Category Archives: Bankruptcy
Bankruptcy Preference Amendment(s) Effective February 19, 2020
On August 23, 2019, the Small Business Reorganization Act (H.R. 3311; S. 1091) (the “SBRA”) was signed into law. The law is effective 180-days following enactment, that is on February 19, 2020. Congress incorporated two important changes into the SBRA that may have broader implications beyond small business reorganizations as applicable to the recovery of “preferential transfers” under Section 547 of the Bankruptcy Code. First, a debtor or trustee is required to consider a party’s statutory defenses “based on reasonable due diligence in the circumstances of the case and taking into account a party’s known or reasonably knowable affirmative defenses” […]
Recent Amendments to the Federal Rules of Bankruptcy Procedure, Effective December 1, 2016
Recent bankruptcy rule amendments, effective December 1, 2016, address the continuing impact of the Stern v. Marshall case on bankruptcy proceedings. In Stern v. Marshall, 564 U.S. 462 (2011), the United States Supreme Court held that a bankruptcy court, as a non-Article III court (i.e. courts without full judicial independence) lacked constitutional authority under Article III of the United States Constitution to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim, even though Congress purported to grant such statutory authority under 28 U.S.C. § 157(b)2(C).
Supreme Court Hears Oral Argument on “Lien-Stripping” in Chapter 7 Cases
In 1992, the United States Supreme Court came down with a decision in Dewsnup v. Timm that has caused a stir in the Chapter 7 bankruptcy world ever since. The Court held that, under section 506(d) of the Bankruptcy Code, a Chapter 7 debtor could not “strip down” a lien to the current value of the collateral, thereby getting rid of a junior mortgage lien, when the senior debt owed exceeds the value of the collateral. In part, the Supreme Court went against lien-stripping because the Bankruptcy Act (the predecessor to the Code) provided that liens pass through bankruptcy unaffected […]
New York’s Highest Court Rules on Rent-Stabilized Leases in Bankruptcy
Mary Santiago-Monteverde lived in her apartment, which was rent-stabilized, for over forty years. When her husband died, she was unable to pay her credit card debts and filed for Chapter 7 bankruptcy. She initially listed her apartment lease on Schedule G of her petition as a standard unexpired lease. Shortly thereafter, the owner of the apartment approached the Chapter 7 Trustee and offered to purchase the debtor’s interest in the lease. When the Trustee advised the debtor that he planned to accept the offer, she amended her filing to list the value of her lease on Schedule B as personal property exempt from […]
