June 6, 2009
Order Approving Sale of Chrysler Assets and the Appellate Briefs
You can access Judge Gonzalez' Order approving the sale here. (Thanks to SCOTUSblog)
Bankruptcy Petition Filings Fall in May - Can That be True?
Total filings in May, 2009 were 120,400, down 6.5% from the 128,720 petitions filed in April, 2009. This compares to 131,000 in March, 102,000 in February and 89,000 in January. The May rate equates to 1,445,000 for a year compared to 1,597,000 in 2004, 1,660,000 in 2003 and 1,578,000 in 2002.
These results surprised me. Although I file only a few consumer petitions each month, the phone calls I get every day are just getting ridiculous. I've been getting more calls than ever in my life from small businesses who want to file chapter 11 and basically faint when I tell them how much it costs. Some small businesses can be squeezed into chapter 13 but small corporations/LLCs/partnerships cannot. There should be a small business chapter 11 that actually works. The small business rules in the code now do nothing to help the small business, especially from the immense cost. But I digress. . .
June 4, 2009
Slate Magazine Quotes Yours Truly
A 20 minute interview reduced to a single sentence. But they spelled my name right - mostly. Chris Beam's article can be accessed here. I really don't know how GM prospective purchasers will view the bankruptcy but have you heard anything lately about the Chrysler case? Or the Tribune Co (which is trying to sell the Chicago Cubs)?
GM Bankruptcy Info Websites
From my Law Professor Blogs compadre, Joe Hodnicki, Law Librarian Prof
Case No.: 09-50026-reg
Venue: Bankr. S.D.N.Y., http://www.nysb.uscourts.gov/
Calendar: In future, but not yet, calendar will be available at http://www.nysb.uscourts.gov/calendars/reg.pdf .
PACER: https://ecf.nysb-mega.uscourts.gov/ (Docket & Documents)
Update: Most documents and docket information are available free of charge from the claims agent's website.
cdcbaa Program on June 13, 2009 on the Means Test
GENERAL MEMBERSHIP ASSSEMBLY
June 13, 2009 at 10:00 a.m.
Southwestern Law School
3050 Wilshire Blvd., Room 611
6th Floor in the Westmoreland Building
Los Angeles, CA 90010
MCLE Program, Co-Sponsored by Southwestern Law School,
11:00 a.m. – 1:00 p.m.
Total Hours: 2 hours
James T. King, Esq.
Peter M. Lively, Esq.
Special Guest Speaker:
Kenneth Lau, Esq.
Staff Attorney, Office of the U.S. Trustee
June 22, 2009 at the California County Club, Whittier
The Earle Hagen Memorial Golf Tournament for the benefit of Public Counsel’s Debtor Assistance Program
June 2, 2009
Judge Robert Gerber Testy in GM Hearings
"All business" Judge Robert Gerber threatened to hang up on a lawyer who cracked a joke about GM executives flying private jets. So says Debra Weiss at the ABA Journal here. The article has some nice background on Judge Gerber.
General Motors Bankruptcy
U.S. Bankruptcy Court
Southern District of New York (Manhattan)
Bankruptcy Petition #: 09-50026-reg
Assigned to: Judge Robert E. Gerber
Date filed: 06/01/2009
General Motors Corporation
300 Renaissance Center
Detroit, MI 48265-3000
Tax ID / EIN: 38-0572515
represented by Joseph R. Sgroi
Honigman Miller Schwartz and Cohn LLP
2290 First National Building
660 Woodward Avenue
Detroit, MI 48226
Fax : (313) 465-7571
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Fax : (212) 310-8007
United States Trustee
33 Whitehall Street
New York, NY 10004
June 1, 2009
Circuit Court of Appeals Cases from Last Week
6th Circuit Court of Appeals, May 28, 2009
Stark v. Moran, --- F.3d ---, 2009 WL ------- (6th Cir. 2009)(person objecting to abandonment of property by the trustee has no standing to appeal because he alleged only that he would have profited from purchasing the stock, and his mere status as a bidder for the stock was insufficient)
7th Circuit Court of Appeals, May 27, 2009
Thompson v. General Motors Acceptance Corp. , --- F.3d ---, 2009 WL ------- (7th Cir. 2009)(in a chapter 13, GMAC violated automatic stay when it refused to return seized vehicle to the estate; GMAC must return vehicle immediately where a debtor has an equity interest and then it can seek adequate protection in bankruptcy court)
9th Circuit Court of Appeals, May 29, 2009
Egebjerg v. Anderson , --- F.3d ---, 2009 WL 1492138 (9th Cir. 2009)(repayment of loan against 401(k) not deductible on means test)
Thanks to Findlaw.com
9th Circuit Rules that Repyament of 401(k) Loans not Deductible on the Means Test Because the Loan is not a Debt
Egebjerg v. Peter Anderson (In re Egebjerg), ---- F. 3d ----, 2009 WL 1492138 (9th Cir. May, 2009)
Issue: Is the repayment of a secured loan against the debtor’s 401(k) deductible on the means test?
Direct appeal from the bankruptcy court
The debtor is single making $6,100 per month. His unsecured debt was $31,000. Two years before filing he took a loan from his 401(k) which he was repaying at $733 per month. On the means test, he deducted this payment as a payment on a secured debt leaving him with net disposable income of $15 per month. The UST moved to dismiss under both 707(b)(2) and (b)(3). The bankruptcy court agreed that the deduction was proper under (b)(2) but dismissed under (b)(3) on the totality of the circumstances since the loan would be repaid in full in just over one year. The court ruled that even if the deduction was not proper under (b)(2), it would qualify as “special circumstance” which could rebut the presumption of abuse under (b)(2).
The 9th Circuit affirmed but ruled that the bankruptcy court should have dismissed under (b)(2). “We join the vast majority of courts in holding that the debtor’s obligation to repay a loan from his or her retirement account is not a ‘debt’ under the Bankruptcy Code.” One reason is that the plan will never sue the member; it is simply an offset against future benefits. “Congress expressly gave Chapter 13 debtors the ability to deduct 401(k) payments from their disposable income calculation, § 1322(f), but did not include any similar exemption for Chapter 7 debtors. Congress also added a section which provides that the automatic stay does not apply to automatic deductions to repay a retirement plan loan, but expressly stated that the provision shall not be construed to provide that such a loan constitutes a ‘claim’ or ‘debt.’ § 362(b)(19). ‘In light of the amendments sprinkled throughout the Code [addressing 401(k) loans] — especially section 1322(f) — the lack of a 401(k) provision in section 707 is a glaring indication that Congress did not intend 401(k) loan repayments to be deducted in Chapter 7.’”
The debtor argued that the deduction was an “other necessary expense.” The court rejected that argument, saying “The IRS’s guidelines foreclose Egebjerg’s contention. The guidelines, which Congress expressly incorporated into § 707(b)(2)(A)(ii), state specifically that ‘[c]ontributions to voluntary retirement plans are not a necessary expense.’” “[I]t is hard to argue that the replenishment of past voluntary contributions to the 401k account by repaying loans is a necessary expense.”
As to the “special circumstance,” the 9th circuit said that it was possible that it could be a special circumstance but not here. The debtor’s “only” reason for borrowing the money in the first place was to pay debts to avoid bankruptcy. This is “commendable” but insufficient. “Indeed, if the original unsecured consumer obligation could not be considered a special circumstance, it would seem problematic to find ‘special circumstances’ for the 401(k) loan that merely replaced those debts.”
May 31, 2009
Cert Petitions Filed in Debt Relief Agency Case of Milavetz
Cert Petitions in the 8th Circuit case of Milavetz, Gallop & Millavetz v. USA were filed by both the Plaintiff law firm and the USA. Plaintiff's brief can be accessed here. The government's brief can be accessed here. The response briefs can be found on the Scotusblog.com. Tom Goldstein has picked this as a case which the Supremes might grant cert. It would sure be fun if they did.
The 8th Circuit ruled that attorneys are debt relief agencies, that the DRA rules which seem to restrict speech are unconstitutional, and that the requirements re statements DRAs have to make in advertising are constitutional.
The Supreme Court is considering this coming week whether to grant cert on this case.