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THE CONSUMER BANKRUPTCY LETTER |
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In This Issue:
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January 3 2005
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TAX DISCHARGE PROGRAM IN JANUARY!
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WEB CAST - PROTECTING YOUR FEES
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FEATURED SITE #2: NACBA.COM
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HEADS-UP ON RECENT CASES
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NACBA HONORS IKE SHULMAN, MAX GARDNER
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The National Association of Consumer Bankruptcy Attorneys recognized the following members at the 2004 Convention in Boston for their meritorious service:
Max Gardner of Shelby, NC was named "Champion of Consumer Rights for his "extraordinary service in protecting American consumers." Max assisted the former employees of Shelby Yarn Company through his innovative and unique use of the bankruptcy laws to obtain more than $2 million in damages and monetary recoveries from the former principals of the company.
NACBA presented a special award to retiring Board member James (Ike) Shulman of San Jose, CA. Ike was a co-founder and first president of NACBA, and has played a critical role in the organization´s ongoing success. Over the years he has devoted endless hours to the organization. In "retirement" he´ll stay on as Treasurer and Legislative Chair.
Other members recognized for their ongoing contributions and support for the organization include:
- Bob Adams - Eric Clayman - Bill Oliver
- Neal Allen - John Colwell - John Orcutt
- Mark Bond - Gary Gale - Marlow Preston
- Edgar Borrego - Jeffrey Jenkins - Jerry Tanzy
- Brad Botes - Bob Michelson - Gerald White
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CORPORATE BANKRUPTCY FILINGS HIT 10-YEAR LOW
Bankruptcy filings by US public companies reached a 10-year low in 2004 as low interest rates and better access to financing helped troubled businesses amass cash and pay debts, according to a research report.
This year, 80 public companies filed for bankruptcy, including Trump Hotels & Casino Resorts Inc. and US Airways Group Inc. The total is less than a third of the record 257 publicly traded US corporations -- including Enron Corp. and WorldCom Inc. -- that sought Chapter 11 protection in 2001, according to a Dec. 27 report by New Generation Research.
This year's number is the lowest since 1994, when 70 public companies sought court protection from creditors.
Low financing costs helped US companies pay down debt and amass a record $1.3 trillion cash stockpile at the end of the third quarter, according to Federal Reserve data.
"The fact there is a very substantial amount of capital and credit available has allowed public companies to refinance outstanding debt and avoid default," said Harvey R. Miller, vice chairman of New York-based investment bank Greenhill & Co.
SOURCE: Bloomberg News December 30, 2004
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UNDERFUNDED PLANS MAY HIT RETIREEES, TAXPAYERS HARD
Generations of Americans have counted on their pensions to carry them through the golden age of retirement. Yet increasingly they have discovered an unsettling trend: There are no guarantees.
One after another, corporations have thrown in the towel on their traditional pension plans, seeing the funds as too costly and too volatile to bear.
Steep downturns in industries such as airlines and steel have sparked a rash of bankruptcies, forcing many to default on their pensions or threaten termination.
"Companies see all this risk," said Paul Klauder, managing director of SEI Investments, whose recent survey said that three quarters of chief financial officers believe that pensions are negatively affecting the financial health of their companies. "And now they have settled on an easy answer."
SOURCE: James Paton, Rocky Mountain News December 25, 2004
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REJECTION OF EXECUTORY LEASE MAY BE ORDERED RETROACTIVELY
A bankruptcy court may approve retroactively the rejection of an unexpired nonresidential lease. We adopt the First Circuit’s conclusion in Thinking Machines Corp. v. Mellon Financial Services Corp. #1 (In re Thinking Machines Corp.), 67 F.3d 1021, 1029 (1st Cir. 1995): although rejection of an unexpired nonresidential lease does not take effect until court approval, “the approving court has the equitable power, in suitable cases, to order a rejection to operate retroactively.” We further hold that the retroactive date may be earlier than the date on which the landlord retakes possession of the premises. Here, the bankruptcy court permissibly allowed the debtor to reject the leases as of the date on which the debtor filed its motion seeking to reject them. Accordingly, we affirm.
PACIFIC SHORES v. AT HOME CORP. (9th Cir. 2004)
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DEBTOR'S FAILURE TO LIST A SURROGATE-MOTHER CONTRACT, TO BE PERFORMED POSTPETITION, IS NOT GROUNDS TO DENY DISCHARGE
A Chapter 7 debtor's failure to disclose the existence of a prepetition surrogate mother contract entitling her to over $20,000 upon the birth of a child did not warrant revocation of discharge or turnover of the funds. Post-petition personal service earnings are not property of the estate in Chapter 7 and the bulk of the services (carrying a baby) were performed post-petition.
In re Bimber (Bankr. W.D. Pa. 2004)
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SOVEREIGN IMMUNITY PROTECTS STATE FROM SUIT FOR DAMAGES
The Bankruptcy Code's attempt to abrogate State immunity is ineffective as to actions by a debtor against a State seeking damages under 11 USC 362(h) for violation of the automatic stay.
In re Crow (11th Cir. 2004)
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Rooker Feldman was in court defending his debtor-client against a motion for relief from stay on the debtor's house. There was considerable colloquy among the creditor's attorney, the judge, and Rooker Feldman. The debtor heard strange words, like adequate protection, lien avoidance, fraudulent transfer, sua sponte, in propria persona, disingenuous, nincompoop and other similar terms. He was totally bewildered by the goings-on.
Finally, the judge made his decision.
Feldman turned to his client, smiled and said "The judge has ruled correctly!"
The debtor looked horified and uttered "Can we appeal?"
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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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