Bankruptcy opinions tend to rely on two major tools for interpreting the Bankruptcy Code: the statutory text and pre-Bankruptcy Code practice. These two methods came into conflict in the Fifth Circuit's recent opinion in Ultra Petroleum Corp. v. Ad Hoc Committee (In re Ultra Petroleum), No. 21-20008 (5th Cir. 10/14/2022), which can be found here.   The majority relied on pre-Code practice to allow creditors of a solvent debtor to recover their full contractual interest. A Series of Fortunate OccurrencesUltra Petroleum had a very good problem. It went into bankruptcy insolvent, recovered when natural gas prices rebounded, and was able to pay all of its creditors in full. However, when it proposed to pay its unsecured creditors post-petition interest at the federal judgment rate, they objected. The creditors argued that they were entitled to their full contractual interest based on Make Whole provisions in their contracts. The bankruptcy court disagreed. Creditors of a solvent chapter 7 estate are entitled to post-petition interest at the "legal rate" under 11 U.S.C. Sec. 726(a)(5), which the Court interpreted to mean the federal judgment rate. Therefore, the Bankruptcy Court approved a plan which paid unsecured creditors post-petition interest at the federal judgment rate which, at the time was 0.58%. The difference between rates was significant and the debtor set aside $400 million to cover the additional interest should it lose.Make Whole Amount Not Allowed by CodeThe Debtor won the argument about whether a Make Whole Amount was not an allowed claim. Under 11 U.S.C. Sec. 502(b)(2), claims for "unmatured interest" may not be allowed. The Fifth Circuit ruled that "unmatured interest" included the “economic equivalent of ‘unmatured interest’” as well.  The Court explained how the Make Whole Amount worked as follows:Contractual make-whole amounts, like the one at issue here, are expressly designed to liquidate fixed-rate lenders’ damages flowing from debtor default while market interest rates are lower than their contractual rates. Lenders’ damages equal the present value of all their future interest payments. In other words, a make-whole amount is nothing more than a lender’s unmatured interest, rendered in today’s dollars.Opinion, pp. 9-10. The Court found that the Make Whole Amount was the economic equivalent of unmatured interest. So, did the Debtor win? No, because that was not the end of the analysis.Pre-Code Practice Carries the DayThe Court then turned to the Solvent Debtor exception. The current Bankruptcy Code has been in effect since 1978. However, the Court went back 300 years to find the authority for its ruling. The Court wrote:For some three centuries of bankruptcy law, courts have held that an equitable exception to the usual rules applies in the unusual case of a solvent debtor. When a debtor proves solvent—that is, when the debtor’s assets exceed its liabilities—bankruptcy’s ordinary suspension of post-petition interest is itself suspended. When a debtor can pay its creditors interest on its unpaid obligations in keeping with the valid terms of their contract, it must.  As with many of our bankruptcy rules, this doctrine originated in eighteenth-century English practice. See 2 William Blackstone, Commentaries *488 (“[T]hough the usual rule is, that all interest on debts carrying interest shall cease from the time of issuing the commission, yet, in case of a surplus left after payment of every debt, such interest shall again revive, and be chargeable on the bankrupt . . . .”)(additional citations omitted). Our forebears adopted English practice in our nation’s nascent nineteenth-century bankruptcy system. (citation omitted). And as the Supreme Court has said, the English solvent-debtor exception “ha[s] been carried over into our system.”  (cleaned up, except that I left in the reference to Blackstone's Commentaries because that was just too cool to take out).Opinion, pp. 18-20.  Thus, because the Debtor had the ability to pay its creditors in full according to their contracts, it was required to do so. Trump Appointee Says Not SoJudge Andrew Oldham, a Trump appointee, dissented. He wrote:The majority correctly concludes that the Make-Whole Amount is unmatured interest in disguise. And it acknowledges that the Bankruptcy Code bars all unmatured interest. See 11 U.S.C. § 502(b)(2). In my view, it necessarily follows that the Code bars the Make-Whole Amount. The majority nevertheless holds that an unwritten solvent-debtor exception “operates in this case to suspend § 502(b)(2)’s disallowance of [the] Make-Whole Amount.” I recognize that the majority is attempting to faithfully apply confusing Supreme Court precedent in a difficult case. But the clear statutory text governing this issue compels me to respectfully dissentOpinion, p. 35.Take-AwaysThe first and easiest take-away is that Make-Whole Amounts are not allowed claims in the Fifth Circuit absent a solvent debtor. This will help to eliminate these claims in most cases.Second, this case illustrates the tension between two different forms of statutory interpretation: text and pre-Code practice. These two schools of thought are illustrated by two Supreme Court decisions. In United States v. Ron Pair Enterprises, Inc., 489 U.S. 235 (1989), the Court held that oversecured creditors were only entitled to costs and fees arising under a contract and not under a statute. It reached this decision, in part, on the placement of a comma within 11 U.S.C. Sec. 506(b).  In contract, Dewsnup v. Timm, 502 U.S. 410 (1992) held that a lien passed through Chapter 7 unaffected even though a code provision appeared to reduce the amount of the lien to the value of the collateral. The Court relied on pre-Code practice to reach this result in apparent derogation of the statutory text.A cynic might argue that resort to pre-Code practice allows a judge to disregard reasonably clear Code text whenever he doesn't like the result. After all, in this case, the Bankruptcy Code provision of  11 U.S.C. Sec. 502(b)(1) said that Make Whole Amounts are not allowed while 11 U.S.C. Sec. 726(a)(5) set the interest rate for a solvent estate at the federal judgment rate. Judge Oldham thought this was a clear repudiation of the pre-Code practice. His colleagues in the majority, Judges Elrod and Jolly, thought otherwise.  In support of her historical approach, Judge Elrod, writing for the majority appealed to Antonin Scalia, who offered supporting words in a book he wrote on statutory interpretation who said “the good textualist is not a literalist”.  As long as the Supreme Court allows resort to pre-Code practice, clever lawyers faced with inconvenient text will do well to crack open Blackstone's Commentaries and look for a different result. The final take-away is that judges are not slaves to the ideology of the President who appointed them, especially when dealing with cases that are technical and apolitical. In this case, Judge Jennifer Elrod, appointed by President George W. Bush, and Judge Grady Jolly, appointed by President Ronald Reagan, ruled in favor of the creditors in their quest for payment of their full interest. Judge Andrew Oldham, appointed by President Trump, took the opposite position. Three judges appointed by Republican Presidents disagreed on how the law should be applied in this particular case.  

If you plan to apply for disability benefits in Pennsylvania, hiring an experienced lawyer is important. Without an attorney by your side, you might have to wait longer to get the disability benefits you need to support you and your family. After applying for Social Security Disability Insurance (SSDI) benefits, Pennsylvania applicants can expect to wait three to five months before they hear back from the Social Security Administration (SSA). If your initial claim is denied, you can request a review within 60 days of rejection. The appeals process can be lengthy, often taking months or even years to complete. This can negatively impact Pennsylvania families in need of a reliable income. In order to speed up the entire process, Pennsylvania applicants can hire an experienced disability lawyer to help them get the benefits they deserve. Our attorneys are here to help Pennsylvania residents take advantage of the disability benefits available to them. For a free case evaluation with the Pennsylvania disability lawyers at Young, Marr, Mallis & Deane, call today at (215) 515-2954. How Long Does it Take to File for Disability Benefits in Pennsylvania? Before you can start receiving disability benefits in Pennsylvania, you must apply for them. In order to apply for benefits, you must gather the necessary information. It can take days, even weeks, for SSDI applicants to source the proper financial and medical records required by the Social Security Administration. To speed up the preparation process, applicants can turn to an experienced Pennsylvania disability lawyer. In order to successfully apply for disability benefits in Pennsylvania, applicants must gather the necessary information regarding their work history and medical condition. The SSA may also require certain personal details from SSDI applicants. The following are some common records and information SSDI applicants should gather when preparing a disability benefits application in Pennsylvania: Birth certificate Social Security Number Proof of U.S. citizenship S. military discharge papers W-2 forms from the last year Self-employment tax returns from the last year Medical records Award letters Pay stubs Proof of Workers’ Compensation benefits In addition to providing certain documentation, applicants must also be prepared to answer certain questions about their finances, health, and personal lives. Your family history, marriage, children, previous occupation, and other facts about your life are all fair game. After you submit an initial application, the SSA might request an interview. During this interview with an SSA representative, it is important that you have an experienced Philadelphia disability lawyer by your side. In addition to helping you prepare the necessary documentation for your SSDI benefits application, your attorney can help you prepare for any questions an SSA representative may ask you during an interview. Preparing to apply for SSDI benefits is a crucial process. Because of the high volume of documents and records required by the SSA, victims may have difficulty sourcing the necessary information themselves. Your attorney can help you compile the right records so that your SSDI application is thorough and accurate. What is the Waiting Period for a Disability Claim Review in Pennsylvania? Once you have applied for Social Security Disability Insurance benefits in Pennsylvania, it may be several months before you hear back from the SSA. While it’s normal to wait a few months before hearing back about a claim’s approval, waiting too long can cause financial strain for Pennsylvania families. If your claim seems to be unnecessarily delayed, reach out to an attorney right away. Generally, it takes about three to five months to hear back from the Social Security Administration regarding an SSDI benefits application. Those months can be grueling for Pennsylvania residents, unable to work and unsure of where their next paycheck will come from. If it has been several months since you submitted an application for SSDI benefits and you still have not received a decision from the SSA, reach out to an attorney. Your lawyer can get in contact with the Social Security Administration to inquire about the delay. Miscommunication, such as missed phone calls or letters, can delay claims. Your attorney can get to the bottom of the situation and help you straighten things out with the Social Security Administration so that your SSDI benefits application gets reviewed and approved as quickly as possible. Remember, at any point during the review process, an SSA representative might reach out with additional questions. An interview might lengthen your claim’s review period, so it is important to determine an interview date as quickly as possible. If the SSA sends you an interview request, pass that request along to your attorney. A Bucks County disability lawyer can schedule an interview promptly so that it does not delay your claim’s review. How Long Do Pennsylvania Disability Applicants Have to Appeal a Denied Claim? In the unfortunate circumstance that the Social Security Administration denies your application for SSDI benefits, it’s important to act quickly. Pennsylvania applicants only have a certain amount of time to appeal a decision. If you don’t begin the appeals process quickly, your access to benefits may be at risk. Hearing that your disability benefit application was denied can be disheartening. You may be concerned and unsure how you will support your family after getting rejected by the SSA. The good news is Pennsylvania residents have an opportunity to appeal an initial rejection. However, the time period they have to do so is quite short. If your SSDI application is denied, you will only have 60 days to begin the appeals process. This two-month period is not a very long amount of time for Pennsylvania applicants to review the SSA’s reasons for rejection and gather the necessary information to counter those reasons. In order to request an appeal within the necessary timeframe, hire an attorney. Your lawyer can identify potential issues with your initial application so that you can ultimately get the SSDI benefits you deserve. Remember, Pennsylvania SSDI applicants have just 60 days after being notified of a rejected application to request an appeal from the Social Security Administration. Don’t hesitate to enlist help from an attorney, as failure to file an appeal within the necessary timeframe could cause you to lose access to SSDI benefits. What is the Waiting Period for a Disability Claim Appeal in Pennsylvania? The appeals process for rejected SSDI applications is lengthy. Depending on the current influx of appeals and the success of your appeal, it might be months, even years, before your case is settled. To speed up the process and your chances of success, hire a Pennsylvania disability lawyer to help you appeal your rejected SSDI application. Depending on the reasons for a denial, applicants may have to complete various forms and compile additional information outlining their eligibility for SSDI benefits. For example, if you were denied because of your medical condition, you will need to complete Form SSA-3441 and Form SSA-827. If the basis for an appeal is because you disagree with a non-medical decision cited by the SSA as a reason for rejection, you must use Form SSA-561. Pennsylvania applicants can mail completed appeal forms to the SSA, or complete the necessary forms online. Your attorney can help you identify the right forms to complete based on SSA’s reason for rejecting your application. There are four potential stages in the appeals process for rejected SSDI claims. The first stage is reconsideration. With an attorney by your side, reconsideration may be successful, meaning you will be granted benefits and the appeals process will be over for your case. If reconsideration is unsuccessful, you may have to move forward with a hearing by an administrative law judge. This hearing is followed by a review with the SSA’s Appeals Council, which is followed federal court review. All in all, the appeals process for denied SSDI benefits applications can take several years. Each stage in the process can take months, leaving Pennsylvania residents without sufficient income during that time. This is unacceptable for many Pennsylvania families. To quicken the appeals process and prevent your claim from getting rejected altogether, reach out to a Bensalem disability lawyer. The right attorney can help you get through the appeals process quickly so that you get access to the SSDI benefits you need as soon as possible. What is the Average Waiting Period to Receive Disability Payments in Pennsylvania? Once your SSDI benefits application has been approved, it may be some time before you start receiving monthly payments. That’s because the SSA wants to be absolutely sure you need and qualify for SSDI benefits before it starts sending you regular checks. Generally, there is a five-month waiting period until Pennsylvania residents start getting SSDI benefits after they have been approved, with exceptions. This waiting period exists so that the SSA can verify your need for monthly payments and that your disability has not improved, which would make you ineligible for SSDI benefits. There are exceptions to this waiting period for SSDI applicants with certain medical conditions. For example, Pennsylvanians with amyotrophic lateral sclerosis, more commonly referred to as ALS, can start getting their monthly benefits almost immediately after a claim has been approved. To learn whether or not this exception to the general waiting period applies to your case, ask your Pennsylvania disability lawyer for clarification. The exact day of the month you receive your SSDI benefits will depend on the day you were born. The following is the current SSDI payment schedule: Those born on the 1st through the 10th receive payments on the second Wednesday of each month Those born on the 11th through the 20th receive payments on the third Wednesday of each month Those born on the 21st through the 31st receive payments on the fourth Wednesday of each month If you’re receiving SSDI payments through a parent’s earning record, you will get your monthly benefit according to your parent’s birthday. If it has been more than five months since your SSDI benefits application was approved and you have not received your first payment, reach out to an attorney. Your Levittown, PA disability lawyer can get in touch with the necessary parties at the Social Security Administration to inquire about the delay. How Can You Get Disability Benefits Faster in Pennsylvania? Waiting too long to get the SSDI benefits they deserve can negatively impact Pennsylvania applicants and their families. Unable to work because of a medical condition, injury, or disability, Pennsylvania SSDI applicants often can’t afford to have a claim delayed or rejected. To get disability benefits faster in Pennsylvania, applicants can hire an experienced attorney. A skilled disability lawyer can help you properly complete your SSDI benefits application so it gets approved sooner. Your attorney can help you prepare the necessary documents and information required by the SSA and anticipate any additional records that may be requested during the review process. In addition, a Montgomery County disability lawyer can advise you to continue getting the necessary medical care so that there is continuous documentation of your condition in case the SSA calls your eligibility into question. Your attorney can help you navigate interviews with SSA representatives during the initial review process and during continuing disability reviews over the years. An experienced lawyer can help you speed up the appeals process if your initial application is denied so that you don’t have to wait longer than necessary to get the benefits you deserve. When Pennsylvania residents attempt to apply for SSDI benefits without a lawyer by their side, their claims may be more likely to be denied. Hiring an attorney from the beginning can result in a sound initial application that contains all the necessary information and demonstrates your eligibility for SSDI benefits. This can help you avoid potential delays, like unnecessary interviews and lengthy appeals, so you can start getting your monthly SSDI benefit checks as soon as possible. Ask Our Pennsylvania Lawyers About Disability Benefits Today If you need assistance applying for disability benefits in Pennsylvania, our attorneys can help. For a free case evaluation with the Northeast Philadelphia disability lawyers at Young, Marr, Mallis & Deane, call today at (215) 515-2954.

WUFT is reporting that virtually all PPP loans have been forgiven with limited scrutiny. The article can be found at https://www.wuft.org/nation-world/2022/10/12/virtually-all-ppp-loans-have-been-forgiven-with-limited-scrutiny/#:~:text=Officials%20promised%20a%20robust%20review,close%2C%20hands%2Don%20reviews.Jim Shenwick, Esq 212-541-6224 jshenwick@gmail.com

Don’t miss today’s NACBA webinar on California exemptions, airing at 2 p.m. We’ll look at new exemptions taking effect on January 1, 2023, along with the return of ride-through and lots more. This is a NACBA members-only presentation that you can’t afford to miss. New NACBA members get free admission. Everyone gets information critical to […] The post New & Overlooked California Exemptions appeared first on Bankruptcy Mastery.

 Yahoo is reporting an increase in bankruptcy filings. The story titled "Year-over-year U.S. Bankruptcy Filings Increase for Second Consecutive Month in September 2022" can be found at https://www.yahoo.com/now/over-u-bankruptcy-filings-increase-161100672.html

 EIDL Loan Default Questions & Answers As many readers  of our blog posts know, at Shenwick &Associates we are representing many individuals and companies that have defaulted on  Economic Injury Development Loans (EIDL) from the SBA.Below are commonly asked questions and answers that we have been asked regarding EIDL  loan defaults.1.  Question: If I personally guaranteed an EIDL  and my company  defaulted on the loan and I guaranteed that loan, can the SBA foreclose and take possession of my house?Answer:  Yes.  However in New York state if the borrower owns the house with his wife, as tenants by the entirety and the wife did not guarantee the EIDL loan, then the SBA cannot foreclose and obtain   possession of the house. The borrower can continue to live in the house. However, the borrower and his wife will not be able to sell or refinance the house, as a result of the SBA judgment. 2.  Question: If I default on an EIDL  loan and I have not closed the business or sold all of the assets, can I make an offer in compromise (OIC)  with the SBA regarding the loan default?Answer:  Generally no, one of the conditions of an OIC is that the business has closed and all of the assets of that business have been sold.3. Question:  if my business files for Chapter 7 bankruptcy protection, will that bankruptcy filing stop SBA collection actions against the company?Answer:  Yes, a Chapter 7 bankruptcy filing stays SBA collection actions due to the automatic stay under Section 362 of the bankruptcy code.  The automatic stay comes into effect when a bankruptcy case is filed and the debtor needs to take no further action after a bankruptcy filing to stop SBA collection actions.4. Question:  If my company files for chapter bankruptcy protection, am I still personally liable if I guaranteed an SBA loan, notwithstanding the company's bankruptcy filing. Answer: Yes, if the company files for Chapter 7 bankruptcy and the principal guaranteed the loan, then the SBA can pursue the guarantor for money due under the SBA loan.5.Question:  If I guaranteed an EIDL  for my company, and my company files for Chapter 7 bankruptcy or closes, and then I file for chapter 7 bankruptcy, will my  personal chapter 7  bankruptcy filing stop SBA collection actions against me?Answer: Yes.  If an individual files for Chapter 7 bankruptcy due to an EIDL default or  other judgments or debts, the automatic stay in the personal chapter 7 bankruptcy filing stops  SBA collection actions against the individual (also known as the debtor).6. Question: If my company defaults under an SBA loan, can the SBA foreclosure (take possession) of the company' property or assets that were collateral for the SBA loan?Answer: Yes, EIDL loans for more than $20,000.00 required that the company enter into a UCC-1 and Security Agreement for the benefit of the SBA and those documents allow the SBA to foreclose/take possession of those assets.7. Question: Where can I learn more about EIDL defaults and bankruptcy filings?Answer: At Shenwick & Associates we have a blog with many posts on this topic, which can be viewed at https://shenwick.blogspot.com/ Our EIDL posts include the following:  http://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html http://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.htmlhttps://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.htmlhttps://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.htmlIndividuals or businesses who would like to speak to Jim Shenwick, Esq. regarding EIDL loan defaults and bankruptcies can  contact him at  jshenwick@gmail.com or 212 541-6224.

If you are considering filing for personal bankruptcy, you may be feeling overwhelmed and intimidated by the process. Whether you are confused about the types of bankruptcy or are not sure how to proceed with the chapter you have chosen, there are lots of questions you may have. Before you begin, here are a few+ Read More The post What to Do Before Filing for Bankruptcy appeared first on David M. Siegel.

Once up a time: Widow Anna saves her house and clears her debt with Chapter 13. Once up a time, an elderly widow named Anna needed to replace the HVAC in her townhouse. Her air conditioning broke down and she needed to fix it. Anna was poor.  She had $1404 monthly from her retirement and […] The post Once Up an Time: A Chapter 13 Story by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.

Once up a time: Widow Anna saves her house and clears her debt with Chapter 13. Once up a time, an elderly widow named Anna needed to replace the HVAC in her townhouse. Her air conditioning broke down and she needed to fix it. Anna was poor.  She had $1404 monthly from her retirement and […] The post Once Up an Time: A Chapter 13 Story by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.

 Democrats Push to Lift Ban on Student Loan Bankruptcy ReliefLegislation has been proposed in the House and Senate that updates the federal bankruptcy code to ensure student loan debt is treated like almost every other form of consumer debt that can be discharged during bankruptcy. The story can be found athttps://www.commondreams.org/news/2022/10/06/democrats-push-lift-ban-student-loan-bankruptcy-reliefWhen I began practicing bankruptcy law, student loan debt was dischargeable like credit cards and other debts. Subsequently that law was changed to the detriment of many debtors. JimJim Shenwick, Esq jshenwick@gmail.com 212-541-6224