Celsius Bankruptcy Claw Back Adversary Proceedings in SDNY Bankruptcy Court Settlement UpdateJim Shenwick, Esq. is proud to announce that he just settled another Celsius Bankruptcy Claw Back Adversary Proceedings in the SDNY.The client had been sued for over $700,000. Based on a review of Exhibit A to the Complaint, which listed the transactions to be clawed back, we discovered that Exhibit A overstated the transactions in the relevant 90-day period, the cryptocurrency valuation was incorrect, and the client had a "New Value" defense.When all was settled, the client paid back a small percentage of the $700,000 sought.Clients who are being sued for preference clawback's should contact Jim Shenwick, EsqJim 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!

4th Cir.: David v. King- Former Trustee Has No Authority to Act Following Conversion, Including to Seek Compensation for Professionals Ed Boltz Tue, 07/30/2024 - 17:19 Summary: Byron David filed for Chapter 7 bankruptcy in July 2018, with Donald King appointed as the Chapter 7 Trustee.  While still a Chapter 7 case,  King obtained approval under 11 U.S.C. § 327 to employ his own law firm to represent him as the Trustee.    The case was converted to Chapter 11 in April 2019, with King again appointed as the Chapter 11 Trustee. King did not, however,  apply for court approval to retain his law firm for Chapter 11 work.  The case was converted again, this time  to Chapter 13 in May 2020, ending King’s role as trustee.  After the final conversion, King sought retroactive approval to employ the law firm for work done during the Chapter 11 phase. The Court of Appeals determined that "the trustee" (Emphasis  kinda in the original) in § 327(a) refers to the currently serving, active singular trustee, not a former trustee.  Upon conversion of the bankruptcy case, King’s authority to act as trustee was terminated under § 348(e), meaning he could not apply to retroactively employ professionals.  The court rejected King’s arguments based on equity and previous cases where current trustees were allowed to file after-the-fact applications, emphasizing that those cases did not involve former trustees. Judge Wilkinson, dissenting, argues that bankruptcy courts, recognized as courts of equity, should retain the discretion to grant after-the-fact authorizations for professional services performed under § 327(a). He disagrees with the majority's interpretation that limits such authority to current trustees only.  Commentary: While the impact of this case is likely to be largely just an admonition to  trustees and their attorneys to not make this same $43,668  mistake as the Chapter 7/11 trustee made here,  it does also both indicate that the conversion of a case to another chapter should serve as a "hard stop" for the previous trustee (with even  post-conversion obligations and residual duties almost certainly being administrative  "trustee time" and not legal services)  but also that the possibility of conversion should always restrain trustees from being so overly hungry or adversarial that the debtor seeks escape. And, as this opinion also relies on Lamie v. U.S. Tr., 540 U.S. 526 (2004),  which notoriously departed from long-standing pre-Code bankruptcy practice that allowed the debtor's attorney to be paid from assets of the estate because of scrivener's errors,  perhaps trustees,  which have previously shown little interest in helping the debtor's bar with a legislative correction,  might now see some need for supporting that sort of change from Congress for everyone's benefit.  (Including a fair and reasonable fix for Chapter 13 trustees in cases dismissed before confirmation.)  I would be happy to participate in that  discussion. With proper attribution,  please share this post.  Blog comments Category 4th Circuit Court of Appeals

E.D.N.C.: Walker v. LVNV-Iqbal/Twombley Do Not Apply to Affirmative Defenses Ed Boltz Tue, 07/30/2024 - 17:03 Summary: Walker moved pursuant to Federal Rule of Civil Procedure 12(f) to strike the affirmative defenses raised by LVNV,  arguing that the Iqbal/Twombley pleading standards apply to affirmative defenses.  Finding no controlling case law,  the court rejected this  relying on Liles v. Wyman (E.D.N.C.  2019) as  motions to strike " are generally viewed with disfavor because striking a portion of a pleading is a drastic remedy". Commentary: While technically accurate in stating that there is no controlling authority holding affirmative defenses to the Iqbal/Twombley standard,  the   Lilles  case does cite to Racick v. Dominion L. Assocs., 270 F.R.D. 228, 230 (E.D.N.C. 2010),  describing it as "collecting cases",  when in fact there the district court struck 11 out of 14 affirmative defenses for failing to comply with Iqbal/Twombley  pleading requirements. Based on Walker,  however,  it would seem that the fairly regular grumble by judges that responses to motions or other pleading need specificity might not,  while helpful in the care and feeding of happy black robes,  actually be required. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document walker_v_lvnv.pdf (661.23 KB) Document racick_v_dominion_law.pdf (676.21 KB) Category Eastern District

      Celsius Bankruptcy Claw Back Adversary Proceedings in SDNY Bankruptcy Court   Celsius Network LLC, the crypto company, filed for Chapter 11 bankruptcy. Pursuant to their confirmed Chapter 11 plan, they have commenced 2,000 adversary proceedings in the Southern District of New York, seeking to claw back monies withdrawn by Celsius customers 90 days prior to the bankruptcy filing or from April 14, 2022, through July 13, 2022 (the “Preference Period”).The 2,000 lawsuits are being brought by ASK LP (Debtor’s preference litigation counsel)Jim Shenwick, Esq. has defended over 100 adversary proceedings for various causes of action, including preferences and fraudulent conveyances. He is familiar with cryptocurrency and has a working relationship with ASK LP.Jim Shenwick was recently retained by a client to defend against a Celsius lawsuit seeking to claw back over $200,000 withdrawn from Celsius prior to the bankruptcy filing. We have commenced settlement negotiations and are optimistic about a very favorable settlement for the client.We have also been approached by another former Celsius customer who was sued in a clawback action.Clients who have been sued or have questions about the clawback lawsuits are advised to contact Jim Shenwick as soon as possible to discuss their options or to seek representation in these cases.Jim Shenwick can be reached at 917 -363-3391 or at jshenwick@gmail.com Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15min 

Chapter 7 bankruptcy is used by individuals under extreme financial burdens to pay off their debts. Because Chapter 7 bankruptcy liquidates your assets to pay off those debts, buying stock during this time might be difficult. When you file for bankruptcy, you will need to give a full accounting of your finances and assets, which will be placed under the authority of the bankruptcy court. If you have money to spend in your bank account, the court will likely not let you use it to buy stocks if you still have debts to satisfy. However, you might have justifiable reasons for doing so, which our attorneys can help argue to the court. We can also explore options to help keep some of the stocks you already own before filing for Chapter 7 bankruptcy. For a free case consultation with our bankruptcy lawyers, contact Young, Marr, Mallis & Deane at (215) 701-6519. Can I Invest in Stocks After Filing for Chapter 7 Bankruptcy? Filing for Chapter 7 bankruptcy can help individuals facing significant financial challenges get out from under the pressure of their debts and move on with their lives. While Chapter 7 bankruptcy is helpful, many people do not understand how filing for it will impact their assets, especially if they want to buy stocks. This has become a much more common issue over the years for those filing for bankruptcy, as online apps give them easier access to trade on various stock markets. Unfortunately, though, Chapter 7 bankruptcy can impact any property you come into possession of after filing for it. Chapter 7 bankruptcy is referred to as “liquidation” bankruptcy because the court sells, or “liquidates,” some of your assets to satisfy your debts. When you file for Chapter 7 bankruptcy, the court will appoint a trustee to oversee the case. One of the first steps the trustee takes after being appointed is to assess the assets you currently possess and separate them into exempt and non-exempt property. Exempt property typically includes your home, retirement accounts, and Social Security benefits and cannot be liquidated to satisfy your debts. Non-exempt property, on the other hand, is everything else you own, including cars, vacation homes, personal property, and stocks. These assets are fair game to be liquidated in your case. If you acquire any assets after starting your bankruptcy claim, you are legally required to report it to the assigned trustee. For instance, if you receive an inheritance, you must report it. Most states give trustees several years to discover hidden assets and claim them, known as the “lookback” period. Stocks are different, though. Buying stocks means you have the money to make investments. If you have the money to invest, the court will want that money put towards your bankruptcy debt, not gambling in the stock market, so it will likely not let you invest. Our bankruptcy attorneys can review your case and determine what arguments we can make to the court. We can also explore options with you that can help protect stocks you already own. How Can I Protect Stocks that I Already Owned Before Filing for Chapter 7 Bankruptcy? As part of the Chapter 7 bankruptcy process, filers might be able to claim various exemptions to keep possession of some of their non-exempt personal property, including stocks. However, which exemptions will be available to you and how much they will protect you will depend on the state in which you are filing for bankruptcy. The following will help you understand how you can exempt personal property like your stocks during bankruptcy and what alternatives you have if your state does not exempt investments: State Personal Property Bankruptcy Exemptions Some states allow you to protect all of your stocks from being acquired during bankruptcy. For example, New Jersey allows those filing for Chapter 7 bankruptcy to keep 100% of their stocks and cannot be seized during any civil process in the state courts, according to N.J.S.A. § 2A:17-19. Maryland’s “wildcard” personal property exemption, on the other hand, only allows filers to protect up to $5,000 in personal property, according to Md. Code, Cts. & Jud. Proc. Art., § 11-504(f)(1)(i)(1). However, Maryland permits another $6,000 in personal property to also be claimed as exempt under a general wildcard exemption, as per § 11-504(b)(6). Not every state has an exemption for personal property or very good ones, so you will want to review your case with our team before deciding which exemptions to apply for. Pennsylvania bars individuals from claiming any exemptions for stocks during bankruptcy under 42 Pa.C.S. § 8124. In fact, Chapter 7 claimants can only protect up to $300 of personal property under Pennsylvania’s wildcard exemption, according to 42 Pa.C.S. § 8123(a). Thus, you will likely not have any coverage left over to protect your stocks after protecting other assets. Federal Personal Property Bankruptcy Exemptions If you are filing Chapter 7 bankruptcy in a state with inadequate or nonexistent exemptions for your stocks, we can help determine if the federal exemptions would offer more relief than your state’s. When federal exemptions are available, a debtor can claim up to $15,000 in property to be exempt from bankruptcy proceedings, according to 11 U.S.C. § 522(d)(1). However, most of the money in that exemption is reserved for real property, like your home. The federal wildcard exemption under 11 U.S.C. § 522(d)(5) does allow debtors to claim $800 in any personal property, plus up to $7,500 of whatever amount is left over from the $15,000 exemption, potentially protecting up to $8,300 in stocks. Can I Sell Stocks Before Filing for Chapter 7 Bankruptcy? If you are instead considering selling some of your stocks before filing for Chapter 7 bankruptcy rather than buying them, you will want to be careful. The court looks carefully at any financial transactions that occur prior to filing for bankruptcy and might consider selling stocks as attempting to hide assets for it and your creditors. Of course, selling your stocks might have been the only way for you to deal with the financial burdens that led you to file for bankruptcy in the first place. You might also sell your stocks before filing for bankruptcy to cover basic living expenses, like food, rent, and utilities. This is fine as long as your expenses can be justified to the court. If the stocks are sold to family or friends or sold for less than they are worth, the court could determine you were trying to hide them and dismiss your case. Worse, you will likely be charged with a crime for defrauding the court. Our Chapter 7 Bankruptcy Attorneys Can Help You with Your Case Today Our Philadelphia bankruptcy attorneys at Young, Marr, Mallis & Deane are ready to provide you with a free case review when you call (215) 701-6519.

   Commercial Chapter 11 Bankruptcies see a 34% increase in the first half of 2024. See  https://www.conchovalleyhomepage.com/news/national-news/commercial-chapter-11-bankrupcies-see-a-34-increase-in-the-first-half-of-2024/amp/ Jim 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!

A Day of Historic Wins We knew we had a great day at the Lakelaw office when our friends and fellow attorneys were congratulating us on our back-to-back victories. So we thought we should tell our friends about it, too.  Bankruptcy Court Case Win #1: Green v. Leibowitz On Tuesday, July 16, 2024, the Seventh Circuit Court of Appeals issued its opinion in Green v. Leibowitz, affirming David Leibowitz’s position as the bankruptcy trustee that a Canadian retirement plan was subject to creditors’ claims and not exempt under Illinois law.This decision culminated two years of litigation in the bankruptcy court, the district court, and finally, the Seventh Circuit Court of Appeals. The Seventh Circuit even cited another Lakelaw win, People ex rel Leibowitz v. Family Vision Services, an Illinois Supreme Court decision that David Leibowitz won, in support of its decision.Before becoming a bankruptcy lawyer, David Leibowitz started his career as a clerk to a judge and former professor in the Illinois Appellate Court. David has successfully appealed in the Illinois Appellate Court and the Illinois Supreme Court, as well as bankruptcy appeals in the federal district court and appeals in the Seventh Circuit Court of Appeals. He has been on the brief in two matters in the United States Supreme Court.Get a free confidential consultation today.  Bankruptcy Court Case Win #2: Chapter 11 Reorganization Our winning streak continued later that afternoon. David Leibowitz asked the bankruptcy court to stop lawsuits against the principals of his Chapter 11 debtor client, so that they could focus on reorganizing their company in Chapter 11. Most of David’s friends discouraged him from trying this because they said a bankruptcy court would never grant this relief. But David knew this particular judge had granted precisely this sort of motion in another case 14 years ago. And despite opposition from 4 opponents and over 2 hours of their argument, Judge Cox issued a written, published opinion, enjoining or stopping, the lawsuits against the debtor’s principals so they could formulate their Chapter 11 bankruptcy plan without outside interference and costs.This victory came only two weeks after David filed his emergency motion for an injunction. Sometimes, justice can be swift as well as effective.  Secure Your Victory with Our Award-Winning Law Firm At Lakelaw, you can count on being represented fearlessly and passionately. Named one of the best bankruptcy law firms in the country by Best Lawyers, Super Lawyers, U.S. News & World Report, Martindale-Hubbell, and Lawdragon, we take great pride in providing all of our clients with razor-sharp and ethically sound legal services.Safely navigate personal and business bankruptcy with lawyers who care.  Get a Free Confidential ConsultationThe post Dual Victories: Lakelaw Wins 2 Important Court Cases in 1 Day appeared first on Lakelaw.

Law Review: Lois R. Lupica & Zach Neumann, Thwarting the Inevitability of Over-Indebtedness, 40 Emory Bankr. Dev. J. 155 (2024). Ed Boltz Mon, 07/22/2024 - 19:01 Available at:   https://scholarlycommons.law.emory.edu/ebdj/vol40/iss2/1 Abstract: This Article focuses on how the law’s relationship with economic and political systems has dire effects upon communities at the local level. By challenging the ineffectiveness of these existing systems, this Article spotlights the stark inequalities in our society. This Article recognizes the bankruptcy system’s limitation as a remedy for debt relief and observes that bankruptcy is not a substitute for effective policies and programs that help the poor navigate financial crises. Part I analyzes a case study of a single household to illustrate two central problems at issue in this Article: first, the barriers erected by public- and private benefit system balkanization; second, low-income families’ lack of power in their housing, credit, and transportation transactions. Part II discusses the financial challenges faced by low-income families as they struggle to pay for housing, health care, and transportation with inadequate wages. This Part also articulates the relationship between the markets for housing, health care, transportation, and consumer credit with the inevitable consequence of low income families incurring high levels of high-cost debt when they cannot pay their bills. Part III asks an important question: Whose interests were served when the rules governing housing, credit, health care, and transportation were enacted and when the system for benefit access was designed? Part IV explores the extent to which lawyers can aid people in dire financial circumstances. Part V scrutinizes the role of the bankruptcy system through the LPE lens. Part VI offers suggestions for recalibrating the power imbalances that harm many low-income families in exigent financial circumstances. Part VII then discusses programs and strategies that can help stabilize families who emerge from financial crises. Finally, this Article concludes by reiterating the importance of challenging existing political and economic structures to smooth out the uneven landscape of inequality.  Commentary: Bankruptcy can be a solution for too much debt,  but it is not a solution for too little income. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document thwarting_the_inevitability_of_over-indebtedness_compressed.pdf (669.29 KB) Category Law Reviews & Studies

Law Review: Ishaq Kundawala, Access to Justice: A Roadmap to Creating and Launching Consumer Bankruptcy Experiential Programs in Law Schools, 40 EMORY BANKR. DEV. J. 411 (2024). Ed Boltz Mon, 07/22/2024 - 18:53 Available at:  https://scholarlycommons.law.emory.edu/ebdj/vol40/iss3/4  Abstract: It is increasingly difficult for people who need consumer bankruptcy relief to access it. Ironically, many of the people who most need it cannot afford it, and oftentimes they come from underserved communities. Large-scale solutions to this access to consumer bankruptcy problem have been discussed, and even proposed, but not yet implemented. While law schools cannot solve the access problem without congressional intervention, they can, at least, take steps to improve the status quo. One way law schools can address this problem is to create experiential programs focusing on consumer bankruptcy.  These types of programs offer a dual benefit. They offer a partial solution to the access problem by providing free or low-cost bankruptcy assistance to qualified members of the community on one hand, and practical learning opportunities for law students on the other. Right now, only seventeen law schools approved by the American Bar Association (the “ABA”) across nine states offer consumer bankruptcy experiential opportunities to their students. There is incredible potential for growth in this area. To be more specific, there are 180 other ABA-approved law schools that do not currently have such a program. By creating one, these law schools can add to the experiential   opportunities available to their students while simultaneously increasing their communities’ access to bankruptcy relief.  Ideally, each law school in the country should offer limited bankruptcy legal services to their communities. In Part I of this Essay, I explore the role of consumer bankruptcy experiential programs in law schools. These programs offer an ideal mix of transactional and litigation experiences, which help students become more practice-ready upon graduation while giving back to their community. In Part II of this Essay, I offer to law schools my tried-and-true formula for creating consumer bankruptcy experiential programs. I have created two of these programs to date, one in Florida, and the other more recently in Georgia. These programs can be surprisingly resource-neutral and quite simple for law schools to implement. If this Essay inspires just one more law school to create their own consumer bankruptcy program, then I have accomplished my central purpose for writing it.   Commentary: In addition to the benefits that the author identifies as resulting from law school bankruptcy clinics,  there are certainly other others, including that not only would law student learn about representing real-life debtors,  but this would increase the access of law school professors to actual debtors and cases as well,  perhaps bringing them down from their often remote Ivory Tower perspectives, which often fail to match actual bankruptcy law or practice. Perhaps by exposing more law students to consumer bankruptcy  with its challenges,  both intellectual and personal, and its joys, again both intellectual and personal,  this could serve to increase the number of young and diverse attorneys that are interested in this area of the law. The Bankruptcy IDEA Consortium might find that assisting in starting clinics to be an excellent way of working towards its  "continuing efforts to achieve a diverse bankruptcy community, promote diversity, equity, and inclusion, and facilitate opportunities for current and future bankruptcy practitioners." (Especially beyond just the Chapter 11 bar.) Law students will need, to comply with ABA and state bar requirements,  the assistance and oversight of practicing consumer attorneys.  And where  the author recognized that finding  consumer bankruptcy attorneys to assist is "much easier said than done",  perhaps the best place to start would be with NACBA,  as that is where the best consumer  bankruptcy attorneys can be found. (I would be more than happy to be a first point of contact.)  Even then,  many consumer bankruptcy attorneys might,  despite the best of  altruistic inclinations,  be hesitant to not only expend time serving as mentor,  but also fear that they are both only training the future competition but also diverting potential current (and paying) clients to a free clinic.  These concerns can,  however, be not just assuaged but flipped,  since  as these clinics should, as the paper recognizes,  focus on  assisting clients that are " suitable for non-complex, no-asset chapter 7 cases" , there will be many potential clients that neither qualify for Chapter 7,  whether because of assets,  income or other reason,  or would be better served by filing Chapter 13,  whether to save a house from foreclosure,  to obtain the more favorable mean test and liquidation analyses,  etc.    Those clients with either complicated Chapter 7 cases or in need of a Chapter 13 bankruptcy could and should be referred to the supervising consumer attorneys.   With proper attribution,  please share this post.    To read a copy of the transcript, please see: Blog comments Attachment Document schools_consumer_bankruptcy_experiential_programs_in_law_schools.pdf (669.44 KB) Category Law Reviews & Studies

Law Review (Economics): Bruze, Gustaf and Hilsløv, Alexander and Maibom, Jonas, The Long-Run Effects of Individual Debt Relief. IZA Discussion Paper No. 17047 Stafford Patterson Mon, 07/22/2024 - 18:45 Available at: https://docs.iza.org/dp17047.pdf Abstract: Individuals with extensive debt may be granted debt relief in court. We provide a comprehensive evaluation of the Danish debt relief program with data from court records linked to nationwide register data. Using event-study methods and quasi-random assignment of applicants to court trustees with varying admission rates, we show that debt relief leads to a large increase in earned income, employment, assets, real estate, secured debt, home ownership, and wealth that persists for more than 25 years after a court ruling. The net transition of workers into employment accounts for two thirds of the increase in earned income.  Commentary: While this research examined the long-term consequences of debt for Danish consumers granted debt relief,  as consumer bankruptcy in the United States is "considered more debtor-friendly than in Continental Europe" (although the social safety net in Europe and especially Denmark is much greater),  many of the findings in this paper likely hold true here as well. (Although further research would be welcome, but I suspect American bankruptcy researchers are jealous of the amount of statistical data available from Danish cases.)   These finding include,  that consumer granted debt relief: Have 26% higher earned income, likely because consumers that can keep their income,  rather than paying it to creditors, have greater incentives to work+; Are 11.7 % more likely to be employed; Are 12.2 % less likely to be out of the labor force; Are 25% more likely to own a house or an apartment,  Accumulate more assets corresponding to an increase of about 200% of the follow-up mean; Have less unsecured debt; Have more secured debt, i.e. they have presumably been able to obtain credit to purchase vehicles and/or home, ; and  Accumulate more wealth relative to debtors who are denied debt relief.    These findings should guide  law and policy makers in decisions about how and when to grant or expand debt relief,  including not only specifically bankruptcy regimes but also related property exemptions,  debt collection protections,  etc., as those would all seem to have tremendous long-term benefits for consumers.  Further,  these statistics can be used to show consumers,  who often file bankruptcy far less frequently than  rational economic theory would predict, many of the long-term benefits for themselves and their families of what can initially be a costy (psychologically and  financially) decision. Also see:  Jason Kilborn at Credit Slips  Long-run (positive) effects of personal debt relief With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document the_long-run_effects_of_individual_debt_relief_compressed-1-50.pdf (523.33 KB) Document the_long-run_effects_of_individual_debt_relief_compressed-51-100.pdf (708.15 KB)