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THE CONSUMER BANKRUPTCY LETTER |
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In This Issue:
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February 28 2005
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VIDEO EXPLAINS BANKRUPTCY TO YOUR CLIENTS
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From BankruptcyBooks.com
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FEATURED SITE #10 SUPREME COURT BANKRUPTCY OPINIONS
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HEADS-UP ON RECENT CASES
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SENATE DEBATE TODAY ON REFORM
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A handy site to find U.S. Supreme Court rulings on bankruptcy issues going back to 1991 is Cornell University's web site page for Supreme Court opinions.
Looking at this site and entering a search for “bankruptcy” we found 242 opinions containing the word bankruptcy, among them most of the important cases we all know and love like Patterson v. Shumate, Lamie, Rash, Seminole Tribe, Young v. United States, Grogan, Till, and others. Inexplicably Dewsnup is not included, even though it is a 1992 case.
Yes, you can do this easily with any of the online legal research services like Westlaw or SearchCases, but the Cornell site is FREE.
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SENATE TO TAKE UP REFORM BILL FEBRUARY 28
Majority Leader Bill Frist R-Tenn. said last week that the Senate will take up the bankruptcy measure on Feb. 28.
Democrats are expected to offer a slew of amendments on the Senate floor to the legislation after holding back during the Feb. 17 markup before the Senate Judiciary Committee. Among these are measures to prevent venue shopping by corporations, and increase the home equity exemption for the elderly seeking protection.
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KENNEDY SETS UP FLOOR FIGHT OVER REFORM BILL
Sen. Edward M. Kennedy blasted legislation Wednesday that would overhaul the federal bankruptcy code, vowing to aggressively fight passage on the Senate Floor of the measure as it is currently written.
“It effectively makes our bankruptcy courts a collection agency for the credit card companies,” Kennedy said.
“It would make them indentured to the credit card companies,” Kennedy said. “It puts at very serious risk hard-working Americans.”
Kennedy also criticized the legislation for failing to address the spate of major corporate bankruptcies in recent years, including Enron Corp. and WorldCom Inc. saying corporate bankruptcy filings should also be on the agenda. Grassley's bill deals only with personal bankruptcies.
A spokesman for Kennedy said he plans to offer an amendment exempting the means test requirement for filers seeking bankruptcy protection as a result of soaring medical costs.
Michael R. Crittenden, CQ Staff
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PRO-ABORTION SENATOR AGAIN TIES BANKRUPTCY AND ABORTION
by Stuart Shepard, correspondent
America needs to reform its bankruptcy laws, but every time Congress tries to do so, harsh amendments aimed at punishing pro-lifers are dumped onto the bill. This year is no exception.
The full Senate will soon take up legislation designed to improve the nation's bankruptcy laws. But the bill may be stalled for a second time in a fight over the free speech of pro-lifers. Many are asking: What does abortion have to do with bankruptcy?
This time, the bankruptcy bill passed out of committee with no amendments weighing it down, thanks to a compromise. But pro-abortion Sen. Chuck Schumer, D-N.Y., has indicated he will work to attach an amendment on the Senate floor that would deny peaceful, pro-life protestors the right to declare bankruptcy if court judgments against them overwhelm their finances. Peter Samuelson, a spokesman for the pro-life law group Americans United for Life, is happy with the idea of taking the bill to the full Senate.
"I think it's definitely easier to amend it in the committee (than on the floor)," Samuelson said. "It's much more difficult on the floor to get everyone behind (an amendment.) It's much more likely, the membership is much more likely to follow the leadership and do what the leadership wants."
The bill failed last year because of Schumer's amendment. Jayd Henricks, a congressional liaison with the Family Research Council said that since this is the second time around, it is less likely abortion-supporting senators will fight for the amendment.
SOURCES: Family.org and BKinformation.com
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SCHUMER AMENDMENT BEING LOOKED AT
February 25, 2005
With S.256, the bankruptcy reform bill, expected to come to the Senate floor the week of February 28, Senate Judiciary Committee Chair Specter (R-PA) said he is "taking a close look" at an amendment sponsored by Sen. Schumer (D-N.Y.) that would bar discharges in bankruptcy for penalties imposed against persons who commit violence during protests.
"I don't think there ought to be a discharge in bankruptcy if someone has blocked an abortion clinic and caused damage, injury, perhaps even fatalities as a result of that blocking," Specter said.
It is expected that Sen. Schumer's amendment will be considered on the floor. Those who support the provision, which was included with bi-partisan support in the last version of the bankruptcy reform bill to pass the Senate (HR 333, in the 107th Congress), should contact their Senator.
David P. Goch
Washington Legislative Counsel
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DEBTOR'S POST-PETITION INTEREST PAYMENTS WERE NOT IN THE ORDINARY COURSE
The bankruptcy court did not err in holding that a debtor's post-petition interest payments on post-petition life insurance policy loans were not in the ordinary course of business and were avoidable under section 549.
We see this contention as without merit, and we agree with the bankruptcy and district courts that the Interest Payments constituted "transfer[s]" under the Statute. The bankruptcy court persuasively reasoned that the Interest Payments were "payment[s] to [Phoenix American] to maintain [Phoenix American's] investment return on the life insurance policies' cash values to enable [Phoenix American] to pay policy dividends and to earn a return for itself." Bankr. Op. I at 10 (emphasis added). MGRE thus depleted its assets, i.e., the cash surrender values of the Insurance Policies, in order to make interest payments to Phoenix American. This is different, the bankruptcy court recognized, from the Loans, where MGRE merely withdrew the cash values it owned in the Policies. In these circumstances, the Interest Payments constituted "transfer[s]" under the Statute, because they decreased the value of MGRE's estate by disposing of the estate's property in favor of Phoenix American.
In re Merry-Go-Round Enterprises, Inc. (4th Cir. 2005)
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PUBLISHED BY KING BANKRUPTCY MEDIA FOR BANKRUPTCY PROFESSIONALS 7080 Donlon Way Suite 222 Dublin California 94568 (925) 829-6460. Morgan D. King, Editor.
© King Bankruptcy Media 2004 CONTACT US AT editor@bankruptcymedia.com
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