August 2, 2008
GAO Report, "Bankruptcy Reform: Dollar Costs Associated With the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005"
The "United States Government Accountability Office" published this report on July 28, 2008 examining the costs of implementing BAPCPA. Of course, US Trustee costs went up, supposedly some $72 million, court costs went up some $42 million, individual trustee costs went up, and attorneys fees went up some 51% With filings down, income to the government has gone down. I shouldn't say "supposedly" I guess, since a lot of effort apparently went into figuring out these additional costs. I think a lot of the "increased costs" is done by employees who were already there although the UST says it hired 127 new staff to do the extra BAPCPA required work.
This was my complaint all along with the means test. The structure was already there to weed out the bad filers. Sections 727, 523 and 707(b). The credit card industry did not want to bother with protecting itself by filing complaints and motions. It wanted a government apparatus set up to do the work for it.
There was no comment, by the way, about the cost of preparing the 53 page report.
July 31, 2008
Mervyn's Chapter 11 First Day Motions
Attached is the Declaration of Charles Kurth, CFO of Mervyn's which is designed to support the first day motions filed by the debtor. This declaration is not as useful as is usually the case. There is not really a lot of information about the company, its assets, liabilites and what led to the filing of the petition. I will check tomorrow to see the results of the hearing on the motions.
July 30, 2008
Earthquake in Los Angeles
I was on the freeway heading to Riverside (through Chino Hills - the epi-center) when the earthquake hit. I felt nothing. I got off the freeway to get some water and the store I stopped at had a sign which said, "Closed for an hour due to earthquake." "Hm," I thought. I turned on the news and found out what happened. (I had been listening to a book on tape - The Steel Wave by Jeff Shaara) My wife had been calling me but my cell never rang. We survivied the 1994 Northridge earthquake. For 30 seconds or so that morning I thought the moon had crashed into the earth or something. It was definitely the "big one" and it started out as the "big one." Hell had arrived. The violence was unimaginable. I know bigger "big ones" are coming but cannot imagine it.
July 29, 2008
Chapter 13 Statistics
Statistics nuts will love this spreadsheet - 201 rows down and about 60 columns across. Collections and distributions by trustee, by category of distribution. $5.1 billion in debtor payments for the fiscal year 2007. $2.8 billion went to secured creditors, $300 million to priority creditors, $1.3 billion to unsecured creditors, and $400 million to debtor's counsel. It looks like $250 million went to the trustees but I'm not sure if I'm reading it right. 281,000 new cases were filed during the period.
July 28, 2008
3rd Circuit Rules on Exemptions - The Asset is Exempt, Not Just the Value Claimed
Schwab v. Reilly (In re Reilly) --- F.3d ---, 2008 WL 2789550 (3rd Cir., July, 2008)
Issue: When the debtor lists an asset on Schedule B at a certain amount and then lists the same asset as exempt on Schedule C at the same amount, may the trustee later sell the asset and give the claimed exemption to the debtor or is it too late to sell the asset at all?
Holding: It is too late. The debtor here “signaled” to the trustee that she intended to exempt the entire asset and when the trustee did not object, it became to late.
Appeal from District Court
In her chapter 7 schedules, the debtor listed as “business equipment,” cooking tools she valued at $10,700. On Schedule C, she claimed that amount to be exempt. The trustee did not timely object to the exemption. The trustee later had the equipment appraised at $17,000. The trustee moved for permission to sell the equipment for $17,000 and indicated he would give the debtor the exempt portion of $10,700. The bankruptcy court ruled that the asset was entirely exempt. The district court affirmed.
The 3rd Circuit also affirmed saying “we believe this case to be controlled by [the Supreme Court in] Taylor." It said,
“[I]t is important to us that [the debtor] valued the business equipment at $10,718 and claimed an exemption in the same amount. Such an identical listing put [the trustee] on notice that [the debtor] intended to exempt the property fully. At that point, had [the trustee] doubted [the debtor’s] valuation of her business equipment, he should have had the property appraised and/or sought a hearing pursuant to Rule 4003(c). Alternatively, if he was not able to seek an appraisal within Rule 4003’s 30-day time limit, he could have requested an extension before that deadline passed. But once Rule 4003’s 30-day period elapsed without [the trustee] filing an objection or a request for an extension, the property became fully exempt from the bankruptcy estate regardless of its ultimate market value.”
“[W]e read Taylor to mean that, where the debtor signals her intention to exempt certain property in its entirety by listing an identical entry for the property’s value and the amount of the exemption, the trustee must object pursuant to Rule 4003 lest the property be rendered fully exempt.”
The opinion discussed the 9th Circuit case of In re Hyman saying that there the exemption claimed was $45,000 which was not the entire equity according to the debtor’s schedules and therefore did not show an intent to exempt the entire property but only a portion of it.
July 27, 2008
Circuit Court of Appeals Cases for Last Week
1st Circuit Court of Appeals, July 23, 2008
In re Arch Wireless, Inc., --- F.3d ---, 2008 WL 2814798 (1st Cir 2008)(creditor may proceed in spite of chapter 11 discharge because creditor did not receive proper notice)
2nd Circuit Court of Appeals, July 22, 2008
Bondi v. Capital & Fin. Asset Mgmt. S.A., --- F.3d ---, 2008 WL 2812964 (2nd Cir 2008)(denial of motion by debtor in foreign bankruptcy proceedings to enjoin actions brought against it in the United States is affirmed)
3rd Circuit Court of Appeals, July 21, 2008
In re Reilly, --- F.3d ---, 2008 WL 2789550 (3rd Cir 2008)(intent to exempt entire interest in a given property exempts the property in its entirety)
5th Circuit Court of Appeals, July 22, 2008
In re Repine, --- F.3d ---, 2008 WL 2801898 (5th Cir 2008)(debtor awarded judgment against attorney for attempting to collect fees from debtor in violation of a stay imposed by a bankruptcy court)
Thanks to Findlaw.com