Split Grows on Whether a Subchapter V Debtor Must Be ‘Currently’ Engaged in Business
The owner of defunct businesses was held ineligible to be a small business debtor because he was no longer the owner of an operating business. Being a non-owner executive of an operating business didn’t qualify him.
To Invoke Equitable or Statutory Mootness, the Record Must Be Clear that a Sale Closed
Unsubstantiated statements that a sale closed didn’t persuade a district judge in Dallas to invoke equitable or statutory mootness.
Medicaid Fraud Suit in State Court Isn’t Subject to the Automatic Stay
Even though the debtor was no longer in business, a Medicaid fraud suit was not subject to the automatic stay and thus served as a deterrent to others.
Court Records Destroyed, a Finding of Proper Notice Presumes Notice by Publication
The finding of proper notice in a confirmation order satisfies the debtor’s burden of proving notice by publication to creditors with future claims, even in the absence of a trust for future creditors, Houston judge says.
Dissolved Corporation May Not File to Reorganize in Chapter 11, Only to Liquidate
Dissolved by forfeit, a corporation cannot reinstate a charter and may resort to bankruptcy only to liquidate, Judge Eduardo Rodriguez says.
Bankruptcy Judges Disagree About Abatement of Rent During the Pandemic
Neither the Bankruptcy Code nor state law permits reducing rent when government regulations restrict a debtor’s ability to generate income, Judge Isgur says.
Judge Isgur Sides with the Third Circuit and Allows Makewhole Premiums
Creditors are entitled to ‘default interest’ when the debtor is solvent.
Houston Judge Rejects Tenth Circuit Opinion Immunizing Subsequent Transferees
Proceeds from fraudulently transferred property can be recovered from subsequent transferees, Judge Rodriguez says, differing with the Tenth Circuit’s Generation Resources opinion.
Texas Mineral Liens May Be Modified in a Subchapter V Cramdown Plan
A cramdown plan can reduce the collateral coverage for secured creditors.
Caution: Trusts Under a Plan Might Dissolve Automatically If Not Extended
Language in the documents prevented trusts from dissolving automatically when the trustee missed a deadline for extending the duration of the trusts, Judge Isgur said.