Tabla de contenidos para October 2023 en ABI Journal

Bradley Pack is a shareholder with Engelman Berger, PC in Phoenix. Aaron Kaufman is a partner with Gray Reed & McGraw LLP in Dallas. Christina Sanfelippo is an associate with Cozen O’Connor in Chicago and co-chair of ABI’s Young and New Members Committee. Debtor Must Pay Default Rate Interest to Cure Defaulted Debt; Takes Deep Dive into Difficult Issue While plenty has been written on the issue of what a debtor must do to “cure” and reinstate an accelerated debt, “[n]‌o court has conducted a comprehensive analysis of the three interrelated Bankruptcy Code provisions — §§ 1123‌(d), 1124‌(2)‌(A) and 365‌(b)‌(2)‌(D) — that bear directly on the issue,”1 according to the U.S. Bankruptcy Court for the Southern District of New York. In In re Golden Seahorse LLC, the court availed itself…

“This program was great and hit the mark perfectly for me. Would love more programs like this!” “This was perhaps the best CLE I have had in 30+ years of practice.” “Insightful…. Informative…. Really interesting and well done.” CPEX OCTOBER 30 - NOVEMBER 10, 2023 LIVE OR ON DEMAND – Just $100! Now in its third year, ABI’s Consumer Practice Extravaganza (CPEX) continues to be the premier consumer practice event of the year. Spanning two weeks, this virtual conference offers quality sessions on key consumer bankruptcy topics, including student loans, AI/technology, subchapter V, chapter 13, ethics and more. Leading practitioners will explore the latest in consumer bankruptcy through more than 25 hours of innovative online programming. Attendees can select any sessions to watch live, and all sessions will conveniently remain…

Marguerite Lee DeVoll is a partner with Watt, Tieder, Hoffar & Fitzgerald, LLP in McLean, Va., and a member of the 2020/2021 NCBJ NextGen Class. A construction company files for either chapter 11 or 7 protection, listing on their schedules what appear to be lucrative income streams from ongoing construction projects with outstanding contract balances. The debtor’s secured lender, relying on its security interest rights under the Uniform Commercial Code (UCC), may see the outstanding contract balances as a guaranteed source of debt repayment. The debtor in possession or panel trustee may see the outstanding contract balances as a potential income stream to fund creditor repayments or a reorganization. In either scenario of this common tale, the parties sometimes forget that there may be a competing interest to the funds:…

Daniel Etlinger is a partner with Underwood Murray, PA in Tampa, Fla., and a title agent in the state of Florida. This article is borne, in large part, by an actual case. A chapter 11 debtor filed a highly contentious motion to immediately sell, which was met by objections. To the debtor’s merit, it persevered, and the motion was granted. The hard part was over, right? Only after the sale order was entered did the debtor first pull its title report, which contained numerous chapter 7 requirements. Thus, there was a fundamental disconnect, that being that this was a chapter 11 case whereas presumably an unfamiliar title agent pulled a title report incorrectly calling for chapter 7 requirements. The parties then spent several weeks connecting with the title agent, and…

Brian Cumberland is a managing director with Alvarez & Marsal Tax and leads the firm’s Restructuring Compensation Practice. J.D. Ivy serves as co-leader and managing director of the firm’s Compensation and Benefits Practice. Allison Hoeinghaus is a managing director with the firm. They are based in Dallas. Companies emerging from a restructuring face unique challenges with compensating key employees. Prior equity incentive awards are typically wiped out, and new arrangements need to be implemented to incentivize employees to achieve challenging post-emergence goals. Management incentive plans (MIPs) are commonly used tools to provide go-forward retention and incentive opportunities, and there are key design elements that companies should consider. In addition, companies emerging from bankruptcy with clean balance sheets are often prime targets for an acquisition. These companies must balance the need…

Hon. Alan Trust is chief judge of the U.S. Bankruptcy Court for the Eastern District of New York in Central Islip. Varinder Singh is an associate with Otterbourg PC in New York and was previously a law clerk to Judge Trust. Forty years ago, the internationally famous rock band Styx released a song and music video called “Mr. Roboto.”3 The essential message of the song is apparent from the lyrics: You’re wondering who I am …Machine or mannequin …With parts made in Japan …I am the modern man. *** The problem’s plain to see, toomuch technologyMachines to save our lives,machines dehumanize.4 Now, you astute observers of my articles over the past 15 years know I like my pop-culture references, so how can I pass on sharing that “Mr. Roboto” was…

NOVEMBER 30-DECEMBER 2, 2023 FAIRMONT SCOTTSDALE PRINCESS SCOTTSDALE, ARIZONA REGISTER TODAY AT www.abiwlc.org STELLAR SESSIONS TAUGHT BY TOP FACULTY? ✓ FUN NETWORKING OPPORTUNITIES? ✓ BEAUTIFUL LOCATION? 4 WARM, SUNNY SKIES? ✓ ICE SKATING IN THE DESERT? ✓ You see, when it comes down to it, ABI’s Winter Leadership Conference checks all the boxes for location, CLE, networking opportunities and so much more. So make plans today to join us — and hundreds of your colleagues — in Scottsdale, Ariz., Nov. 30-Dec. 2 for the annual Winter Leadership Conference, where we’ll toast this year’s “40 Under 40” honorees, bask in the Arizona climate, golf on a championship-caliber course, and don our favorite cowboy/cowgirl gear for a Western-themed Final Night Shindig that will knock your tengallon hats off! As if that weren’t enough,…

Two attorneys with Loeb & Loeb LLP received the 2023 Excellence in Pro Bono and Public Interest Service Award from the U.S. District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association. Laura K. McNally has been an ABI member since 2019 and is based in Chicago. Noah Weingarten has been an ABI member since 2020 and is based in New York. Bernice C. Lee of Kozyak Tropin & Throckmorton, LLP (Miami) has been elevated to partner. She has been an ABI member since 2023. Joseph M. Welch has joined Blank Rome, LLP as a partner in the firm’s Finance, Restructuring and Bankruptcy Practice Group in Irvine, Calif. He has been an ABI member since 2023. The American College of Bankruptcy announced its…

2022-23 Hon. Kevin J. Carey (ret.) 2021-22 Robert P. Reynolds 2020-21 Hon. Barbara J. Houser (ret.) 2019-20 Alane A. Becket 2018-19 Edward T. Gavin 2017-18 Hon. Eugene R. Wedoff (ret.) 2016-17 Jeffrey N. Pomerantz 2015-16 James Patrick Shea 2014-15 Brian L. Shaw 2013-14 Patricia A. Redmond 2012-13 James T. Markus 2011-12 Geoffrey L. Berman 2010-11 Melissa S. Kibler 2009-10 Robert J. Keach 2008-09 John W. Ames 2007-08 Reginald W. Jackson 2006-07 Hon. Wesley W. Steen (ret.) 2005-06 John D. Penn 2004-05 Michael P. Richman 2003-04 Bettina M. Whyte 2002-03 Andrew W. Caine 2001-02 Richardo I. Kilpatrick 2000-01 Keith J. Shapiro 1999-2000 Ford Elsaesser 1998-99 Deborah D. Williamson 1997-98 Robert M. Fishman 1996-97 Robert M. Zinman 1994-96 Robin E. Phelan 1991-94 Robert E. Feidler 1989-91 Hon. William L. Norton, Jr. (ret.) 1987-89 Richard A. Gitlin 1982-87 L.E. Creel III…

As Congress returned to Capitol Hill in early September following summer recess, many of the headlines regarding legislative action once again turned toward key issues surrounding funding and budgetary measures.1 While these issues will likely absorb both chambers in the near term, the House and Senate have also examined key bankruptcy and debt issues during the first session of the 118th Congress. This article provides a quick synopsis of a few of these issues and legislative developments that have taken place to date. Note that prospects for further congressional consideration of the issues/legislation laid out below are all currently set to “uncertain,” as the road to reaching bipartisan support has been a bit bumpy with Republican control of the House and Democratic control of the Senate. Regulation of Cryptocurrency Following…

James Bailey is a partner with Bradley Arant Boult Cummings LLP in Birmingham, Ala. Jay Bender is a partner in the firm’s Charlotte, N.C., office. Aaron Johnson is an associate in the firm’s Nashville, Tenn., office. The chapter 11 plan-confirmation process requires both the flexibility to quickly incorporate negotiated compromises up to the confirmation hearing and procedural safeguards to protect interested parties. As the Eleventh Circuit addressed in In re America-CV Station Group Inc., notwithstanding other courts’ contrary decisions, the practical balancing of these interests when considering pre-confirmation plan modifications cannot be used to deny interested parties who have voted to reject (or are deemed to have rejected) a proposed plan the procedural safeguards of receiving an additional disclosure statement, and a new opportunity to vote, when the requirements of…

Sarah Boehm is counsel with McGuireWoods LLP in Richmond, Va. Shawn Fox is a partner in the firm’s New York office. One of the greatest concerns a lender has after it has made a loan is collateral leakage — when an asset escapes the lender’s lien — in a default or distressed scenario. In some situations, causes of action that a borrower may have against third parties may be the most valuable assets left. Moreover, the factual circumstances that gave rise to such causes of action may have been a contributing factor that led to financial distress. These causes of action are often in the form of commercial tort claims. However, because of nuances in the Uniform Commercial Code (UCC), a lender might be surprised to find that it does…

David Cox is the founding member of Cox Law Group in Lynchburg, Va., and serves on ABI’s Board of Directors. Caleb Chaplain is the career law clerk for Hon. Rebecca B. Connelly of the U.S. Bankruptcy Court for the Western District of Virginia, a 2022 ABI “40 Under 40” honoree and an adjunct professor at Washington and Lee University School of Law. Editor’s Note: ABI’s Subchapter V Task Force, launched in April, is studying practitioners’ experiences with the three-year-old law, culminating in a final report to be released in 2024. Learn more at subvtaskforce.abi.org. Under § 1182‌(1), in order to properly elect to proceed under subchapter V, a debtor must not only be “engaged in commercial or business activities,” but also “not less than 50 percent” of the debtor’s “noncontingent liquidated…

Michael Bernstein is a partner in the Bankruptcy and Restructuring Practice of Arnold & Porter Kaye Scholer LLP in Washington, D.C. He is also a past treasurer of ABI’s Board of Directors. One of the great rewards of having served as cochair of ABI’s Diversity & Inclusion Working Group since 2019 has been the opportunity to meet and work with bankruptcy and restructuring professionals from all over the U.S. who come from diverse backgrounds, many very different from my own. I have learned an enormous amount from these individuals, and I have been inspired by those who overcame challenges and barriers to achieve at a high level and to contribute to our profession. Here is one example: Carlos E. Loredo of Nicholson PC in Cambridge, Mass., who has come a…

Kellie Fisher is a shareholder with Drummond Woodsum, and Adam Prescott is a shareholder with Bernstein Shur Sawyer & Nelson, PA. They are based in Portland, Maine. Editor’s Note: ABI’s Subchapter V Task Force, launched in April, will study practitioners’ experiences with the three-year-old law, culminating in a final report to be released in 2024. Learn more at subvtaskforce.abi.org. Section 1182‌(1) of the Bankruptcy Code1 defines who may be a “debtor” under subchapter V of chapter 11. Among the requirements to be a subchapter V debtor under § 1182‌(1)‌(A) are that the debtor must be “engaged in commercial or business activities,” and that not less than 50 percent of the debtor’s eligible debts must have arisen “from the commercial or business activities of the debtor.”2 Although much of the early dialogue…

Soneet Kapila is a founding partner of KapilaMukamal, LLP in Fort Lauderdale, Fla. He previously served as ABI’s Treasurer. Subchapter V Task Force It is hard not to acknowledge the incredible progress of the Subchapter V Task Force (subvtaskforce.abi.org) and the commitment being demonstrated by its members. With the closing of the survey questionnaire on July 31, the results are being compiled and assimilated. The public hearings have proven to be invaluable, with six already having been held virtually: (1) kick off/general experiences with subchapter V (June 9, 2023); (2) eligibility issues (June 23, 2023); (3) role of the subchapter V trustee (July 14, 2023); (4) operation of the case (July 28, 2023); (5) confirmation issues (Sept. 8, 2023); and (6) post-confirmation issues (Sept. 22, 2023). Recordings of these hearings…

Find the ABI Booth at NCBJ and Pick Up Your Free Book — While Supplies Last ABI is excited to welcome you to NCBJ in Austin, Texas, Oct. 11-14. ABI will be on site for all the festivities. You won’t want to miss the ABI reception at NCBJ on Thursday, Oct. 12 (all attendees are invited), and make sure to swing by the ABI booth to pick up a free publication; come early, as book supplies are limited. While you are at the conference, tap into ABI’s Wi-Fi for free; password will be provided on site. Register at 2023.‌ncbjmeeting.‌org. See you in Austin! 2023 “40 Under 40” Class to Be Announced During NCBJ At NCBJ, ABI will announce the 2023 Class of “40 Under 40” during ABI programming. The program recognizes…

Legislation Introduced to Cap Credit Cards’ Annual Percentage Rate Sen. Josh Hawley (R-Mo.) introduced the “Capping Credit Card Interest Rates Act” on Sept. 12 to cap the interest rate for credit cards at a “common-sense level” of 18 percent in an effort to protect vulnerable borrowers. “Americans are being crushed under the weight of record credit card debt — and the biggest banks are just getting richer,” Sen. Hawley said.1 “Capping the maximum credit card interest rate is fair, common sense, and gives the working class a chance.” American credit card debt passed $1 trillion this summer, contributing to quickly rising consumer debt, which grew by nearly $18 billion from May to June, according to the most recent federal data available. The average U.S. household carries about $10,000 in credit…

Nate Juster is a judicial law clerk to Hon. Victoria M. Calvert of the U.S. District Court for the Northern District of Georgia in Atlanta. Is it unconstitutional to force states to record in rem bankruptcy court orders as charges against real property? It could be. In Haaland v. Brackeen,2 the U.S. Supreme Court considered whether Congress can “conscript the States into federal service by assigning them recordkeeping tasks.” This implicates § 362‌(d)‌(4) for the following reasons. Background: In Rem Relief As the Ninth Circuit Bankruptcy Appellate Panel has observed, “[o]‌ccasionally, debtors have resorted to filing tactical, serial bankruptcy cases to prevent creditors from enforcing liens against their property.”3 As part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Congress enacted § 362‌(d)‌(4),4 which “permits the bankruptcy…

Jessica Kincaid is a legal writing lecturer at Baylor Law in Waco, Texas. Jonathan Hawkins is a partner with Thompson Hine LLP in Dayton, Ohio. Debtors who file for chapter 7 are normally entitled to a discharge of unsecured debts. Certain debts may not be discharged, however, including any debt “for willful and malicious injury by the debtor to another entity or to the property of another entity.”1 While conceptually simple — the bankruptcy process should not be used by a debtor to escape the moral culpability associated with willful and malicious injury to property — courts are split on whether § 523‌(a)‌(6) requires a judgment for a concordant intentional tort for such a debt to be rendered nondischargeable. In Kawaauhau v. Geiger, the U.S. Supreme Court held that an…

Kenneth Malek, CPA, CIRA, CDBV is president of, and Kiera Berkley Durgan is a managing director with, Malek Capital Advisors LLC in Libertyville, Ill. In June 2023, Hon. Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware issued an opinion following a three-week trial in the matter of Peter Kravitz, as Settlement Trustee of and on behalf of the Samson Settlement Trust v. Samson Energy Co. LLC, et al. (In re Samson Resources Corp., et al.), finding in the defendants’ favor in a fraudulent-conveyance action. The suit arose out of the sale of Samson Investment Co. to Kohlberg Kravis Roberts & Co.1 in December 2011 for $7.2 billion. Four years later, Samson filed for bankruptcy.2 The trustee filed suit for recovery of alleged fraudulent transfers, claiming…

Dr. Israel Shaked is the senior managing director of The Michel-Shaked Group in Boston, is a professor emeritus of finance and economics at Boston University’s Questrom School of Business, and co-authored ABI’s A Practical Guide to Bankruptcy Valuation, Second Edition. Paul Dionne manages the firm’s New York office. Editor’s Note: Part I was published in the September 2023 issue. While the discounted cash flow (DCF) valuation model approach is a key component of the valuation literature, the other important component is the market approach. The DCF valuation approach is mostly based on the subject company’s specific parameters. In contrast, the market approach is substantially (but not exclusively) based on valuation benchmarks/metrics of companies similar to the subject company and consists of two “branches”: (1) the comparable companies (CompCo) methodology, which calculates…

Alec Klimowicz is a student at the University of Illinois College of Law in Champaign, Ill., and a research assistant to Prof. Robert M. Lawless. From data breaches to incessant telephone scams, individuals increasingly face attempts to steal and use their private information daily. Creditor matrices can provide the exact information that scammers need to execute their machinations. In response, debtors increasingly ask judges to conceal identifying information on the creditor matrix. In Celsius Network LLC — one of the first major cryptoexchange cases — scammers posed as bankruptcy attorneys to access creditor information and contact individuals to obtain access to their virtual wallets.1 In recent rulings, including FTX Trading Ltd. and Genesis Care, bankruptcy judges overruled the U.S. Trustee’s objections and concealed creditors’ information.2 Although this case law began…

April Steven Anderson ND Fund New Orleans Kelly M. Appleyard Pa. Office of the Attorney General Harrisburg, Pa. Batul Ather University of Notre Dame South Bend, Ind. Melina Tabibian Bales Jones Day Dallas Nicholas E. Ballen Greenberg Traurig LLP Chicago James Bardenwerper Configure Partners Atlanta Sarah Ben-Ezer Whitefort Capital Miami Beach, Fla. Parnell Black NACVA Sandy, Utah Lashonda Bourgeois-Lewis Lewis Law PLLC Clarkston, Mich. Ellen Brennan U.S. Bankruptcy Court (W.D. Va.) Roanoke, Va. Paul Caminiti Reevemark LLC New York Zack A. Clement Zack A. Clement, PLLC Houston Christopher M. Condon Murphy & King, PC Boston Kyle Conway Campbell University Wilson, N.C. David W.T. Daniels Perkins Coie LLP Washington, D.C. A. Todd Darwin Holcombe Bomar, PA Spartanburg, S.C. Vanessa De Leon Guerrero Office of the Standing Ch. 13 Trustee San Antonio,…