentuckiana Bankruptcy Opinions: (Bankr. W.D. Ky. June 29, 2015) Judge Lloyd confirms the Chapter 13 plan at 100% on condition that the debtors remit all tax refunds during the plan term to the Chapter 13 trustee for distribution to creditors. The court requires this because the debtors refused to justify the telecom expense of more than 5% of the debtors monthly net income ($400 per month). Opinion below. 2015-06-29 – in re birdwell Author: Matt Lindblom View original
15 hours 3 min ago
Supreme Court of the United States
Getty Images
The U.S. Supreme Court just put its stamp of approval on the Obama administration’s health-care reform, and a Boston law professor thinks he knows what will happen next. In his 2014 study, Northeastern University law professor Daniel Austin dug into personal bankruptcy filings to figure out what happened after Massachusetts lawmakers made health insurance mandatory in 2005. His findings? Massachusetts residents who file for bankruptcy protection these days have way less medical debt compared to the rest of the country. The typical Massachusetts person or couple who filed in 2013 had $3,041 in medical debt, while people everywhere else had an average of $8,594 in medical debt. In fact, he found that Massachusetts is the only state where medical debt isn’t the leading cause of personal bankruptcy. (A loss of income is the No. 1 reason, he found.)

Read More from: WSJ.com: Bankruptcy Beat

16 hours 6 min ago
An aerial view of the Morongo Band of Mission Indians’s casino and resort, which sit on tribal land. The Morongo are riding to the defense of embattled gun maker Colt Defense.
Morongo Band of Mission Indians
A business-savvy tribe of Native Americans, the Morongo Band of Mission Indians, is riding to the rescue of Colt Defense LLC, the embattled gun maker caught up in a contentious bankruptcy case. Private-equity owner Sciens Capital Management has been clashing with bondholders over control of Colt. Sciens had the upper hand, but bondholders then moved into the lead, offering to finance a turnaround via the chapter 11 proceeding that began June 14. At this point, the fate of the Connecticut company, which has roots that run back to the 19th century, is unknown. After the initial dustups in the bankruptcy brawl, the Morongo tribe had its lawyers on the phone to everyone concerned, offering to open talks with the maker of the “gun that won the West.” “We are the West,” said Drew Ryce, attorney for the Morongo tribe, which is based in Southern California near Palm Springs. “All we know is that the company failed and we don’t want that to happen. It’s an iconic American company. It shouldn’t fail. It shouldn’t go away.”

Read More from: WSJ.com: Bankruptcy Beat

16 hours 26 min ago
The PCAOB is asking for public comment on whether to require audit firms to file a new form to make public the name of the engagement partner and information about other participants in the audit. 
17 hours 30 min ago
JW Resources Inc. filed for chapter 11 bankruptcy Tuesday, the latest coal miner to seek court protection during troubles in the industry. Read the Daily Bankruptcy Review article here. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”) Puerto Rico’s electric power utility was close to a deal with creditors Tuesday that would allow it to avoid default, The Wall Street Journal reports. A bankruptcy judge Tuesday urged the federal government to agree to halt active collection efforts against a subset of former Corinthian Colleges Inc. students—but declined to broadly order a temporarily halt on the collection of billions of dollars in student loans, DBR (sub. req.) reports.

Read More from: WSJ.com: Bankruptcy Beat

19 hours 28 min ago
JW Resources Inc. filed for chapter 11 bankruptcy Tuesday, the latest coal miner to seek court protection during troubles in the industry. Read the Daily Bankruptcy Review article here. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”) Puerto Rico’s electric power utility was close to a deal with creditors Tuesday that would allow it to avoid default, The Wall Street Journal reports. A bankruptcy judge Tuesday urged the federal government to agree to halt active collection efforts against a subset of former Corinthian Colleges Inc. students—but declined to broadly order a temporarily halt on the collection of billions of dollars in student loans, DBR (sub. req.) reports.

Read More from: WSJ.com: Bankruptcy Beat

19 hours 28 min ago
BOKF, N.A. v. JPMorgan Chase Bank, N.A. (In re MPM Silicones, LLC), 518 B.R. 740 (Bankr. S.D.N.Y. 2014) – Senior lienholders sued lenders holding junior liens on common collateral, arguing that the junior lienholders violated an intercreditor agreement.  The bankruptcy court … Continue reading →
21 hours 5 min ago
The financial crisis and its aftermath elevated the stature of CROs. The true test of their new clout will come during the next market expansion.

Read More from: BankThink

1 day 5 hours ago
Posted by Kathy Bazoian Phelps    Below is a summary of the activity reported for June 2015. The reported stories reflect: 3 guilty pleas or convictions in pending cases; over 140 years of newly imposed sentences for people involved in Ponzi schemes; at least 7 new Ponzi schemes involving over $240 million; and an average age of approximately 51 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.    Thomas Abdallah, 51, and Mark George, 58, of Ohio, pleaded not guilty to charges that they ran a Ponzi scheme, along with Jeffrey Gainer, 51, through KGTA Petroleum Ltd. The three allegedly defrauded 70 investors out of $17 million. They promised investors returns of up to 5% per month, or 60% per year, for investments in oil and fuel.     William D. Allen, 36, and his business partner, Susan C. Daub, 55, were criminally charged in connection with an alleged $32 million Ponzi scheme. Allen played for three NFL teams over his 12 year career, including the Giants, Dolphins and Patriots. Allen and Daub are accused of running a Ponzi scheme through their company, Capital Financial Partners Enterprises LLC, which was making high-interest, short-term loans to professional athletes.

Read More from: The Ponzi Blog

1 day 7 hours ago
Since 2004, 12 Catholic dioceses have filed under Chapter 11. The latest case is that of the Archdiocese of St. Paul and Minneapolis, which filed in January 2015. The claims bar date is set for August 3. How should the Archdiocese go about notifying potential claimants -- clergy abuse survivors who have not yet come forward and who may feel ashamed and alone -- that they need to file a claim by the bar date? Yesterday the official unsecured creditors' committee (which is comprised of five clergy abuse survivors) filed a motion requesting that the bankruptcy court order all 187 parishes to play a 7 minute video in which three abuse claimants explain the necessity of filing a claim by the bar date and talk about, from their unique perspectives, why coming forward, however hard it may be, is important, both for survivors and for the church. (The motion also requests that parishes publish the video on their websites.)

Read More from: Credit Slips

1 day 9 hours ago
The Third Circuit’s recent holding in In re Jevic Holding Corp., raised a number of intriguing topics for us bankruptcy nerds so we could not resist taking a closer look at one of the issues presented in the case – structured dismissals.  If you are not familiar with the concept, you are probably not alone, as the use of a structured dismissal as a means to exit bankruptcy is relatively uncommon.  Although the main issue in Jevic Holding Corp. involved whether a settlement, which required a structured dismissal of the case, should be approved notwithstanding that its terms violated the absolute priority rule, we did not want to dismiss (pun intended!) the issue of permissibility of structured dismissals in a bankruptcy case.  So we take this opportunity to provide an overview of structured dismissals and how they work in a bankruptcy case.  Stay tuned for Part II of our In re Jevic Holding Corp. case study where we’ll examine the Third Circuit’s ruling with respect to deviations from the Bankruptcy Code’s priority scheme.  For now, though, we’ll turn to structured dismissals.  Structured Dismissals Generally
1 day 11 hours ago
Before your bankruptcy attorney pulls the trigger on an actual filing, you should undergo a thorough final review of your petition. You may discover that your monthly plan payment can change based upon your current circumstances. You may have assets that have shifted or otherwise transferred in the ordinary course of business. You also may+ Read More The post Final Review Of Your Chapter 13 Bankruptcy Petition appeared first on David M. Siegel.
1 day 11 hours ago
Richard Drew/ASSOCIATED PRESS
As the Dewey & LeBoeuf LLP trial plods into its sixth week, e-mails continue to play a key role. From the day the indictment against Dewey’s three former leaders–former Dewey Chairman Steven Davis, ex-Chief Financial Officer Joel Sanders, and former Executive Director Stephen DiCarmine–came out more than a year ago, the prosecution has trotted out a series of e-mails sent by the defendants that they say show their intent to commit fraud. In response, attorneys for the defense have argued that their clients were using sarcasm when they said things like “fake income” and “clueless auditor.” This week, Andrew Frisch, an attorney for Mr. Sanders, used old e-mails sent by a government witness to try to show that everyone sends e-mails they don’t really mean. Former Dewey partner Richard Shutran testified this week on his role in helping Dewey refinance $250 million in debt back in 2010, two years before the firm filed for bankruptcy.

Read More from: WSJ.com: Bankruptcy Beat

1 day 14 hours ago
Richard Drew/ASSOCIATED PRESS
As the Dewey & LeBoeuf LLP trial plods into its sixth week, e-mails continue to play a key role. From the day the indictment against Dewey’s three former leaders–former Dewey Chairman Steven Davis, ex-Chief Financial Officer Joel Sanders, and former Executive Director Stephen DiCarmine–came out more than a year ago, the prosecution has trotted out a series of e-mails sent by the defendants that they say show their intent to commit fraud. In response, attorneys for the defense have argued that their clients were using sarcasm when they said things like “fake income” and “clueless auditor.” This week, Andrew Frisch, an attorney for Mr. Sanders, used old e-mails sent by a government witness to try to show that everyone sends e-mails they don’t really mean. Former Dewey partner Richard Shutran testified this week on his role in helping Dewey refinance $250 million in debt back in 2010, two years before the firm filed for bankruptcy.

Read More from: WSJ.com: Bankruptcy Beat

1 day 14 hours ago
Even if the U.S. government eases enforcement against banks processing wire transfers to developing countries, lawsuits brought by the plaintiffs' bar under the Anti-Terrorism Act may make banks continue to avoid providing remittance services to needy communities.

Read More from: BankThink

1 day 15 hours ago
Credit Slips blogger, Anna Gelpern, was on the Diane Rehm Show this morning discussing the financial problems in Puerto Rico and Greece. Gelpern of Georgetown University was joined by Greg Ip of the Wall Street Journal and Matthias Matthjis of Johns Hopkins. A link to the full audio program can be found here

Read More from: Credit Slips

1 day 15 hours ago
On June 1, 2015, the United States Supreme Court decided Bank of America v. Caulkett, No. 13-1421, together with Bank of America v. Toledo-Cardona, No. 14-163, holding unanimously that a Chapter 7 bankruptcy debtor cannot “strip off” a junior lien. Lien stripping takes place when there are two or more liens on a property, and the senior lien is “underwater” in that the amount owed on the senior lien is greater than the value of the property. In a Chapter 13 case a property owner can strip off the junior lien, resulting in it being treated as unsecured debt in the bankruptcy. In these cases, the Court held that a Chapter 7 debtor may not void a junior lien under 11 U.S.C. § 506(d) when the debt owed on a senior lien exceeds the current value of the collateral if the junior creditor’s claim is both secured by a lien and allowed under § 502 of the Bankruptcy Code. Read More › Tags: Chapter 13, Chapter 7, U.S. Supreme Court

Read More from: Michigan Bankruptcy Blog

1 day 16 hours ago
Equal-opportunity small business lending can go a long way toward helping minority groups rebuild the wealth lost during the Great Recession. The CFPB has delayed implementing reporting requirements that could close the credit gap for far too long.

Read More from: BankThink

1 day 17 hours ago

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