Emory Bankruptcy Developments Journal

Volume 32Issue 2
The Thirteenth Annual Emory Bankruptcy Developments Journal Symposium


Chelsea Deppert | 32 Emory Bankr. Dev. J. 265 (2016)

The Emory Bankruptcy Developments Journal hosted its Thirteenth Annual Symposium on February 25, 2016. The Consumer Panel discussed recent developments in bankruptcy regulation, including developments regarding the FDCPA and the CFPB. The Corporate Panel discussed the ABI Commission’s Report on the Reform of Chapter 11.

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Corporate Bankruptcy Panel: ABI Commission’s Report on the Reform of Chapter 11: Small and Medium Businesses, Sales of Assets, Financing, and Plans

Michelle M. Harner, G. Eric Brunstad, Jr., The Honorable Wendy L. Hagenau, Melissa B. Jacoby | 32 Emory Bankr. Dev. J. 267 (2016)

The Corporate Panel focused on the Report’s sections discussing small and mediums businesses, sales of assets, financing, and plans.

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Consumer Bankruptcy Panel: Recent Developments in Bankruptcy Regulation: Mortgage Servicing Rules, the FDCPA, and the CFPB

Frederick Tung, Alane A. Becket, Sarah Bolling Mancini, Nick Wooten | 32 Emory Bankr. Dev. J. 303 (2016)

The Consumer Panel discussed recent developments in bankruptcy regulation, including developments regarding the FDCPA, the CFPB, and mortgage servicing rules under RESPA and TILA.

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The Waterfall of Tiers: A Relocation Cost-Based Theory of Municipal Insolvency and a Proposal for a New Municipal Bankruptcy Regime

Jonah Peppiatt | 32 Emory Bankr. Dev. J. 335 (2016)

The “non-liquidation assumption” presumes that municipal bankruptcy law exists to provide municipalities a “breathing spell” from creditors and disallows the liquidation of municipalities. This assumption rests on the notion that chapter 9 exists solely to help municipalities continue to provide essential public services. This approach runs counter to the prevailing theory of corporate bankruptcy—that bankruptcy exists to resolve collection action problems among creditors and maximize social welfare. This Article rejects the “non-liquidation assumption” and applies a modified theory of municipal bankruptcy based on corporate bankruptcy theory. This Article further proposes a waterfall bidding alternative municipal bankruptcy regime that looks to promote an efficient market-based allocation of resources.

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Trust(ee) and Abandonment Issues: A Proposal for New Action Regarding Abandonment of Environmentally Contaminated Property

Michael P. Arwood | 32 Emory Bankr. Dev. J. 365 (2016)

For a Chapter 7 trustee to abandon property under § 554 of the Bankruptcy Code, the property must be deemed burdensome or of inconsequential value to the estate. While environmentally contamination is burdensome because of the resources required to clean the property, there is currently no decisive rule or law to assist bankruptcy courts in determining when to allow trustee abandonment. This Comment explores the possibility of a trustee in bankruptcy asserting the innocent landowner defense under CERCLA as well as proposes three other solutions that may clarify this issue: (1) amending CERCLA or the Bankruptcy Code to provide a “superlien” for governmental entities that initially paid cleanup costs; (2) amending § 554 of the Bankruptcy Code to create an “abandonment test” similar to the means test; and (3) outlining a balancing test or factors courts could use for determining when abandonment is proper.

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Why Two Facets of Chapter 15 Rulings Hinder Cross-Border Insolvency Petitions in the United States

Hardy DeLaughter | 32 Emory Bankr. Dev. J. 397 (2016)

Court disagreement about two matters in chapter 15 rulings impacts whether foreign debtors may acquire relief from the United States Bankruptcy Code. First, courts disagree about whether § 109(a) applies to chapter 15 petitions for recognition. Second, courts use two separate dates to determine the debtor’s center of main interests. Some courts use the chapter 15 petition date; other courts look further back and choose the beginning date of the foreign proceeding. For various reasons, § 109(a) was not supposed to apply to chapter 15 petitions, and the commencement date of the foreign proceeding is the correct date to determine a debtor’s center of main interests.

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No Seal No Deal: Amending Federal Rule of Bankruptcy Procedure 9019 to Require Judicial Approval of Settlement Agreements

Linhadley Eljach | 32 Emory Bankr. Dev. J. 433 (2016)

The language of Federal Rule of Bankruptcy Procedure 9019 has created a split among courts. Currently, a majority of courts require trustees to file any settlements they enter into with creditors with the court where the bankruptcy case is pending. By contrast, some courts do not require the trustee to file any settlements with the court. Requiring judicial approval of settlement agreements is consistent with the underlying policy of the Bankruptcy Code, legislative history, common law practice, and pre-Bankruptcy Code practice. This requirement would also promote uniformity among federal procedure rules. Accordingly, this Comment recommends that the Advisory Committee on Rules of Bankruptcy Procedure amend Federal Rule of Bankruptcy Procedure 9019 to require judicial approval of settlement agreements.

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Lien Stripping in Chapter 20 Bankruptcy: A Permissible Relief to Debtors

Jessica L. Johns | 32 Emory Bankr. Dev. J. 471 (2016)

Chapter 20 bankruptcy cases arise when a debtor files for chapter 13 after completing a chapter 7 case. Lien stripping is a benefit available to certain debtors in bankruptcy and it removes an unsecured lien from property. The removal of the part of a lien that is partially unsecured is called a “strip down,” whereas the removal of a completely unsecured lien is called a “strip off.” The Supreme Court has held that a “strip down” in both a chapter 7 and a chapter 13 are impermissible modifications of a secured claim. Recently, the Supreme Court held in Bank of America, N.A. v. Caulkett that a strip off in chapter 7 is also impermissible. This Comment argues that despite the recent Caulkett decision, lien stripping in chapter 20 remains permissible. Additionally, there is a body of case law indicating that circuit courts are permitting.

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The Antidote to Zombie Foreclosures: How Bankruptcy Courts Should Address the Zombie Foreclosure Crisis

Amanda McQuade | 32 Emory Bankr. Dev. J. 507 (2016)

Bankrupt homeowners across the United States continue to struggle because of the mortgage foreclosure crisis. Although zombie foreclosures present a significant issue for individuals who filed for bankruptcy during the last few years, there is no satisfactory legal remedy. The Bankruptcy Code and bankruptcy courts may offer an overlooked solution to the problem. Due to flexibility within bankruptcy courts, bankruptcy judges have a greater degree of discretion within certain situations to fulfill their equitable powers. Bankruptcy judges can take the realities of the debtor’s circumstances into account in ways that state and federal courts cannot. This Comment’s recommendations demonstrate the need for both courts and Congress to reconsider the Bankruptcy Code as a solution to zombie foreclosures. With a few amendments, the Bankruptcy Code should be able to help alleviate the zombie foreclosure problem.

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Reconciling Bankruptcy Law and Corporate Law Principles: Imposing Successor Liability on GM and Similar “Sleight-Of-Hand” 363 Sales

Brad Warner | 32 Emory Bankr. Dev. J. 537 (2016)

In June 2009, General Motors filed for chapter 11 bankruptcy protection. Now in 2016, General Motors has entered what some have called its renaissance period with flourishing sales and increased profitability. Meanwhile, thousands of vehicle owners who were harmed by defective General Motors vehicles have been barred by 11 U.S.C. § 363(f) of the Bankruptcy Code from seeking an equitable remedy from the now thriving company. This Comment argues that those harmed by General Motors’ defective vehicles should have access to an equitable remedy via the successor liability doctrine. Successor liability has been scantly applied to § 363 sale purchasers. However, this Comment contends that General Motors’ § 363 Sale was a “sleight-of-hand” transaction which allowed the corporation to essentially sell its assets to itself and escape most of its liabilities and that the successor liability doctrine was intended to prohibit these “sleight-of-hand” transactions.

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