The economy continues to struggle to mount a real recovery. Economists and banking experts argue about how to maintain the little bit of momentum we’ve seen over the last six months. From our view as Virginia creditors rights lawyers, we think there is a coming wave of preference claims that will surprise a lot of companies that were thanking their (more…)

So Maybe We Now Know When A Claim Arises, But Can A Debtor Discharge The Claim?

Although not admitting that it succumb to acknowledged “universal disapproval” of its 1984 decision in Avellino & Bienes v. M. Frenville Co. (Matter of M. Frenville Co) 744 F3d 332 (3rd Cir. 1984), the Third Circuit Court of Appeals did, in fact, reverse Frenville on June 2, 2010, with its en banc decision In re: Grossman’s Inc. et al., Debtors JELD-WEN f/k/a (more…)

On March 23, 2010, the U.S. Supreme Court issued a 9 – 0 opinion in United Student Aid Funds, v. Espinosa  (08-1134) in which the Court affirmed the 9th Circuit’s holding that a chapter 13 debtor can obtain a discharge of a student loan by including it in a chapter 13 plan, if the creditor fails to object after notice and opportunity to do so, and the BK court enters an order confirming the chapter 13 plan. (more…)

In today’s economic environment, businesses are looking to modify and re-structure debt to pull through until the economy turns around. Rather than allowing so many loans to go bad, lenders are working with debtors to re-structure loans in a manner that allows the debtor to stay in business. For example, a lender may allow a debtor to cease making payments for six months in exchange for increasing the interest rate for the life of the loan. Another example would be a lender who might agree to reduce the principal amount of a loan increasing the probability of receiving some return of capital rather than risking that the borrower would stop paying altogether. (more…)

Just this week, another big financial company — CIT Small Business Lending Corporation — filed bankruptcy. CIT filed a “prepackaged” filing, in which terms for restructuring are negotiated before the bankruptcy case is filed. In more conventional bankruptcy filings, it can take a year or more before a plan is confirmed; in a pre-pak, filers may have a plan confirmed in a month or two.

Having a confirmed plan, of course, achieves the desired reorganization, and allows the company to continue in business under a new business plan or model, with workable debt load and other stable financial underpinnings. The faith of investors and vendors must be strong for the enterprise to exit and prosper. During the negotiations prior to the filing, the terms can be worked out in a mutually-acceptable manner, rather than with the heavy leverage that courts often apply when they control whether a firm exits intact or is dissolved. (more…)

The first two provisions of the Credit Card Accountability, Responsibility, and Disclosure (“CARD”) Act of 2009 went into effect Thursday, August 20, 2009.  The CARD Act is designed to protect consumers from unfair and deceptive practices by credit card companies.  (more…)