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On Day 2 of NCBJ San Antonio, I went for a run, laughed at a musical about ethics, listened to a debate over equitable mootness, went to a fraudulent conveyance program and listened to an economist predict the next recession.An Early Morning Run and an Opportunity to Give BackDay 2 of this year's NCBJ dawned early for about 5% of the conference attendees who shrugged off the prior night's eating and drinking for an early morning Wake Up and Run.   The event, which is sponsored by Bernstein-Burkley, was particularly poignant because of the recent terrorist attack in Pittsburgh.   Here is what the firm had to say:These horrific events have hit us close to home at Bernstein-Burkley, having occurred only a few miles from the firm's headquarters in Pittsburgh. Our employees lost friends and family members, and together as a united city, we grieve the loss of 11 neighbors. The firm will donate $100 for every person entered in the race and will match contributions from NCBJ registrants up to $7,500.00.   To donate, please visit https://app.mobilecause.com/vf/JFPGH. Send a receipt of your donation to mluznar@bernsteinlaw.com and Bernstein-Burkley will match your donation. Getting back to the run itself, it was really dark out and was a reminder that there are a lot of lawyers and judges who are in better shape than I am.  However, I did finish the race and I got to see half of the judges in the Western District of Texas.   Congratulations to everyone who participated.   Robert Miller was the fastest runner, finishing in a blistering 17:32.   Judge Elizabeth Stong from the Eastern District of New York was the fastest judge.    Ethics FolliesWhat could be a better way to learn about ethics than singing and dancing lawyers?   Ethics Follies 2018 presented a parody of Sister Act called Shyster Act.  I have posted a few clips below.Since the point of an ethics presentation (beyond getting ethics hours) is to learn about ethics, here are a few takeaways.   Some of them were pretty obvious.  In the story an attorney who manages a singer co-mingles her trust funds with his client funds and then uses the money to hire internet trolls to try to influence a senate election.   When his associate refuses to participate in the scheme and quits the firm, lawyer Shyster shoots him.   The singer Lola sees this and goes into witness protection at a convent.   The obvious points here are don't co-mingle client trust funds, don't embezzle client trust funds and don't commit murder.   The less obvious point (only because the others were so glaringly apparent) is that an attorney may not commit an act he knows to be illegal or unethical and in the face of a demand to do so, must resign.   The ethical rules do not address how to avoid being murdered when you find out you are working for a criminal law firm.There were a number of other ethical issues interspersed with the singing and dancing.  In one scene, an associate of the firm takes a selfie with Lola and is about to post it on Instagram when he has to be reminded about client confidentiality.   (In this case, Lola's location was confidential since she was hiding from Shyster).  One song dealt with lawyers who went to mediation in bad faith so that they could run up their hours.  The bad male lawyers also made a plan to object to all the other side's discovery responses and set hearings when they knew the other side was going to be out of town.   This segment dealt with the duty not to overbill your client, the requirement to convey settlement offers to your client, the duty of fairness to the other side and counsel, and the duty of candor to the tribunal.In another scene, an associate is passed over for promotion and is drinking heavily.   The partners discuss the resources available from the State Bar to help lawyers with substance abuse problems as well as the risks of allowing an impaired lawyer to advise clients.   However, the most moving part was the young associate's self-revelation when he sings "Before I can save someone else, I have to save myself."There is also a random scene of bankruptcy judges singing about the Judicial Code of Conduct which all of us should find reassuring.In the finale, Shyster forces his way into the convent and tries to shoot Lola.  The nuns offer to lay down their lives for their new friend who has taught them how to sing.  However, the heroic FBI agent disarms Shyster and receives a chaste kiss on the cheek from Lola.The study guide to the musical covered at least twenty different rules from the ABA Model Rules of Professional Conduct.Hooked on the Horns of a Legal Dilemma:  Can "Moo"tness Be Equitable? This was a moot court demonstration on the issue of ethical mootness.   The demonstration was more informative about the substantive issue than on how to argue an appellate case because both of the advocates were too good.   What I mean is that the advocates, Danielle Spinelli and Susan Freeman, did such a good job arguing their positions that there weren't any mistakes to learn from. The case being argued was based on the facts of Sunnyslope, the affordable housing project that was worth more in foreclosure than as an ongoing business.   You can read more about the case at the CLLA Bankruptcy Blog here.    The oral argument highlighted the odd situation that equitable mootness runs counter to the principle that courts must hear cases within their jurisdiction but is accepted by all circuits.   Ms. Spinelli lead off by arguing that equitable mootness was neither equitable nor about mootness.  She pointed out that prudential mootness exists where a court cannot craft a remedy of any sort so that any opinion would be advisory.  Equitable mootness on the other hand prevents review of a substantially consummated plan even when a remedy could still be fashioned.  She pointed out that the Bankruptcy Code expressly provides for two situations in which an order which has not been stayed is shielded from review:  DIP financing and sales free and clear of liens.  Since Congress expressly provide for non-review in those areas, it should be presumed not to have intended it in other cases.  She distinguished equitable mootness from abstention doctrines.  If a federal court abstains from hearing a case, it can still be heard by another court.  With equitable mootness, the appeal dies and the case is  not heard at all. She said that the role of equitable mootness should be limited to crafting a remedy which does not disturb the interests of third parties who have relied upon the confirmation order.Ms. Freeman highlighted the impact on parties who have relied on the confirmation order, such as the investor who put funds into the project, the city that wanted to promote affordable housing and the tenants of the affordable housing project.   She argued that if plans could be reversed after substantial consummation that sophisticated investors would refrain from committing to a plan if there was a possibility of appeal of a confirmation order.  She said that reversal of the confirmation order would eviscerate the plan because the only effective remedy would be to allow foreclosure.  She distinguished the case from one involving third party releases where a discrete issue could be carved out without undermining the entire plan.   She also faulted the bank for not seeking a stay pending appeal noting that the bank had the resources to post a supersedeas bond but made the tactical decision not to do so.   It was an interesting debate.  I have used equitable mootness and have argued against it.   I don't like it because it cuts off appellate review of plan confirmations and believe that it should be used sparingly.ABI Roundtable on Fraudulent Conveyance LawThis presentation was mislabeled since everyone sat at a rectangular table.   The panelists discussed several hot issues in fraudulent conveyance law and invited discussion from the audience.The first issue discussed was whether a deposit into a bank account was a "transfer."   This seemed like a silly issue to me but the courts have come up with different rationales for arriving at the same result.   In re Whitley, 848 F.3d 205 (4th Cir.), cert. denied, 138 S. Ct. 314 (2017) said that deposit of funds into a bank account was not a transfer.   Meoli v. The Huntington National Bank, 848 F.3d 716 (6th Cir. 2017) said that it was a transfer but that the bank was not the immediate transferee so that the transfer could not be avoided.   In re Tenderloin Health, 849 F.3d 1231 (9th Cir. 2017) involved a deposit of funds into an account that was used to pay a bank debt.   The bank argued that once the funds were deposited in the account, it had a right of setoff.  However, the Ninth Circuit said that in a hypothetical liquidation, the deposit of the funds giving rise to the setoff would have been an avoidable transfer itself.   The premise  behind these cases is that the funds are long gone.   It does not seem right to allow the trustee to recover the funds when the bank only held them in a technical sense.The next issue had to do with clawback of parents paying tuition for their children.  The cases break down between the formalistic view stating that the parent did not receive a benefit from paying for their child's education and the broad view that moral or societal value constitutes reasonably equivalent value.  Boscarino v. Bd. of Trs. of Conn. State Univ. Sys. (In re Knight), No. 15-21646, 2017 WL 4410455, (Bankr. D. Conn. Sept. 29, 2017) applied the strict view.  DeGiacomo v. Sacred Heart Univ. (In re Palladino), 556 B.R. 10 (Bankr. D. Mass. 2016) held that the parents' view that having a financially self-sufficient child constituted reasonably equivalent value.   Sikirica v. Cohen (In re Cohen), Adv. No. 07-02517, 2012 WL 5360956 (Bankr. W.D. Pa. Oct. 31, 2012), rev'd on other grounds, 487 B.R. 615 (W.D. Pa. 2013) found that  a debtor received “reasonably equivalent value” for funds used to satisfy reasonable and necessary expenses for the maintenance of the debtor’s family, and that payments for post-secondary undergraduate educational expenses are reasonable and necessary for the maintenance of the Debtor's family.  Ron Peterson brought up  In re Adamo, 582 B.R. 267 (Bankr. E.D.N.Y. March. 29, 2018) which involved a payment made by parents to a student's tuition account.   The court found that the initial transfer was to the student and not to the college.  As a result, the college as mediate transferee could defeat the claim.   Mr. Peterson also raised the anomaly of a debtor who was obligated to pay for college tuition for an adult child under a divorce decree and the parent who remained married and paid for college tuition.  In the first case, the parent had a legal obligation to pay.  In the second, the obligation was only moral or societal.The next topic was payment of fines.  I'm not sure what the issue is here.  If there is a legally enforceable debt, it is clearly reasonably equivalent value.   If a person pays a fine to avoid prison time, that would be reasonably equivalent value because a person can 't earn any money while they are in jail.  If it is a corporation paying a fine to prevent its executives from going to jail, that is not reasonably equivalent value.   First, the corporation does not benefit from protecting its execs.  Second, the incompetence of the executives was probably what put the corporation in bankruptcy in the first place.  Therefore, removing the executives would be a net benefit to the corporation.Finally, there were issues relating to taxes.   In re DBSI, Inc., 869 F.3d 1004 (9th Cir. 2017) involved a sub-s corporation that paid its shareholders' tax liability.   The IRS argued that it would have been entitled to sovereign immunity under state law.   The Court of Appeals held that section 106 waived that sovereign immunity.   The transfer at issue occurred more than two years pre-petition.  As a result, the transfer could only be avoided under section 544.   Outside of bankruptcy, sovereign immunity would prevent recovery of the transfer.  However, the court found that section 106 overroad the result that would otherwise occur.   The Seventh Circuit went the other way.   In re Equipment Acquisition Resources, Inc., 742 F.3d 743 (7th Cir. 2014) found that sovereign immunity would prevent recovery of the transfer outside of bankruptcy and that because section 544 is based on remedies available under state law that sovereign immunity had to be included.  It found that the reference to section 544 in section 106 had to be understood as referring to section 544(a) only.ABI Luncheon:  Honoring Keith Lundin and a Not So Gloomy RecessionRetired Judge Keith Lundin accepted the Norton Judicial Excellence Award.   Presenter William Norton discussed Judge Lundin's Zelig-like presence at all of the important bankruptcy developments of the past thirty years and his super-authoritative treatise on Chapter 13.   Rather than talk about himself, Judge Lundin essentially gave a roast for the twelve prior recipients of the award, demonstrating that he is a genius and has a sense of humor to boot.Dan White, a Senior Economist with Moody's Analytics, presented the economic forecast.  He told a story about the time J.P. Morgan was asked what would happen with the stock market.  Morgan replied "There will be volatility," a perfectly accurate answer with little practical import.  Mr. White said that the one thing he could be 100% certain of was that there will be a recession.  However, he could not say with certainty when it would happen or how severe it would be.   On these topics, all he could do was offered educated guesses.   To avoid keeping you in suspense, his education guesses were that there would probably be a recession in mid-2020 and that it would likely be mild unless one or more accelerators kicked in.  (My term not his).      He said that several factors pointed to a recession in mid-2020.   First, it has been nine years since the last recession.   This is the second longest period of expansion in recent history.  He added that ten years is a long time to avoid screwing up the economy.   Their forecast assumes a strong 2019 which would then peter out shortly.   The Trump administration has jacked up the economy with tax cuts and increased spending.   He gave the example of his six year old son trick or treating and coming home shaking from the amount of sugar he had consumed.  After the sugar rush wore off, he immediately fell asleep, not even making it through the opening credits of "It's the Great Pumpkin, Charlie Brown."  In this case, the Trump administration has given the economy a sugar rush with tax cuts and increased spending.  When this wears off in 2020, the economy will likely fall.Mr. White also said that when we blow past full employment, we usually have a recession within three years.   The economy passed 4.5% unemployment in 2017.  If full employment is at the 4.0% unemployment rate, we may have a little more time.He also talked about the yield curve in a slide I copied below.   In order for bankers to lend, there needs to be a spread between the 3 month interest rate and the ten year interest rate.   When the yield curve inverts, we are usually a year away from a recession.  He also said that whenever the yield curve falls to 1%, it is likely to invert.   We are currently at 1%.  He said that many economists will go on TV and explain why the yield curve doesn't matter.   "Friends don't let friends doubt the yield curve" he explained.All of these factors point to a recession in 2020, but the big question is how bad will it be?  He gave three examples.   The recession of 2001 was mild, the recession of 1991 was more severe and the great recession of 2009 was, well, it was the great recession.   In  the 2001 recession, GDP dropped 0.6 percent from its peak.  In 1991, the drop was 1.5%.   The 2001 recession was over within a quarter while the 1991 recession lasted a year.   (I took these numbers from an article that I found, not from Mr. White's presentation).    Mr. White explained that there could even be a growth recession, that is, where the economy declines but continues to expand.He explained that "having a recession is not the end of the world."  A recession "brings some of the excess crap out of the economy.  Small recessions help avoid big recessions."Mr. White said that the likelihood was for a soft landing but there were a broad range of possibilities.  He explained several wild cards that could make a recession worse.   If President Trump and President Xi follow through on all of their threats regarding tariffs, it could raise the tariff rate from 1% to 5%, something that has not been seen in many years.  This would hurt agriculture and any industry that relies on steel.   He described the two world leaders as engaging in a game of chicken and predicted that they would ultimately back away.Debt was another factor that could influence a recession.   Household debt is actually at a good level.  Federal government debt is on an unsustainable course but will not dramatically affect the economy for 10-15 years if entitlements are not reined in.   Local government spending is a problem because the percentage of mandatory spending by local governments has been steadily rising along with defaults and bankruptcies by local government.   Because local governments cannot engage in deficit spending, they will have to curtail other spending as mandatory expenditures rise.  This could hurt the economy.   Finally, non-financial corporate debt is not scary on an aggregate level but the distribution of that debt is.   He described corporate debt as a barbell.   There are a lot of well-collateralized, very secure corporate debts.  At the other extreme, there are "leveraged" debts which is a euphemism used to avoid describing them as junk debt.  Leveraged firms are leveraging up.  Because every business with good credit has already received all the loans they need, banks need to make riskier loans to continue making money.   However, because of the transparency required by Dodd-Frank, they will not keep these loans on their own balance sheets.   Instead, they are creating "Collateralized Loan Obligations" and selling them to pension funds and other investors.  However, the size of these debts is not large enough to tank the economy.His opinion was that these risk factors would likely mean the difference between a 2001 recession and a 1991 recession.  Either way, it is not an apocalyptic scenario unless someone does something really stupid that we can't see at this point.   You can always bet on stupid.  (My comment, not his). 

NCBJ 2018 opened in the historic Lila Cockrell Theater with current NCBJ president Judge Michael Romero belting out a welcome in song adapted from Cabaret.    For me, Day 1 featured an awards show with head-snapping array of bankruptcy trivia and video, a valuation mock trial and the Commercial Law League's program.   Themes throughout the day included trying to find some importance in this term's three bankruptcy-related Supreme Court decisions and the Tempnology case which just received a grant of cert.Broken Bench Awards ShowThe opening plenary session featured a highly produced awards show in which judicial writing was honored along with more than a little substance thrown in.   The show began with Cinderella (Prof. Nancy Rapoport) facing foreclosure from her bank after it finds out that its collateral has turned into a pumpkin and some mice.  Fairy Godmother (U.S. District Judge Pam Pepper) saved Snow White by telling her about bankruptcy and gave her some schedules to fill out in the five minutes before the judge arrived.   The part about completing schedules in five minutes truly had a fairy tale quality to it.There were a number of awards, some silly and some not so silly.    Best Judicial Turn of Phrase went to Supreme Court Justice Sonia Sotomayor who made this quip in her opinion in Wellness International Network, Ltd. v. Sharif, 135 S.Ct. 1932, 1947 (2010):"The principal dissent warns darkly of the consequences of today's decision.  To hear the principal dissent tell it, the world will end not in fire, or ice, but in a bankruptcy court."The award for the best Bench Slap went to In re Lynch, 2017 WL 416782, 63 Bankr. Ct. Dec. 176 (Bankr. N.D. Oklahoma) where Judge Cornish chastised a lawyer for hiring professionals found on Craigslist.The Court was stunned that Hyde chose attorneys and experts to assist her by shopping for them on the website Craigslist.  Traditional avenues for finding and vetting attorneys such as the Lawyer Referral Service of the Oklahoma Bar Association, County Bar Association and Martindale-Hubbell Legal Directory seem much more reliable and trustworthy sources of information rather than searching classified ads on the internet. Best Ethics Rant went to Judge Jeffrey Norman of the Western District of Louisiana (now sitting in the Southern District of Texas.  His In re Banks, 2018 WL 735351 (Bankr. W.D. La. 2018) opinion said that:This case is an unfortunate tale of attorney delay, promises to a client made by counsel but not kept, deception, and professional negligence.They said that the lesson is that judges have a lot on their dockets.  They don't want to spend pages and pages calling someone out.  Make good choices (followed by a clip from Pitch Perfect).Retired Judge Michael Ninfo (dressed as Captain America) received a lifetime achievement award for his work founding CARE, Credit Abuse Resistance Education.   The presentation made me want to volunteer for the group.The award for Best Use of a Song Lyric in an opinion went to In re Drew Transportation Services, 2016 WL 8892459 (Bankr. E.D.N.C. 2016) for its use of the Rolling Stones' "You Can't Always Get What You Want."  (However, I felt that Judge H. Christopher Mott got robbed since he used the phrase in his In re SCC Kyle Partners, Ltd., 2013 Bankr. LEXIS 2439 (Bankr. W.D. Tex. 2013) relating to cram-down interest.   He led his opinion with the quote and added:  "In the Court's view, neither party will get all they want, but both will get what they need."Prior to the conference, attendees voted on the Best Bankruptcy Cinderella Story.   Receiving the award was the City of Detroit case.   Judge Steven Rhodes, Kevin Orr and Corinne Ball accepted the award on behalf of the case.    Judge Rhodes thanked Jones Day for not filing the case in Delaware.Valuation Mock TrialJudge Laurie Silverstein (Bankr. D. Del.), Ian Peck of Haynes & Boone, Camisha Simmons of Simmons Legal and Bob Stearn of Richards, Layton & Finger presented a mock trial of a hearing to value a company in the context of a chapter 11 confirmation hearing.   I am not going to discuss the specific valuation issues raised since a lot of it was over my head.   However, I do have a few takeaways from watching the mock advocates.   There is a lot of jargon used in valuation.   While some judges may understand the difference between a WAC and a Beta input, it is important for the advocates to take the time to explain these concepts and how they fit into a valuation decision.   In this case, the Judge understood a lot of concepts which were never explained.   However, in real life, the parties might not get so lucky.  I thought that the attempts to attack the qualifications of the experts were of limited value.   If you are not going to get the expert thrown out or substantially discredit them, questioning about the number of zinc mines appraised doesn't add much.I thought that the demonstratives that the lawyers used were helpful but would have liked to see more of them.I liked the way that one of the attorneys used his cross-examination of the other side's expert to lay out themes that his expert would be raising in his direct.    I was also impressed by the extent that the mock advocates understood the underpinnings of their opponent's expert's opinions.   In one case, an expert had relied on a proprietary report.  The advocate effectively challenged the fact that the expert had no way to verify the conclusions reached by the analysts who prepared the report.   He referred to it as a black box in his cross and closing, a term that was echoed by the judge in her ruling.   It is hard to do a practice skills presentation with tight deadlines.   I found this one to be very realistic (because it was based on a real case) and a good teaching exercise.  (NCBJ is offering videos of all of the plenary sessions for sale in case you want to watch the presentation for yourself).King Award LuncheonEvery year the Commercial Law League of America awards the Lawrence P. King Award for Excellence in Bankruptcy to a distinguished judge, academic or practitioner.   This year the award went to Prof. Jay Westbrook of the University of Texas School of Law.   Prof. Westbrook has been one of the leading bankruptcy academics in the country for many decades.  His ground breaking empirical work (with Teresa Sullivan and Elizabeth Warren) has helped us to better understand bankruptcy and the people who file bankruptcy.  He is one of the bright lights of international insolvency law.  He has also worked to accomplish venue reform, helping to draft a bill that was introduced in the Senate by two unlikely co-sponsors:  John Cornyn of Texas and Elizabeth Warren of Massachusetts.  He was introduced by his former research assistant Eric Van Horn and a video message from his former collaborator U.S. Sen. Elizabeth Warren.  I recorded both Sen. Warren's introduction and Prof. Westbrook's acceptance on my phone.  I apologize for the quality.   This is the first time I have attempted to incorporate video into a blog article. Focus on the Supreme CourtI am combining one segment from Broken Bench Awards with Prof. John E. A. Pottow's address to the Commercial Law League luncheon since they both dealt with last term's Supreme Court decisions as well as one case that the Court has granted cert on for this term.   In the awards category, three presenters made pitches for why each of the Court's decisions was the best.   Craig Goldblatt and (I think ) Danielle Spinelli from Wilmer Hale made pitches for Lamar, Archer & Cofrin, LLP v. Appling, 138 S. Ct. 1752 (2018)  and  Merit Mgmt. Grp., LP v. FTI Consulting, Inc., 138 S. Ct. 883 (2018) explaining why each of these decisions faithfully followed the text of the Code.   Prof.  Troy McKenzie of New York University School of Law argued for U.S. Bank Nat’l Ass’n v. Vill. at Lakeridge, LLC, 138 S. Ct. 960 (2018).   Village at Lakeridge received the highest votes from the audience although I personally voted for Appling.   Prof. Pottow sought to provide some context to the decisions in his presentation titled Is Functionalism Back?    The Professor stated that the Supreme Court has a hard time getting bankruptcy.  He explained that this makes sense since they are generalists who must deal with many different areas of the law.   However, it means that they often have a poor idea of what is going on in the trenches.   This feeds into the formalism vs. functionalism dichotomy.   Formalism looks at the words of the text while functionalism looks at how a given interpretation will work in practice.  (My words, not his).This leads to the three cases that the Court decided last term.   I did not describe them above because I wanted to do so in the context of Prof. Pottow's talk.  The first case up was Lamar, Archer & Cofrin, LLP v. Appling, 138 S. Ct. 1752 (2018), a case about a client who not only stiffed his lawyers, but lied to them to get them to continue representing him.  Mr. Appling told his lawyers that he would be receiving a tax refund of "about" $100,000 and would use it to bring their bill current.   The refund was closer to $59,000 and the debtor apparently did not intend to pay his lawyers.   He filed bankruptcy after they sued him.   The lawyers argued that their ex-client had induced them to keep doing work for them by lying about the tax refund.  The issue before the Supreme Court was whether Appling's verbal statements about the refund were statements "respecting" the debtor's financial condition.   Any claim based on a lie "respecting" the debtor's financial condition must be in writing.  The lawyers said that a statement about one asset was not made "respecting" the debtor's financial condition.  The Supreme Court disagreed.In making its ruling, the Court started with a formal analysis--what does the dictionary say that "respecting" means.   Then it went to an historical analysis--how were these claims treated under the Bankruptcy Act.   Finally, the Court looked at the consequences of a rule requiring that a statement of financial condition must refer to more than one asset.   What if the debtor makes one statement listing his assets and a separate statement concerning his liabilities?   He has not made a  single statement concerning his financial condition.   The definition urged by the lawyers would be difficult to apply and would lead to bizarre results.   Only the third rationale reflected functionalism.   Prof. Pottow likened it to the dessert of the opinion, but added that at least Justice Thomas didn't dissent.The Court also discussed legislative history, specifically a House Report.   The Supreme Court had previously relied on this same report in Field v. Mans, 116 S.Ct. 437 (1995).  This was one step too far for Justices Gorsuch, Thomas and Alito who did not join this portion of the opinion.Next up was U.S. Bank Nat’l Ass’n v. Vill. at Lakeridge, LLC, 138 S. Ct. 960 (2018).  According to Prof. Pottow, this was not really a bankruptcy case at all because it dealt with the standard of review on appeal rather than what rule the court should apply under bankruptcy law.  The case dealt with how to determine whether a person was a non-statutory insider.   According to the professor, the opinion  starts out formalistically and ends on a functionalist crescendo.   The formalistic part of the opinion notes that there are three types of issues on appeal:  issues of fact, issues of law and mixed questions of fact and law.  Factual determinations receive deferential review while questions of law are reviewed on a clean slate.   For mixed questions, it depends.   The functionalist part of the opinion looked at what the Court was doing as it examined the mixed question of law and fact.  If what the court was doing was closer to fact finding than applying the law, then the more deferential standard would apply.   Prof. Pottow pointed out that the institutional competency of the Supreme Court was deciding difficult issues of law in a manner that would provide guidance to the lower courts.   The institutional competency of the bankruptcy court was listening to evidence and making decisions about the facts.   Having established that appellate courts should defer to the fact finding of trial court's, individual justices began to weigh in on what the rest should be.   This was a problem because the Supreme Court had not granted cert on this issue.  Nevertheless, Justice Sotomayor said that the test used by the Ninth Circuit was dumb.  Justices Alito, Thomas and Kennedy joined in the concurrence.  Justice Kennedy concurred in the concurrence.   This probably show buyer's remorse that the court had not granted cert on the substantive issue and was left with a narrow, insignificant opinion.   (My words, not Prof. Pottow's).Finally, there was Merit Mgmt. Grp., LP v. FTI Consulting, Inc., 138 S. Ct. 883 (2018), a case about whether the safe harbor for securities clearing transactions should apply in a case where funds for a stock purchase flowed through two banks before reaching their ultimate destination.   According to Prof. Pottow, this would have been a great case for the Supreme Court to dive deeply into the question of what is a transfer.   In point of fact, funds travelled from the buyer (Party A) into his bank (Party B) to the Seller's Bank (Party C) to the Seller (Party D).    The Supreme Court disregarded the parties in the middle, stating that while there was a transaction, there was not a transfer.   Prof. Pottow claimed that the Supreme Court merely stated that the transfer was from A to D without analyzing why that was the case.  I personally believe that they were looking at the economic reality of the transaction.   The banks were akin to a courier rather than parties who came into ownership of the funds.   Sure, a courier could make off with the funds and not delivered them, but that is not what happened here.  Expressing his disappointment with this case, Prof. Pottow suggested that it might not be a good case to include in the next textbook.Prof. Pottow pointed out that the judges who were the most functionalist went along with all three opinions.  Of course, they were all 9-0 decisions, so that the judges who were most formalist went along with them as well.  Interesting Stuff That Didn't Fit Anywhere ElseThere is more that I wanted to write about.  However, the hour is late and tomorrow starts with a run at 6:00 a.m.   I may add to this section after I return home.  

By Danielle FurfaroThe city will apply the brakes on millions of dollars in fees due this week from taxi-medallion owners in an attempt to stem a rash of cabby suicides. Taxi and Limousine Commission head Meera Joshi agreed to waive what would amount to nearly $20 million in fees to give struggling medallion owners some breathing room. She made the move after nearly a year of driver deaths led to mounting criticism from other cabbies, pols and city officials. Councilman Mark Levine (D-Washington Heights) has been pushing legislation to provide longer-term solutions for medallion owners and asked for the break for taxi drivers who are already on the brink financially. “This is a short-term step to provide some relief to the drivers while we work out a longer-term policy,” said Levine. “It’s critical that we take steps to help out the drivers who have seen their life savings evaporate through no fault of their own.” The city usually requires hacks to pay $1,650 every two years — a biennial $550 taxi-medallion renewal, six $90 inspection fees and a $10 renewal for the medallion tin. Handicapped-accessible medallion owners must pay another $540. With 11,286 regular medallions on the streets and 2,301 accessible ones, that’s nearly $20 million in fees that the city is now waiving.And all of that was set to come due this week."Absolutely anything could help out right now,” said Bhairavi Desai, executive director of the New York Taxi Workers Alliance. “People are struggling and they would definitely appreciate it.” TLC commissioner Meera Joshi, who has been scorned by taxi drivers for not doing enough to help them, agreed that the hacks need a hand. “The renewal fee is one more payment for medallion owners at a time when every penny counts,” said Joshi. “It is certainly prudent to pause collection of that fee while [Levine’s] bill moves through the legislative process and, if passed, the study it requires would be in motion.” The city could try to recoup the fees in the future. Levine’s bill would require the TLC to conduct a study of medallion owners’ and drivers’ debt and propose ways to help them out. Seven for-hire drivers — three of them cabbies — have committed suicide over ruined finances since November. The most recent was Uber driver Fausto Luna, 58, who jumped in front of an A train on Sept. 26 because of massive debt. In June, cash-strapped yellow cabby Abdul Saleh, 59, hanged himself in his Brooklyn apartment. In May, yellow cab driver Yu Mein “Kenny” Chow, 56, jumped into the East River. In March, cabbie Nicanor Ochisor, 65, hanged himself in his garage in Maspeth, Queens. Black car driver Douglas Schifter, 61, killed himself with a shotgun outside City Hall on Feb. 5, leaving a scathing note blaming the city for his woes. In December 2017, livery hack Danilo Corporan Castillo, 57, wrote a suicide note on the back of a summons and jumped out the window of his Manhattan apartment. A month earlier, livery driver Alfredo Perez hanged himself.© 2018 NYP Holdings, Inc. All Rights Reserved.

     Anyone who does farm bankruptcies should be familiar with the Perishable Agricultural Commodities Act (PACA).  This law provides in part that proceeds from the sale of produce received by a merchant, dealer or broker shall be held in trust for the benefit of all unpaid suppliers or sellers of such produce until payment of all sums due to the suppliers or sellers.   This gives such sellers a superior right to such funds over non-PACA creditors, including secured creditors.  Thus it is critical to determine whether a purported PACA claim actually qualifies as such a claim to determine the right to distribution of funds in chapter 12.  This may be more of an issue when finance companies try to arrange their transactions so as to be able to assert a PACA claim in a non-traditional setting.  This appears to have been the case in a chapter 11 case in  In re Spiech Farms, LLC, 2018 Bankr. LEXIS 3245, Case #GK-17-05398-jtg (Bankr. W.D. Mich., 18 October 2018).   Spiech Farms purchases, processes and packages blueberries and grapes in Michigan and Georgia, then selling the produce to national grocery chains such as Wal-Mart, Meijer, Publix, Whole Foods and Kroger.  It produces 80% of the fresh Concord grapes in the US, and is a licensed PACA dealer.  For years the debtor had relied on Chemical Bank to finance its operations, granting them first priority mortgage liens and security interests in substantially all its assets.  In early 2017 a frost severely damages its blueberry crop in Georgia, causing the debtor to fall out of formula on at least one of its lines of credit with Chemical.  It then considered alternative financing, including with Produce Pay. Produce Pay is a finance company focused exclusively on the fresh produce space.  During preliminary discussions between Debtor and Produce Pay, Debtor advised Produce Pay of Chemical's lien on the accounts receivable, though this did not deter Produce Pay.  After initial failures, the parties eventually agreed on August 31, 2018 to a Distribution Agreement to provide debtor with access to funds.  The court described the agreement as at times confusing, perhaps purposely so, containing shades of a true sale, factoring, consignment, securitization, and hints of PACA.  The agreement was structured to effectuate two transfers.  First, Produce Pay agreed to purchase from the debtor 'Distributed Asset Pools' which per the definition included produce.  Second, the Debtor agreed to act as Produce Pay's 'consignment agent' by selling to Debtor's pre-existing customers, on behalf of Produce Pay, the same produce that Produce Pay had allegedly just purchased as part of a Distributed Asset Pool.   Debtor was then required to remit the proceeds to Produce Pay, plus sales commissions, marketing commissions, and certain expenses, including the costs of collection.  The agreement did not identify any Distributed Asset Pools or produce for sale.  Instead Debtor was to designate produce to the agreement by uploading 'pallet reports' through a software platform proprietary to Produce Pay.  If Produce Pay then decided to purchase the Distributed Asset Pool identified on the pallet report' it paid the determined price and transmitted an email to the debtor advising it that funds had been wired to its account, as well as sending a confirmation through the software platform.  Produce pay was never to take physical possession of any produce, and the risk of loss remained with the debtor at all times.  If the customers did not pay for the produce allegedly sold to them on behalf of Produce Pay, the debtor was required to repurchase the Distributed Asset Pool.  Debtor started to access funds under this arrangement around September 8, 2017.  Around the same time Chemical discovered that Produce Pay had filed a financing statement against the Debtor on September 1, 2017.  Chemical expressed concern with the security interest but was unaware of the complicated structure of the agreement or the PACA trust language therein.  When Chemical discovered Produce Pay's attempt to circumvent their security interest by asserting rights under PACA, Chemical declared Debtor to be in default.  Chemical demanded that the Debtor notify its customers that they were required to remit all future payments jointly to Debtor and Chemical.  Chemical also effectuated setoffs of more than $570,000 from Debtor's deposit accounts over the next 8 days.   Produce pay also informed debtor that it owed them $190,000, and that no additional funds would be made available until payment in full, and threatened legal action.   Being unable to fund its operations, Debtor filed for relief under chapter 11 on 22 November 2017.  Both Produce Pay and Chemical objected to the use of cash collateral, which was authorized after a multi-day trial.   Debtor also filed a motion to establish certain procedures related to PACA claims, and the court ordered anyone asserting a PACA claim to file a proof of claim and supporting documentation by 14 May 2018.   Produce Pay filed a PACA claim in the amount of $1,002,273.70.  The Debtor and Creditor's Committee filed objections, and after briefing, an evidentiary hearing was held.  The court first examined the PACA law and legislative history.  PACA only protects unpaid 'sellers' and 'suppliers' of perishable agricultural commodities.  While the statute does not define these terms, Black's Law Dictionary defines a 'seller' as the party who transfers property in a contract of sale.  In order to recover from a PACA trust, an alleged trust beneficiary must demonstrate by a preponderance of the evidence that i) the goods sold were perishable agricultural commodities; ii) the purchaser of such commodities was a commission merchant, dealer, or broker; iii) the transaction occurred in interstate or foreign commerce; iv) full payment on the transaction has not been received by the supplier, seller, or agent; v) the seller or supplier preserved its trust rights by giving written notice to the purchaser; and vi) the payment terms did not exceed the maximum amount prescribed by PACA.   The court found that Produce pay failed to demonstrate that it is an unpaid seller or supplier of perishable agricultural commodities.  7 U.S.C. §499e(c)(2).  The issue is whether Debtor had any title to the produce to transfer to Produce Pay at the time Produce Pay allegedly purchased a Distributed Asset Pool.  Per section 2-403 of the U.C.C. a purchaser only acquires the title which the transferor had or had power to transfer.  Under section 2-401 of the UCC title to goods cannot pass under contract prior to their identification to the contract.  If a contract is for the sale of future goods, identification occurs when the goods are 'shipped, marked or otherwise designated b the seller as the goods to which the contract refers,' such as by inclusion of items on a purchase order or by similar means.  U.C.C. §§ 2-105(2), 2-501(1)(b).  Title can never be deemed to pass after goods are delivered to the buyer.  U.C.C. §2-401(1).  Where goods are not moved, delivery is deemed to occur when a document of title is provided by the seller.  U.C.C. §2-401(3).   Once goods are in the possession of the buyer, any reservation of an interest or title by the seller is deemed a security interest.  Applying these rules, the court concluded that Debtor transferred title to the produce in Produce Pay's proof of claim to the Debtor's customers before the produce was identified to the agreement with Produce Pay.  Identification under the Produce Pay agreement first occurs when the Debtor uploaded the pallet reports.  These pallet reports state that the produce had been shipped and delivered to the Debtor's customers before the Debtor uploaded the pallet report to the platform.  Likewise each pallet report and invoices attached show that the Debtor's customer had been invoiced before the produce was offered to Produce Pay.   The court rejected Produce Pay's assertion that the Debtor retained some equitable title after delivery until payment of the produce.   This is contrary to the provisions of the U.C.C. referenced above.   As the debtor no longer had title at the time of providing the identifying information to Produce Pay, Produce Pay never obtained title to the produce which is the subject of it's PACA claim, thus it is not a seller or supplier of perishable agricultural commodities entitled to the status of a PACA trust beneficiary.  Produce Pay then advanced an alternative argument that the agreement constitutes a financing arrangement wherein when Produce Pay purchased a Distributed Asset Pool, it also purchased receivables, including Debtor's rights as a PACA trust beneficiary; essentially transforming the agreement from one calling for the sale of produce to one contemplating the sale of accounts receivable, ie a factoring agreement.  The Debtor and Committee point to the fact that risk of loss remained with the Debtor at all times as evidencing that the agreement was a financing arrangement rather than a true sale.  As PACA does not address the sale of receivables, the court looked to state law.    The Second, Third, Fourth, Fifth and Ninth Circuit Courts of Appeal have applied a multi-factor test known as the 'transfer of risk' test.  Essentially this test looks to whether the lender or the borrower bears the risk of non-performance by the account debtor.  If the risk remains with the borrower, the lender holds only a security interest in the accounts.  While the Sixth Circuit has not considered the issue, the bankruptcy court concluded that it would likely follow this test.  The court looked at the details of the agreement in finding that Produce Pay did not purchase the receivables.    These details include the 1) Debtor's obligation to pay Produce Pay even if the customers default on their obligations to the Debtor.  2) If Debtor doe snot remit the proceeds within 30 days, the sales commission due to Produce Pay will increase pursuant to formulas in the agreement; thereby penalizing Debtor rather than Produce Pay if the Debtor's customers failed to pay for the produce.  3) The agreement required Debtor to repurchase the Distributed Asset Pools from Produce Pay unless Debtor paid Produce Pay within 60 days, including payment of costs incurred by Produce Pay within that 60 days.  4) The risk of the customer's default was overtly placed on the Debtor.  5) The Debtor was burdened with all risks and costs associated with any damage from consumption, storage, marketing, and promotion for the produce related to the receivables allegedly purchased by Produce Pay.  6) The agreement provides that the Debtor acknowledges it cannot use it's accounts, accounts receivables, or proceeds from sales as collateral in connection with loans from third parties.  7) The agreement refers to the platform as a mechanism for 'alternative financing' and one day after the agreement was executed Produce Pay filed a financing statement in which it identified as collateral the Distributed Asset Pools and all cash collections from, and all proceeds of the foregoing.   Thus, rather than purchasing the receivables, Produce Pay used them a collateral to secure repayment of the loans made to the Debtor, thus again it cannot stand in the Debtor's shoes as an unpaid PACA trust beneficiary.  The court disallowed Produce Pay's PACA claim finding that neither sold or supplied produce, nor purchased accounts receivables including the Debtor's PACA trust beneficiary rights.Michael Barnett www.hillsboroughbankruptcy.com506 N Armenia Ave., Tampa, FL 33609-1703.(813) 870-3100 

   Most litigation involving the automatic stay revolves around lifting or extending the stay.  In rare cases, the court may go back and retroactively annul the stay in a current or prior case.  The court found such grounds in In re Schonscheck, 2018 Bankr. LEXIS 3231 Adv #18-2027-GMH, (Bankr. E.D. Wis. Oct. 18, 2018).  While the order was entered in a 2018 adversary in a dismissed 2010 case, the background facts to back to a 2009 state court replevin suit filed by John Deere.  Although a bankruptcy was filed in 2010 prior to the entry of a judgment in state court, the state court was not notified of the bankruptcy resulting in the entry of a replevin judgment against the debtors.  Later, in 2017 after dismissal of that 2010 chapter 12 case, as well as two other cases filed by the debtors, the state court issued a writ of replevin based on the 2010 judgment, and John Deere took possession of the debtor's equipment.  No payments had been made to John Deere since 2014.  The debtors filed this adversary proceeding against John Deere in 2018 to have the bankruptcy court determine that the replevin judgment, and subsequent writ of replevin were void as being entered in violation of the automatic stay.  The bankruptcy judge looked back at the payment history on the debt.  After the 2010 chapter 12 was dismissed in March 2014, the debtor made a payment to John Deere in April 2014, which was the last payment made to the creditor.  Debtor promised in November 2014 to pay after the harvest of a bean crop 30 days later, and in January 2015 promised to pay by the end of the year if John Deere agreed to forego replevin.  No payments were made based on these promises, or a subsequent promise to make payments in September through November of such year.    The debtors filed two more chapter 12 cases in 2016, the first of which was dismissed in September at the debtor's request, and the second dismissed the next February without a confirmed plan.  The court initially determined that it could consider the effect of the 2010 automatic stay on the state court judgment under 28 U.S.C. §1334(b).  Then the court can consider whether to grant John Deere relief from such claim pursuant to Fed. R. Bankr. P. 7056.  The court determined that it had the ability to annul the automatic stay for cause under 11 U.S.C 362(d)(1).  The use of the term annulling in §362(d) contemplates an order terminating the stay retroactively. 1  The Fifth Circuit has approved annulling the automatic stay in a foreclosure "[W]here a creditor having no knowledge of a pending bankruptcy forecloses in good faith on the collateral, and where the debtor's interest in that collateral is unenforceable against that creditor, and where the debtor, although notified in advance of the foreclosure, failed to assert its status before the foreclosure, . . . the automatic stay should [be] annulled with respect to the post-bankruptcy foreclosure.2  It does not appear that the state court was aware of the bankruptcy prior to entry of the replevin judgment.  Nor did the debtors dispute the validity of the judgment in any of the 3 bankruptcy cases during or after the judgment.  Rather, the debtors seek to enforce an automatic stay that terminated four years ago upon dismissal of their bankruptcy case.  To interfere now with the creditors collection efforts, after 3 failed attempts to complete a chapter 12 plan, serves no bankruptcy purpose.  The court also finds that where there is grounds to annul the §362(a) stay, the court may also annul the co-debtor stay of §1201(a).  Finding that the debtors interfered in bad faith with the creditor's exercise of its state court rights, and that failure to annul the stay would cause the protections of the automatic stay to be applied inequitably to achieve improper ends, the court exercised its authority under §105 to annul the co-debtor stay of §1201(a).  The court also denied the debtor's request for fees under §362(k), finding that since the was no stay in effect when the creditor sought the writ of replevin in 2017 the court's action at that time could not have violated the automatic stay.  The court awarded costs in the proceeding to John Deere.1 Albany Partners, Ltd. v. Westbrook (In re Albany Partners, Ltd.), 749 F.2d 670, 675 (11th Cir.1984)↩2 Mut. Benefit Life Ins.Co. v. Pinetree, Ltd. (In re Pinetree, Ltd.), 876 F.2d 34, 37 (5th Cir. 1989).Michael Barnett www.hillsboroughbankruptcy.com506 N Armenia Ave., Tampa, FL 33609-1703.813 870-3100↩

By Ron LieberThe program that public servants can use to have their federal student loans forgiven is such a quagmire for borrowers that Congress had to set up a relief program for the relief program.So far, it’s not performing much better.It has been nearly five months since the Department of Education released instructions for a $350 million pot of money that some public servants can use if they received bad information about the loan forgiveness program and ended up in the wrong type of repayment plan.Tens of thousands of people have applied for the relief program. But so far, most have been rejected, and as of late last month, none among the few thousand who remain in the running have seen their debt balances go to zero.In response to an inquiry led by Senator Tim Kaine, Democrat of Virginia, the department disclosed last week that 28,207 people had submitted requests as of Sept. 28 and that it had found 21,672 ineligible almost immediately. It then culled “approximately” half of the remaining 6,535 for other reasons. That leaves just over 3,000 applications still under consideration.It can take up to six months or so to review these requests because of the complexity of both the forgiveness program and the relief fund application process. The Department of Education has shifted some staff to work more closely with the loan servicer that handles the forgiveness program.The relief fund was created after it became clear that scores of teachers, social workers and other government and nonprofit employees had received bad information from their loan servicers about the forgiveness program’s complex terms. So far, fewer than 1 percent of applicants have had their loans discharged through the program, which got its start just over a decade ago but is only now having borrowers become eligible.To qualify for tax-free loan forgiveness, borrowers need to make 120 on-time monthly payments (while working in an eligible public-service position), have the right kind of loan (some federal loans qualify while others do not) and be in the right kind of payment plan (the income-driven ones designed to help lower-income borrowers). I explained the process in more detail in an earlier column.When it became clear in recent years that loan servicers had told public-servant borrowers that they were doing everything right even when they were in the wrong kind of loan or payment plan, pressure grew on elected officials to help borrowers who thought they were being meticulous onlyto find that years of payments had not counted for forgiveness.Enter the Temporary Expanded Public Service Loan Forgiveness initiative, which is a pool of $350 million designed to help borrowers who were in certain ineligible payment plans, often because their loan servicers specifically told them to use those plans or stay in them. The relief program comes with its own rules and restrictions, which I outlined in a previous article and are available on the Department of Education’s website.Five months in, that website is no model of clarity.For instance, one paragraph tells borrowers that they must submit a public service loan forgiveness application and wait to be rejected (for payments that were not in a qualifying payment plan) before being potentially eligible for relief. The very next paragraph, however, tells them that they do not need to wait before submitting a request under the temporary plan.Jolie von Suhr, a psychologist in a state psychiatric hospital in Lakewood, Wash., who was in an ineligible payment plan for years before realizing she had a problem, said the site’s conflicting information left her both perplexed and afraid.“It kind of sounds like you can submit them both at the same time, but I’m not sure,” she said. “I’m so anxious now about doing anything incorrectly that could get me booted out of consideration.”In fact, you do not have to wait for a public service loan forgiveness denial in order to request consideration under the temporary expanded program. I asked if the department intended to clarify this on its site and received assurances that it “will continue to review communications to borrowers and will adjust them as appropriate.”Some eligibility determinations are easier to make than others — rejecting people who have not made 120 payments or who were in an ineligible loan, for example. The Department of Education’s loan servicer often has a tougher time producing an accurate count of months of repayment.Plus, it now has to account for a rule under the temporary program that applies to people who thought they were in the right kind of repayment plan but found out much later that they were not. They are eligible for the temporary program only if their most recently monthly payment and theone they made 12 months before their application were higher than what they would have paid if they had been enrolled in a qualifying repayment plan. Yes, it’s complicated, and clearing this hurdle may require documentation.The Education Department seems tired of bearing blame for all of this.“We implement the programs Congress creates,” said the department’s press secretary, Liz Hill. She added that the forgiveness program and the temporary program were “poorly constructed programs, the rules of which are highly complex and difficult for students to navigate.”“We are working to make it as straightforward as the rules allow,” Ms. Hill said.Some borrower advocates are not surprised by the delays thus far.“This is a new program in that we’re still in the first year or so of forgiveness applications,” said Betsy Mayotte, president of the Institute of Student Loan Advisors, a nonprofit adviser to debtors. “I have high hopes that the process will become more seamless and quicker over time.”© 2018 The New York Times Company.  All rights reserved.

Natalia Lusinski Student loan debt is a big financial burden for many people. In fact, Americans owe $1.5 trillion in student loan debt, according to data from the Federal Reserve. While some may find themselves forced to defer or default on your student loans, it's better if you're able to come up with a system to pay them off — and within a modest time frame. There are two primary reasons to pay down your student loan debt in a reasonable amount of time, Maizie Simpson, data and news editor at Credit Karma, told Business Insider via email. "The first has to do with interest: The longer you draw out your repayment period, the more interest you'll end up paying," Simpson said. "The second reason is that the longer you have student loan debt, the longer you might put off big life decisions or making investments in your future, such as starting a family or contributing to a 401(k)." When it comes to paying off your student loans, no matter how intimidating the debt amount is, making an actionable payment plan is key. Here, Elyssa Kirkham, a finance reporter and student loan expert for Student Loan Hero, who paid off a substantial amount of debt herself, took us through a 10-step plan for paying off your student loan debt. 1. Know what you owe Kirkham said that the first step in repaying your debt is to know your debt, especially since you might have taken out several student loans with various lenders. "Many people avoid thinking about or looking at their student debt too closely for a simple reason: Student loans are a huge source of stress," she said. She suggested using the National Student Loan Data System to find any federal student loans you took out while in college. "You can also find both federal and private loans listed on your credit report, and check that you're making the proper payments on time each month," Kirkham said. "In addition, record the current balance and interest rate on each student loan." 2. Triage your student loan debt If you are in danger of or already missing student loan payments, Kirkham advised that you try to triage them. "First, switch federal student loans to an income-driven repayment plan to lower monthly payments," she said. "Then, apply for deferment or forbearance to pause payments if you hit a major financial setback, such as losing a job." Many private student loan lenders also provide an option to defer payments, Kirkham said. "And keep in mind that unless you have Direct Subsidized Loans, deferred student debt will continue to accrue interest and your balance will increase." 3. Assess other financial considerations Kirkham said to consider if other financial goals need attention before you can go gung-ho on student debt. "If you have other debt, like credit card balances, that are costing you more than your student loans are, it might be wise to pay these off first," she said. 4. Get — and keep — your living costs in check Kirkham suggested that you keep your biggest monthly costs as low and affordable as you can. "I got married right out of college, and my husband and I had borrowed over $40,000 to pay for our educations," she said. "We paid off my student loans right away — about $17,000 within three years of graduating — and we just paid off the remaining student loan balance in July 2018!" She said that keeping her lifestyle in check was a huge factor that enabled her to pay off her student loans in a timely manner. "I chose more affordable apartments, for example, and shared a car with my husband for years to put off buying a second vehicle," she said. Kirkham said to take a look at your own monthly spending and rework your budget. "Outline recurring expenses, be critical, and see if there are any you can cut out or trim down," she said. "For instance, can you keep just one of the three video streaming services you're subscribing to? Each dollar you trim from your expenses means an extra dollar you can use to pay off student loan debt." 5. Decide how much to put toward student loans "Once you calculate your set expenses, look at how much is left over," Kirkham said. "This is your discretionary income — money that you are free to decide how and when to spend." She says you should decide how much of your discretionary income you want to put toward making payments on your student loan debt. "It's best to set a firm dollar amount that you can pay each month," she said. Kirkham said that although you feasibly could afford to put all of this toward your student loans, it's important to be realistic. "You want to create a spending plan you will actually stick to," she said. "Try to cut back on this optional spending without making yourself miserable. For example, I learned to DIY what I could: I cooked at home, worked out at home, and even learned to give myself a pretty great self-manicure." 6. Make extra student loan payments each month Make additional student loan payments each month by setting up an automatic, extra payment to go through after each deposit, Kirkham said. "This puts your student debt goal first and keeps it on track, instead of putting it at the mercy of your spending habits." However, she said to check your monthly statements to make sure your extra student loan payments are applied properly. "Some servicers will count them as advance payments instead of applying them to your principal, for example," she said. 7. Target high-interest student loans first with the debt avalanche method You may be familiar with the debt avalanche method of paying off credit cards, in which you pay off the highest-interest card first. Well, the same goes for student loans. "As you pay down this balance, this will also lower the amount of interest you're being charged each month, so your dollars are used to actually lower your principal and get you out of debt," Kirkham said. "If you pay off this first loan, you simply put the amount you were paying (including both the monthly payment and extra payments) toward the student loan with the next-highest interest rate." 8. Refinance certain student loans Another way to target high-interest student loans could be to refinance them, Kirkham said. "Private student loans and PLUS student loans, in particular, tend to have high enough interest rates that it could make sense to refinance," she said. "You'll need to be well-qualified, but taking this step could help you replace your high-interest student debt with a new private student loan at a lower interest rate." 9. Put any windfalls or raises toward your student debt Kirkham suggested looking for "extra" income that you can use to take a chunk out of your student loan balances, such as tax refunds, bonus pay, cash gifts, raises, and income from side hustles. "In particular, focusing on growing your income through earning raises, trading up to a better job, or starting a side hustle can be great ways to generate more money you can use to target student debt," she said. 10. Pace yourself and stay motivated "Paying off student loans is a marathon, not a sprint, and it requires similar skills and strategies," Kirkham said. She said to pace yourself and find a budget and student loan system that works best for you. "Keep your eye on the prize and stay focused on your goal of paying off student loans," she said. "Track your progress and celebrate your wins as you go, from the first extra payment you make to the first student loan you pay off to the last payment you ever send a student loan servicer."  Copyright © 2018 Insider Inc. All rights reserved.

  It is unusual for creditors to be awarded an administrative expense in chapter 7 cases for post-petition fees incurred in discovering assets for the estate.  This was allowed in In re Javed, 2018 Bankr. LEXIS 3135, (Bankr. D.Md., case #17-20067-MMH 11 October 2018).  Here, a took a 2004 examination of an individual chapter 7 debtor prior to the meeting of creditors, thereby assisting in the discovery of prepetition transfers from the debtor to family members.   §503(b)(3) of the code permits requests administrative expense claims for "the actual, necessary expenses ... incurred by ... (D) a creditor, an indenture trustee, an equity security holder, or a committee representing creditors or equity security holders other than a committee appointed under section 1102 of this title, in making a substantial contribution in a case under chapter 9 or 11 of this title."  11 U.S.C. 503(b)(3).  Reasonable fees incurred for such an allowed claim are themselves allowed under 11 U.S.C. 503(b)(4).  The majority of courts reject allowing §503(b)(3) claims for substantial contributions in chapter 7 cases.  "'[w]hen a subsection directly addresses the type of administrative expense sought, the restrictions in it cannot be avoided by appealing to the non-exclusive nature of § 503(b).'" In re Engler, 500 B.R. 163, 174 (Bankr. M.D. Fla. 2013). Other courts take a totality of the circumstances approach,  "[w]e have noted previously that the Bankruptcy Code itself encourages an expansive reading of § 503(b). The statute explains in § 102(3) that the terms '"includes" and "including" are not limiting[.]' ... Consequently, we held that Congress's failure to expressly designate a given expense as allowable under § 503(b) does not mean that it is excluded."   In re Connolly N. Am., LLC, 802 F.3d 810, 816 (6th Cir. 2015).   The risk in a chapter 7 case is that actions by creditors could conflict, undermine, or duplicate efforts by a chapter 7 trustee.  Allowance of such expenses are more reasonable in chapter 9 and 11 cases where the debtor typically remains in control of its assets.   Chapter 7 is intended to provide a breathing spell to stop the race to the courthouse steps.  Thus, there should be a general presumption against awarding substantial contribution claims to creditors in chapter 7 cases, with the burden of proof on the creditor to show that such actions were necessary under the circumstances and provided a substantial benefit to the estate.  The court found that the creditor should not be compensate for actions it took after the active engagement of the chapter 7 trustee, such as sharing its valuation assessment on real property being sold by the trustee.  The increased distribution to the creditor resulting for the higher sales price adequately compensates the creditor for this effort.  On the other hand, the actions taken prior to the active engagement of the trustee streamlined the collection efforts of the trustee in recovering four vehicles for the estate.  The creditor's prepetition litigation and familiarity with the debtor allowed it to move more quickly than the chapter 7 trustee initially, creating efficiencies for the trustee and the estate, and allowing swift recovery of the vehicles by the trustee.  The court thus allowed an administrative expense to the creditor  of $7,987.50 for the attorneys fees incurred for the time period prior to the closing of the final meeting of creditors in the case.  The court noted the trustee did not oppose the application.Michael Barnett hillsboroughbankruptcy.com506 N Armenia Ave., Tampa, FL 33609-1703813 870-3100 

Understanding the bankruptcy process can be a daunting undertaking. However, if you break it down into manageable sections, it can be easier to understand. Keep reading the following sections to learn more about the bankruptcy process and how it applies to your individual situation: Bankruptcy Explained, Bankruptcy Types, Why Should You File Bankruptcy, When Should You File Bankruptcy, and Bankruptcy Costs. The post Understanding Arizona Bankruptcy appeared first on Tucson Bankruptcy Attorney.