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On February 6, 2015, a district court held Puerto Rico's Recovery Act to be expressly preempted by section 903 of the Bankruptcy Code. On July 6, 2015, the U.S. Court of Appeals upheld the finding: The Recovery Act is preempted, on both express preemption and conflict preemption grounds.  Judge Torruella wrote a separate concurrence starting on page 50 of the decision. One of his points bearing special mention here is that he finds unconstitutional the 1984 Bankruptcy Code amendment that stripped Puerto Rico's right to authorize chapter 9 for its municipalities, due to the lack of a rational basis. Had he secured another vote for that view...

Read More from: Credit Slips

10 hours 26 min ago
Not all debts are created equal, especially when it comes to bankruptcy.  While Chapter 7 and Chapter 13 both allow debtors to greatly reduce or wipe out many of their debts, some liabilities are difficult if not impossible to escape.  So which category does tax fall into?  Does bankruptcy eliminate tax debt, or not?  In short: it depends.  Our bankruptcy lawyers explain when taxes are (and aren’t) dischargeable. Does Bankruptcy Erase Tax Liability? Debts which can be eliminated are known as dischargeable debts, because they are wiped out once the bankruptcy case is finalized or “discharged” by the court.  Discharge is always the goal in bankruptcy.  If a case is dismissed, it means the court found a problem, and the result is that the debtor is still liable for their debts and can still be pursued for repayment by creditors. Most debts are dischargeable under both forms of bankruptcy, including but not limited to the following:  

Read More from: Young, Klein & Associates

10 hours 28 min ago
Paul Sakuma/Associated Press
Nortel Networks Corp .’s bondholders and the company’s U.S. division lost a bid to upset a ruling on how $7.3 billion should be divided among competing national units of the defunct telecommunications giant. Read the Daily Bankruptcy Review article via The Wall Street Journal. (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.”) Energy Future Holdings Corp. bondholders were warned about their desire for Oncor, DBR (sub. req.) reports.

Read More from: WSJ.com: Bankruptcy Beat

11 hours 44 min ago
Per www.globalinsolvency.com:Tue., July 7, 2015 The long-awaited new insolvency law has taken a big step towards becoming a reality after being approved by the Cabinet, The National reported. Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai, said on his website that the proposed draft law includes flexible strategies to bail out businesses that have encountered financial troubles that might lead to bankruptcy. “The draft law aims to regulate accumulated debts, eases restructuring of companies as well as support troubled businesses,” he said. “The draft law aims to mitigate risk of bankruptcy and ensure a safe and attractive business environment in the UAE that nurtures and supports investments.” The new law, which was approved on Sunday, is reported to be largely based on French insolvency practices, drawing on a number of provisions from German law, as well as legal codes from countries such as the Netherlands and Japan. Significantly, the new law is reported to contain groundbreaking provisions regarding the decriminalisation of bounced cheques.

Read More from: The COMI

1 day 37 min ago
The Equitable Mootness Doctrine     The entry of an order confirming a plan of reorganization is probably the most significant event in a bankruptcy case.  Shortly after a confirmation order enters, parties to the case often invest funds, alter operations, sell assets, and otherwise implement the reorganization.  Accordingly, courts have developed a doctrine called “equitable mootness” to protect the finality of confirmation orders.  See, e.g., Rev. Op. Grp. v. ML Manager LLC (In re Mortgs. Ltd.), 771 F.3d 1211, 1215 (9th Cir. 2014) (“An appeal is equitably moot if the case presents transactions that are so complex or difficult to unwind that debtors, creditors, and third parties are entitled to rely on the final bankruptcy court order.”).     The Ninth Circuit has developed four factors to determine whether an appeal is equitably moot.  They are: (1) whether the appealing party sought a stay of the confirmation order; (2) whether the plan has been substantially consummated; (3) whether the remedy sought will affect third parties unfairly; (4) whether the court can fashion effective and equitable relief without significantly upsetting the confirmed plan.  See In re Thorpe Insulation Co., 677 F.3d 869, 881 (9th Cir. 2012).  The Transwest Decision

Read More from: Creditors' Rights

1 day 1 hour ago
The sandwiches and fries in this picture cost less than $15 total.
Joseph Checkler
Here’s our Yelp review for dinner and drinks at the 100 Montaditos on Bleecker Street in Greenwich Village: Title: “Waaaay Too Much Quality for Waaaay Too Low a Price.” Body: “The food was way too inexpensive for how great it tasted, and the happy hour drinks were just too heavily discounted. And to boot, the manager was extremely accommodating and friendly to all the guests. Also, the location is awesome and the space is great. I’m not sure how this place is still in business.” Last sentence notwithstanding, that’s a five-star review. But for a company in bankruptcy, low-priced food and drinks at high-rent locations might not be the quickest way out of chapter 11. In fact, early in the bankruptcy case, a lawyer for embattled franchisees cited that business model as one of the reasons for the Spanish chain’s struggles since expanding into the U.S. Our investigation started out by taking advantage of what must be the best (and only) five-hour happy hour in Greenwich Village: $2 sangria—albeit a little watery—and $3 draft beer.

Read More from: WSJ.com: Bankruptcy Beat

1 day 3 hours ago
A recent article in the New York Times illustrated how advantageous the bankruptcy process can be for senior citizens looking to make a fresh financial start and protect their retirement income. The piece featured a 66-year-old retired former nursery owner and plant consultant from Orlando with diminishing income and mounting bills, a problem to which seniors across the country can relate. The retiree said he wanted to get out of debt in time to reorganize his finances and leave something to his grandchildren. What is truly surprising, and unfortunate, is that he said that overcoming the stigma of bankruptcy was his biggest obstacle in initiating the process. As people get older, they require more medical care; however, their lack of income after retirement means that they can’t always pay for it. This results in mounting medical bills that balloon out of control and sometimes force elderly individuals into bankruptcy. This maneuver, however, can be beneficial to those looking to protect and preserve what limited income they have during their retirement. Without getting this fresh start, seniors run the risk of having their income eaten up by creditors each month, leaving them with very little, if anything, to enjoy the life they’ve worked so hard to build.
1 day 5 hours ago
In over 19 years of being a bankruptcy lawyer I’ve heard – and been part of – both sides of the discussion about how smart it is to file for bankruptcy. After much consideration, I’ve concluded that it’s a stupid conversation. There’s a lot of misinformation out there about bankruptcy. Credit counselors and debt settlement companies will tell you it’s the worst thing for your credit, in spite of the fact that even the Federal Reserve Bank of New York (you know, the folks who run the banking system) says that’s untrue. On the other side of the discussion comes the bankruptcy lawyers who think that a trip to bankruptcy court is the cure for what ails your financial situation. And a recent article in Huffington Post includes a story of someone who, upon hearing that a friend was going to file for bankruptcy, responds with, “congratulations.” If you’re in debt and don’t handle it, you’re putting yourself at risk financially. Retirement, after all, is one day closer every time the sun rises. Illness, job loss, family upheaval and an unexpected household repair can all cause calamities if you’re not on firm financial footing. But the key isn’t whether bankruptcy is good or bad – it’s one of attending to your financial problems in the best manner possible. And here’s what you should be doing instead. Begin with Expenses
1 day 6 hours ago
Do you own and manage rental property in Walworth County? If so, this post could save you thousands of dollars. Most lost funds are incurred by landlords when a tenant moves out. Repairing and replacing household items adds up. There is normally a dispute between the landlord and the tenant over the property’s condition at the time of the tenant’s move-out. You can avoid this type of situation by clearly defining the condition of your property at the time of move-in and defining the condition your property should be left in when the tenant moves out. Learn how to withhold security deposits without complaints from your tenants. 6 Money Saving Tips for Landlords from our Walworth County Real Estate Attorney 1. Video the Tenant Walk-Through. It’s time to get out your camcorder, camera, or mobile phone and use the video feature. Be sure to include the date, time, and name of your future tenants. Video record the entire walk-through with your potential tenants. Try to get a 360 degree view of each room. Include the tenants in each room view. Have your future tenants and yourself comment on the condition of each room. You will take the video seriously. Your tenants will take the video seriously, especially when you have them state their names as listed on the lease agreement. This pre-move-in video will make it very difficult for any tenant to dispute the condition of your property at the time of move-in.

Read More from: Wynn at Law, LLC

1 day 7 hours ago
Davis Polk has submitted a comment letter on the SEC proposal for companies to disclose pay versus performance. We previously summarized the rule proposal here. 
1 day 8 hours ago
Community banks that try to serve too broad an array of customers will wind up losing out to larger competitors. They would do better to focus on on one or two customer segments and familiarize themselves with those groups' specific habits and needs.

Read More from: BankThink

1 day 9 hours ago
Receiving Wide Coverage ... What's Next for Greece: One day after Greeks voted overwhelmingly to reject the bailout terms offered by European creditors, the country's future is up the air. One thing that's for sure: controversial Greek finance minister Yanis Varoufakis is stepping down at the behest of prime minister Alexis Tsipras in an effort to smooth upcoming negotiations with European creditors. Varoufakis has no regrets about the hardball tactics that aggravated eurozone officials: "I shall...

Read More from: BankThink

1 day 10 hours ago
At the conclusion of an individual’s bankruptcy case, the court enters an order closing the case, and a copy of this order is sent to the debtor. Unless the trustee has assets to distribute to creditors, case closing takes place fairly quickly in Chapter 7 cases. In Chapter 13, the case will not be closed until after the debtor finishes making payments under the plan. The case will also be closed if the court enters an order of dismissal.
1 day 10 hours ago
Auto parts maker Chassix Holdings Inc. won final court approval of its restructuring plan. Read the Daily Bankruptcy Review article via The Wall Street Journal. (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.”) Yellowstone Club founder Tim Blixseth is staying in jail, the Associated Press reports. Stockton University doesn’t think developer Glenn Straub, who bought Atlantic City N.J.’s Revel casino, is serious about buying the former Showboat casino and wants to find a new buyer, the Associated Press reports.

Read More from: WSJ.com: Bankruptcy Beat

1 day 11 hours ago
Auto parts maker Chassix Holdings Inc. won final court approval of its restructuring plan. Read the Daily Bankruptcy Review article via The Wall Street Journal. (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.”) Yellowstone Club founder Tim Blixseth is staying in jail, the Associated Press reports. Stockton University doesn’t think developer Glenn Straub, who bought Atlantic City N.J.’s Revel casino, is serious about buying the former Showboat casino and wants to find a new buyer, the Associated Press reports.

Read More from: WSJ.com: Bankruptcy Beat

1 day 11 hours ago
Back on January 4, in my first post of the year, I wrote:"If the ultra-left Syriza party wins control of Greece's government this month, I expect Greece will default, for three reasons.  One, the core reason for Syriza's existence is to repudiate the terms imposed by the "Troika" (EC, ECB, and IMF) as part of the 2011 bailout and restructuring, so it doesn't really have a politically viable alternative to default, although I expect there will be an elaborate show of offers and counteroffers between its leadership and the Troika before a default occurs.  Two, even after the massive haircut inflicted on private creditors back in 2011, Greece was left with an unserviceable debt load, so it was inevitable it would get to the point of defaulting eventually, and there is a lot to be said on both sides to get it over with sooner rather than later, as opposed to the surplus-generating nations in the EU throwing good money after bad.  Last, those nations have to be worried about emboldening copycat repudiations by ultra-left parties in larger nations, especially Podemos in Spain, where there will be national elections in December, so it makes sense to l

Read More from: Necessary and Proper

1 day 12 hours ago
Jim Poolman was twice elected to serve as North Dakota’s Insurance Commissioner. While Commissioner, he worked to strengthen laws to protect citizens against insurance fraud. The scope of consumer protection widened, in North Dakota and nationally, with landmark legislation related to suitability of sales, life settlements and a host of other issues.  Poolman served as Chairman of the Life Insurance and Annuities Committee for two years and Vice President of the organization in 2004. Read more here.
1 day 14 hours ago
After much debate and criticism, proposed legislation making significant changes to the Delaware General Corporation Law (the “DGCL”) – previously discussed here – has been signed by Governor Markell after being passed by the General Assembly, and is set to take effect on August 1, 2015. Read More › Tags: Delaware General Corporation Law, Fee-Shifting Bylaws, Forum Selection Bylaws

Read More from: Delaware Bankruptcy Insider

2 days 8 hours ago
Today's Greek referendum might look like a high point for democratic accountability, but it is not. When Greek citizens vote on the demands of their government’s international creditors, the outcome will bind Greek politicians, but not the creditors that have prescribed economic policy for Greece since 2010. Instead, the European institutions and the IMF answer to a complex tangle of constituents outside Greece, including taxpayers in other countries that stand to lose money if Greece fails to pay its debts, and those who would suffer shock-waves from Greece abandoning the euro as its currency. This democracy mismatch can lead to over-lending and over-borrowing based on flawed policies and improbable assumptions, which might have been rejected if the creditors had a more direct stake in the consequences of their prescriptions for Greece from the start. Tying a small portion of debt repayment to policy outcomes would improve accountability and help align incentives for the borrowing government and its creditors alike.

Read More from: Credit Slips

2 days 8 hours ago
So I've been off the grid for a few weeks, and of course after months of little to talk about, the world gave us a bounty of stories about financial distress, and related topics, each of which would merit its own post. But I'm going to hit them quickly to get caught up again this holiday weekend:
  • I've always enjoyed reading Hamilton's Report on Public Credit, which has something of a reorganization plan about it, as well as a good discussion of distressed debt trading. Thus, I'm largely in agreement with those that say that Jackson and not Hamilton should go to free up space on one of our bills. But what about having two types of bill in each denomination? Harriet Tubman on some dollar bills, with Washington on the others, seems about right. 

Read More from: Credit Slips

3 days 6 hours ago

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