Two recent cases suggest that broadcasters who advertise a debtor’s fraudulent business may be vulnerable to § 548 claims. If the broadcaster received notice of the debtor’s fraudulent business practices, it may lack good faith. Yet a recent decision from the Fifth Circuit suggests that even if good faith exists, advertising that grew the debtor’s fraud does not provide reasonably equivalent value. In this first of two articles, good faith is addressed.
It’s January 2011. I’m sitting in a conference room at the Federal Courthouse in Omaha (the building is new and beautiful; you should visit it sometime). It’s a “brown-bag luncheon” for the local bankruptcy bench and bar. We’re on the last agenda item (open forum), and the judge asks for input. Having recently completed a couple of state court mediations, I raise my hand and say, “What about using mediations in bankruptcy?” Next thing that happens: I’m chair of the Nebraska Bankruptcy Court Mediation Committee.
More and more, alternative dispute resolution is providing an efficient methodology for reducing the costs of bankruptcy proceedings and bankruptcy litigation. It was not that long ago that bankruptcy lawyers inherently believed that they were capable of settling their own cases and did not need outside help. (The authors were among those people.)
At the 33rd Annual Spring Meeting in Washington, D.C., ABI presented Professor Michelle M. Harner of the University of Maryland Francis King Carey School of Law with its highest membership award, the ABI Annual Service Award. As the official Reporter for the ABI Commission to Study the Reform of Chapter 11, Prof. Harner supported the Commission in all aspects of its vast effort to study current practice under chapter 11 and make recommendations for legislative reform.
On March 13, 2015, on remand from the Fifth Circuit, the U.S. Bankruptcy Court for the Western District of Texas allowed a trustee’s claim for a foreclosure commission under 11 U.S.C. § 502, but the court denied the mortgagee’s § 502 attorneys’ fees claim.[1] Both claims had previously been found unreasonable under § 506.
[1]Bankruptcy professionals work in an area that, by its very nature, makes the fee process lengthily transparent, subject to rigorous oversight and, in some cases, highly contentious. Even if fees are awarded, collecting them can be difficult. In a few (thankfully) rare cases, even after fees have been awarded and paid on an interim basis, the bankruptcy case becomes administratively insolvent and the professionals may have to disgorge their previously paid fees.[2]
In a recent decision,[1] the U.S. Bankruptcy Court for the Northern District of California granted an adversary proceeding for the defendant’s motion for allowance and payment of a secured claim for attorneys’ fees incurred defending the adversary proceeding. While this may be just an isolated case, the decision could mark the start of a new wave of defendants prophylactically crafting contracts with attorneys’ fees provisions related to adversary proceedings, and attempting to enforce them.
In the U.S. and in most developed countries, adherence to ethical standards is the accepted business practice. This is not the case in many developing markets, however. Consequently, ethical dilemmas can arise between conflicting standards. It is therefore important to educate clients and their stakeholders about the long-term financial benefits of avoiding ethical pitfalls in their international business dealings.
Atlantic City, N.J.’s pride has become its downfall. In the past few years, many of the city’s casinos have closed down or entered bankruptcy. Consequently, the city itself, which is heavily dependent on casino revenue, has taken a severe financial hit.
Atlantic City’s decline is due in part to the legalization of gambling and casino operations in neighboring states. Since the town’s chief draw for many years has been gambling, there is now less of a reason to visit Atlantic City if other cities with more diverse attractions (like Philadelphia and Baltimore) also offer luxurious casinos and good gambling opportunities.
Words can sometimes be deceiving. This is one of the lessons learned by the debtor in the recent Tayfur decision. Although the case ultimately applied a different subsection of § 365 of the Bankruptcy Code, the Third Circuit underscored an important fact in oil and gas law: A mineral lease is not always a true lease. Thus, a mineral lease will not always fall within the ambit of § 365, and therefore it may not always be rejected in bankruptcy.
