Circumstances Justifying the Dischargeability of Student Loans Under the Bankruptcy Code
re: Homaidan v. Sallie Mae, Inc., et al., No. 20-1981 (2d Cir. July 15, 2021) Generally speaking, student loans are extremely difficult to discharge in bankruptcy even under dire circumstances when guaranteed by a government unit or a non-profit institution. In some cases, as much as bankruptcy judges have [...]
Recent Fifth Circuit Case Gives Lender Green Light to Change Management
The Fifth Circuit Court of Appeals recently upheld a lower court ruling permitting a lender to change management pursuant to a negotiated agreement notwithstanding the debtor’s allegation that it was only under duress that it permitted the lender to do so. As noted by the Fifth Circuit, [U]sing leverage [...]
Sales in Bankruptcy – No Stay, No Pay
Official Comm. v. Walker Cty. Hosp. Dist. (In re Walker County Hospital Corp.), No. 20-20575, 2021 U.S. App. LEXIS 20610 (5th Cir. July 12, 2021) The Fifth Circuit Court of Appeals recently reaffirmed the general rule that if an objecting party to a bankruptcy sale fails to seek a [...]
The Purpose of Special Purpose Entities
The American Bankruptcy Institute describes a Special Purpose Entity (SPE) as an entity formed concurrently with, or immediately prior to, the closing of a financing transaction…to isolate the financial assets from the potential bankruptcy estate of the original entity, the borrower, or originator. When a lender requires the creation [...]
A Recent Decision Recharacterizing Debt to Equity Under Delaware Law Could Have Far-Reaching Implication
A recent decision out of the Bankruptcy Court for the Southern District of New York1 interpreting Delaware law will probably impact other decisions throughout the country in light of the impact Delaware corporate law has in other jurisdictions. In re: Live Primary, LLC Insider investors loaned $6 million [...]
What Rights and Possible Exposure to Consequences Arise for Tenants When a Real Property Lease is Rejected by a Bankrupt Landlord?
Section 365(h) of the Bankruptcy Code provides special protection for non-debtors who have rights as tenants if a trustee or Chapter 11 debtor landlord rejects an unexpired lease. The lessee/tenant has the option of retaining possession of the leased premises. That said, it is not entirely clear what [...]
Temporary Pandemic-Related Bankruptcy Code Provisions
Bankruptcy Code provisions temporarily applied because of the COVID-19 pandemic. The Means for Monthly Income Calculation Individual debtor’s disposable income cannot exceed a certain level and the debtor’s expenses must be reasonable and necessary to meet the threshold to qualify under Chapter 7. Nevertheless, under the CARES Act an [...]
Retention of Bankruptcy Debtor’s Property After Bankruptcy Is Not a Violation of the Automatic Stay
The Supreme Court finally settled a long-standing question as to whether a creditor is required to return property of a debtor after bankruptcy has been filed. The answer is that a creditor can continue to retain possession over property of the debtor and such retention is not in violation of [...]
Bankruptcy Court Rules that Eviction Moratorium for COVID Does Not Apply in Bankruptcy
In a case of first impression, the Bankruptcy Court for the Central District of California, Los Angeles Division, issued a recent opinion in In re Nikolay Machevsky, No. 14-29611 (Bankr. C.D. Cal. Jan 8, 2021), ordering a debtor to be evicted from his residence because he did not qualify for [...]
Temporary Extension of Time for Debtor-Tenants to Decide Whether to Assume or Reject Certain Leases
On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act of 2021 (CAA). The CAA includes a temporary extension for debtor-tenants to assume or reject certain leases. Section 365 deals with the assumption and/or rejection of residential and non-residential leases when a debtor files bankruptcy. Section 365(d)(4) [...]
