As many of our readers are aware, Jim Shenwick, Esq., a New York State licensed Bankruptcy attorney with extensive crypto experience, is representing numerous Celsius customers who have been sued in preference claw back adversary proceedings.  One of the most frequent questions we receive is whether clients should settle with Celsius or defend against the litigation. In this post, we'll explore why settling might be the better option for most defendants.  Why Settlement May Be Preferable  1. Legal Basis: While many clients believe these lawsuits are baseless or unfair, Section 547 of the Bankruptcy Code actually permits a debtor to file preference claw back actions. Our law firm has defended these actions across various industries, including retail, jewelry, garment, and crypto.  2. Cost of Defense: Defending against these actions can be expensive. Costs include:    - Retaining an experienced attorney    - Participating in mediation (paying half the cost)    - Engaging in discovery with the debtor    - Potentially going to trial before a bankruptcy judge  3. Time and Resources: These cases are often difficult and time-consuming to defend. Legal fees, mediation costs, and expert witness fees can range from $25,000 to $100,000. The process could take up to three years to reach trial.  4. Limited Defenses: Common defenses in preference cases include:    - "Ordinary course of business": This defense typically does not apply in crypto cases where most parties invested and withdrew funds in a single transaction.    - "New value": This defense requires that the customer bought more crypto from Celsius after their initial withdrawal. We have not encountered this scenario in our cases.  5. Untested Legal Arguments: Some attorneys and consultants suggest defenses based on Sections 546(c) and 546(g) of the Bankruptcy Code. However, these defenses require a judge to classify crypto as either a commodity, a security or a swap agreement.. While some government agencies such as SEC and the CFTC have taken these positions, we are not aware of any bankruptcy case that has made such a determination.  The Case for Early Settlement  1. Favorable Terms: In our experience, earlier settlements in preference litigation often come with more favorable terms for defendants.  2. Avoiding Escalating Costs for Both Parties: If the debtor is forced to litigate, try the case and prevails, settlements after judgment are likely to be significantly more expensive for defendants then pretrial settlements.  3. Learning from History: In the Madoff case, defendants who chose to litigate rather than settle often ended up losing their cases, paying substantial legal fees and expert witness fees, and having to pay the full judgment amount plus post judgment interest of 9% per anum.  Our Recommendation While each case has its unique facts, we generally recommend that Celsius defendants do the following:  1. Hire an experienced bankruptcy attorney with crypto knowledge. 2. Work towards settling their cases as soon as possible and for the lowest amount achievable.  Our firm has represented many Celsius defendants and has successfully settled numerous cases on favorable terms for our clients.  Contact Information  If you're a Celsius defendant looking to discuss your lawsuit or explore settlement options, please contact: Jim Shenwick, Esq. Email: jshenwick@gmail.com Phone: 917-363-3391  To schedule a 15-minute telephone consultation, please use this link: [Schedule a Call](https://calendly.com/james-shenwick/15min)   Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Each case is unique, and you should consult with a qualified attorney to discuss your specific situation.  

Bankr. E.D.N.C.: In re Lyles- Violation of the Automatic Stay Ed Boltz Fri, 08/30/2024 - 19:40 Summary: The Lyles brought a motion for sanctions against Corey Heating, Air Conditioning, & Plumbing Inc. (Corey Inc.) for violating the automatic stay under 11 U.S.C. § 362, alleging that despite the filing of Chapter 13 bankruptcy case, Corey Inc. continued to send monthly payment invoices to the Lyles for a prepetition debt. The court found that Corey Inc.'s actions constituted a willful violation of the automatic stay, awarding the Debtors' bankruptcy estate $325 in nominal damages and $1,250 in attorney fees. However, the court rejected Mrs. Lyle's personal claims for her own medical damages,  finding that only Mr.  Lyles was "the target of the attempted debt collection" and that even if that was not the case,  Mrs.  Lyle's  layman testimony  did not convincingly tie specific medical costs to the debt collection letters. Commentary: This is the kind of stay violation that bedevils not only debtors but debtors'  attorneys,  specifically the low level disregard and continued collection activity particularly by small creditors.  Mere monthly statements,  which would be of little consequence for many people,  can take on heightened importance for debtors that have been through the sweat box of debt collection  that led to their bankruptcy filing.   Collection demand after the filing of bankruptcy  can leave these battered and bruised debtors to distrust  their own attorneys and the whole system when the automatic stay does not protect them fully.  This can be further exacerbated  when judges struggle to  recognize that debtors are often  eggshell skull victims and not as resilient as others in the face of this kind of debt collection. With proper attribution,  please share this post.    To read a copy of the transcript, please see: Blog comments Attachment Document in_re_lyle.pdf (214.13 KB) Category Eastern District

N.C. Ct. of App.: Myers v. Broome-Edwards- Self-Help Eviction as Unfair and Deceptive Practice Ed Boltz Fri, 08/30/2024 - 14:47 Summary: The North Carolina Court of Appeals affirmed the trial court's decision, which found that the defendants, Sandra Broome-Edwards and Donald Blair, violated the North Carolina Unfair and Deceptive Practices Act (UDPA) by executing a self-help eviction against the plaintiff, Henry Myers. After  multiple eviction actions were dismissed (including one with prejudice),  the defendants locked Mr.  Myers out of his home and disposed of his belongings, actions the court deemed illegal without judicial process.  Despite the defendants' arguments on appeal, the Court of Appeals upheld the trial court’s findings that these actions were unfair and deceptive, and that Blair, acting as Broome-Edwards' agent, was also liable. The court rejected the defendants' claims, including that res judicata should bar the case, as that argument had not been raised prior to the appeal.  The court also found that Blair, as  the agent for Broome-Edwards, was not shielded from liability by respondeat superior, since the Ejectment of Residential Tenants Act expressly applies to agents and landlords. The trial court’s decision to award treble damages and attorney’s fees to Myers was affirmed.  Commentary: Nice work by the folks at Legal Aid of North Carolina. This case also undermines the frequent assertion by  rent-to-own  creditors and other personal property lenders, that the refusal by a consumer to surrender collateral absent a claim and delivery order,  insulates the creditor's self-help repossessions against any breach of the peace (including the employment of off-duty law enforcement). With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document myers_v._broome-edwards.pdf (125.33 KB) Category NC Court of Appeals

E.D.N.C.: Hagins v. Carrington Mortgage- Frivolity Review Ed Boltz Tue, 08/27/2024 - 16:56 Summary: The court reviewed Marquita Hagins' pro se application to proceed in forma pauperis  and her associated complaint. The court allowed her application solely for the purpose of conducting a frivolity review, as required under 28 U.S.C. § 1915(e)(2)(B). During this review, the court found while a pro se  plaintiff is entitled to more leeway than one represented by an attorney,   Hagins’ complaint, which alleged fraudulent conveyance of a mortgage deed and other violations, lacked sufficient factual basis to support her claims under the cited federal statutes, such as the Fair Debt Collection Practices Act (FDCPA) and various criminal statutes that do not provide for private rights of action.  Additionally, the court found no valid basis for federal jurisdiction or any clear state law claims to support diversity jurisdiction. As a result, the magistrate judge recommended that Hagins’ complaint be dismissed without prejudice, meaning she could potentially refile if she corrected the deficiencies. Hagins was given until June 5, 2024, to file objections and the failure to do so could result in the presiding district judge adopting the recommendation and barring her from appealing the decision. Commentary: With no further filings,  this case was then dismissed on July 16,  2024. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document hagins_v._carrington_mortgage.pdf (217.46 KB) Category Eastern District

Law Review: Sousa, Michael D., Seizing Welfare from the Bankrupt (August 22, 2024). U Denver Legal Studies Research Paper Forthcoming, University of Cincinnati Law Review, Volume 93, No. 2., 2024, Ed Boltz Mon, 08/26/2024 - 20:10 Available at:  https://ssrn.com/abstract=4934050   Abstract: The earned income tax credit (EITC) is currently the largest means-tested antipoverty program in the United States that assists low-income working families surviving along the edges of poverty. A central component of the national welfare system, the EITC has lifted millions of families with children out of poverty and has produced myriad benefits for their everyday lives. But most of the poor and near-poor endure in the low-wage labor market and often lead turbulent financial lives plagued by precarious employment along with deleterious material and psychological constraints in budgeting for daily expenses. For the segment of these families also burdened by unwieldy debts, bankruptcy laws offer a fresh financial start in life, in part by allowing debtors to exempt certain property from the reach of creditors. However, in most jurisdictions EITC refunds are not exemptible in bankruptcy and can be seized by trustees to both enrich themselves and to distribute to creditors, while many middle-class assets are shielded entirely. Adopting a critical theory framework, this Article maintains that capturing EITC refunds from low-income working families who resort to filing bankruptcy is inequitable and perpetuates class inequality. Low-income working families are doubly exploited in our harsh economy, first by the low-wage labor market and second by the bankruptcy system. I argue for the implementation of statutory changes to fully protect EITC refunds in bankruptcy as a matter of fundamental equity. Commentary: Paired with the recent Bellido opinion from the M.D.N.C. bankruptcy court (blog post forthcoming), the examination in this article of the lack of protection for the EITC  is a real indictment of how  bankruptcy courts  universally assert that they are giving   "a  liberal presumption in favor of claimed exemptions"  but nonetheless repeatedly allow Trustees to seize these funds from the poorest of debtors.  The author is also unfortunately correct that, despite various governmental agencies,  from the Department of Justice or the U.S. Trustee Program to more locally the Bankruptcy Administrators (all of whom could direct Trustees,  as they did with COVID relief benefits,  not to administer EITC funds), mouthing concerns for access to justice in bankruptcy, the only real solution will be for Congress  (or state legislatures) to act.  This could be done by  simply excluding  the EITC from the bankruptcy estate like 401k plans,  providing an broad exemption in all states (regardless of having those opted-out) as is done for Social Security, an/or excluding it from the definition of Disposable Monthly Income. With proper attribution,  please share this post.  Blog comments Category Law Reviews & Studies

Startups Are Booming--but So Are Bankruptcies. See the article at Inc. https://www.inc.com/chris-morris/bankruptcies-vc-backed-startups-rising-data.htmlJim Shenwick, Esq  917 363 3391  jshenwick@gmail.com Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt!

   Client Review below:" I contacted Jim seeking counsel as one of the 2000 defendants in the Celsius crypto bankruptcy clawback case. After a few short conversations with him, I quickly knew he was the right person for the job. Once the retainer was paid, Jim dropped everything and fully dedicated himself to my case. In just a matter of a few days, Jim had negotiated a very favorable settlement. I highly recommend Jim if you find yourself in a similar situation and are in need of representation" My pleasure to help! Thanksfor the review. Jim

Join the Chapter 13 Academy‘s free webinar Thursday August 15 at 2 pm EDT for the inside scoop on claims process and pitfalls from a pair of experienced Chapter 13 trustees. You can submit questions in advance when you register. Did I say it’s free? The post Navigating Claims in Chapter 13 appeared first on Bankruptcy Mastery.

I’ll be gone for two weeks   I’m leaving for the longest vacation since I became a Virginia lawyer in 1985. If you want to talk to a qualified bankruptcy lawyer right away, I can suggest these two.  Michael Sandler, in Woodbridge.  Or Ashley Morgan, in Herndon. I’d like to talk to you the week of August 26 If you can wait, Vanessa@robertweed.com will get in touch with you on Thursday August 22 or Friday August 23 to schedule a Zoom appointment for the following week. For the most complete consultation, please fill in my Be Happy form.  When you send in the Be Happy, Vanessa will give you priority scheduling as soon as I get back. We’re going to Paris and Ruoen. My wife’s novel begins in medieval Paris My wife’s PR business did not survive Covid. So she’s writing a novel. Part of it takes place in Paris and Ruoen, so we are going to visit.  It’s right after the Olympics, so it should be less crowded and maybe more fun. For most people, bankruptcy works Here’s more info on the five ways bankruptcy gives you a new start.   The post I’m out until August 26 appeared first on Robert Weed Bankruptcy Attorney.

I’ll be gone for two weeks   I’m leaving for the longest vacation since I became a Virginia lawyer in 1985. If you want to talk to a qualified bankruptcy lawyer right away, I can suggest these two.  Michael Sandler, in Woodbridge.  Or Ashley Morgan, in Herndon. I’d like to talk to you the week of August 26 If you can wait, Vanessa@robertweed.com will get in touch with you on Thursday August 22 or Friday August 23 to schedule a Zoom appointment for the following week. For the most complete consultation, please fill in my Be Happy form.  When you send in the Be Happy, Vanessa will give you priority scheduling as soon as I get back. We’re going to Paris and Ruoen. My wife’s novel begins in medieval Paris My wife’s PR business did not survive Covid. So she’s writing a novel. Part of it takes place in Paris and Ruoen, so we are going to visit.  It’s right after the Olympics, so it should be less crowded and maybe more fun. For most people, bankruptcy works Here’s more info on the five ways bankruptcy gives you a new start.   The post I’m out until August 26 appeared first on Robert Weed Bankruptcy Attorney.