The Bamberger Blog » bankruptcy

Bill Introduced To Restore Fairness To Bankruptcy Venue Rules

thartmann — Tue, 19 Jul 2011 13:30:58 +0000

Under current law, corporations have been able to engage in significant “forum shopping” to file their bankruptcy cases in locations far away from their principal business activities. While this allows the debtor to choose a Bankruptcy Court that it perceives to be more favorable to management, it also has the effect of placing significant burdens on creditors, employees and customers who actually did business with the bankrupt entity back where they were principally located.

On July 14, House Judiciary Chairman Lamar Smith, a Republican from Texas, and John Conyers, Jr., a Democrat from Michigan, introduced the Chapter 11 Bankruptcy Venue Reform Act of 2011 (H.R.2533). The change proposed by the act would require corporations to file their Chapter 11 Bankruptcy Petitions in the judicial district where they have their principal place of business or assets.

This makes sense as a matter of fundamental fairness. If a company is going to avail itself of the protection of the Bankruptcy Code, at a minimum, it should be as convenient as possible for the other stakeholders who will also be required, often against their will, to participate in the bankruptcy process initiated by the debtor. Further, given that at least some of the forum-shopping debtors have chosen to file their reorganization cases in places like New York, the costs of participation in the bankruptcy process may go down significantly.

I would anticipate that the act will face criticism from the Bankruptcy Bar that has benefited from the forum shopping loopholes, but I am hopeful that Congress will act favorably upon the legislation.

Author: Andrew C. Ozete (bio)
Phone: 812.452.3582
email: aozete@bamberger.com

Bamberger Seminar – Getting Your Fair Share

kjewell — Wed, 03 Nov 2010 13:30:05 +0000

Join the attorneys at Bamberger on November 17, 2010 from 11:30 am to 1:00 pm for a complimentary seminar covering credit and collections issues facing businesses today.

Here to offer some legal insight on credit and collections issues are the attorneys at Bamberger, Foreman, Oswald & Hahn, LLP. Our panel of speakers will cover topics such as the ins and outs of the litigation process, how to maximize your recovery in bankruptcy court, and finding and using often-overlooked remedies for creditors.

The seminar will be held at the Bamberger Conference Center on the 10th floor in the Hulman Building. Lunch will be provided. If you’d like to attend this informative seminar, please RSVP by Wednesday, November 10, 2010 by calling 812.452.3567 or email us at rsvp@bamberger.com.

Author: Kim Jewell (bio)
Phone: 812.452.3588
email: kjewell@bamberger.com

Bamberger Seminar – Getting Your Fair Share

kjewell — Wed, 20 Oct 2010 13:30:14 +0000

Join the attorneys at Bamberger on November 17, 2010 from 11:30 am to 1:00 pm for a complimentary seminar covering creditors’ rights issues facing businesses today.

Here to offer some legal insight on creditors’ rights issues are the attorneys at Bamberger, Foreman, Oswald & Hahn, LLP. Our panel of speakers will cover topics such as the ins and outs of the litigation process, how to maximize your recovery in bankruptcy court, and finding and using often-overlooked remedies for creditors.

Author: Kim Jewell (bio)
Phone: 812.452.3588
email: kjewell@bamberger.com

Quick Perfection of Purchase Money Security Interest

kjewell — Mon, 22 Feb 2010 14:19:58 +0000

A purchase money security interest transaction is virtually never susceptible to bankruptcy preference attack. An exception to this is where the bank has not perfected the security interest on or before twenty days after the debtor receives possession of the property constituting the collateral.

If the financing statement is not filed (or a lien is not noted on a motor vehicle title) within that time frame, what would otherwise be a protected transaction may now be attacked by the trustee and the bank may lose its lien rights. Likewise, the Uniform Commercial Code requires perfection of the purchase money security interest within the same time frame in order for the transaction priority to relate back to the date that the security interest attached.

Author: Laura A. Scott (bio)
Phone: 812.452.3557
email: lscott@bamberger.com

Borrower Found to Have Filed Bankruptcy in Bad Faith

kjewell — Fri, 19 Feb 2010 13:56:30 +0000

In a New York case, a borrower was found to have filed a Chapter 11 bankruptcy in bad faith in order to avoid a foreclosure action filed by the lender. In this case, the borrower owned an apartment building and had been sued by the lender for nonpayment.

The court found that the filing was done in bad faith because:

The borrower had only owned one asset, the apartment building
The borrower had only a few unsecured creditors with small claims
The apartment building had only a few employees
The property was subject to a pending foreclosure action
The borrower’s financial problems pertained to the loan by the secured creditor and could have been resolved in the state court
Filing immediately prior to the sheriff’s sale evidenced an intent to frustrate the lender from enforcing its rights

Although this case was decided in New York, the factors set forth in the case are applicable in Indiana, Illinois and Kentucky.