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Home IndyBar: Thank You, U.S. Bankruptcy Court for the Southern District of Indiana Pro Bono Volunteers!Related News and Opinion

The U.S. Bankruptcy Court for the Southern District of Indiana wishes to say thank you to the following attorneys for the many hours theyve volunteered to assist underrepresented individuals. Their efforts have allowed petitioners to obtain the fresh start afforded to honest debtors by the Bankruptcy Code.

John Allman

Kayla Britton

Penny Carey

Ben Caughey

Michael Cox

Morgan Decker

Darrell Dolan

Timothy Fox

Keith Gifford

Christine Jacobson

Lloyd Koehler

Eric Lewis

Konstantine Orfanos

Scott Racop

NiCale Rector

Eric Redman

Joseph Ross

Tom Scherer

Richard Shea

Andrea Wasson

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IndyBar: Thank You, US Bankruptcy Court for the Southern District of Indiana Pro Bono Volunteers! - Indiana Lawyer

The carriers will not stop their activity this Monday when the strike called from December 20 to 22 is called off after reaching an agreement with the Government of Pedro Snchez this Friday after a meeting of more than 11 hours. The employers asked the Executive to listen to the historical requests of a sector that has been seriously affected by the impact of the coronavirus crisis and the rise in fuel prices -which in the last year have shot up 40% .

What are the measures that have been achieved to avoid logistical chaos and bankruptcy in the sector? The most important for this sector is the prohibition of the participation of the driver in the loading and unloading with the modification of article 20 of Law 15/2009, of November 11, of the Land Transport of Goods contract.

This claim had already been in Spain for years on the negotiating table of the CNTC and the Ministry. It was not permissible for our professional drivers, after driving 9 hours, to start unloading 20 tons of fruit and vegetables, for example. For a security issue and because it is a job that does not concern them. Our Portuguese neighbors banned it in September and, fortunately, now it is our countrys turn, he explains. Ramon Valdivia, Executive Vice President of the International Road Transport Association (ASTIC).

In addition to the transposition of the directive on posted workers with the limitation of unfair competition from foreign companies of transport in our country; the reduction of waiting times in loading and unloading from 2 hours to 1 hour; fight against unfair competition; creation of a Code of Good Commercial Practices in the contracting of transport; as well as improving the environmental sustainability of the road freight transport sector.

Fuel price

Another of the approved measures that the sector has taken is the mandatory review of the price of transport due to the variation in the price of fuel from the moment of contracting until the actual performance of the transport, eliminating references to voluntariness.

For Spanish transport companies, the energy that moves the trucks, mostly diesel, accounts for more than 30% of their operating costs and the diesel price (excluding VAT) has suffered an increase, from October 2020 to October 2021, of 32.0% , highlights Valdivia. In addition, it must be taken into account that fuel prices have skyrocketed since the beginning of the year and truckers have not been able to pass these increases on to loaders.

The rest of the measures that were signed at the meeting this Friday, lasting more than 11 hours, will not be approved by royal decree law, such as the maintenance of the current deduction of professional diesel or the return of the sanitary cent, as well such as the maintenance of the road network or the call for specific aid for the digitization of the sector.

Disclaimer: This article is generated from the feed and not edited by our team.

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These are the measures that transporters have agreed to avoid bankruptcy in the sector - Market Research Telecast

Los Angeles, Dec 16 (EFE).- A United States judge annulled Thursday the bankruptcy agreement of OxyContin manufacturer Purdue Pharma, which would have protected its owners, the Sackler family, from future lawsuits related to the opioid crisis.

District New York District Judge Colleen McMahon ruled the bankruptcy court that made that decision in September had no authority to relieve the Sackler family of their responsibilities, according to several US media outlets.

In 2019, the New York Attorney Generals Office filed a lawsuit against Purdue and four other distributors that led to a settlement in Bankruptcy Court in September whereby the pharmaceutical company was dissolved and emerged as a company controlled by authorities.

The settlement also required the Sacklers to hand over $ 4.5 billion over a nine-year period to help mitigate the consequences of the opioid crisis and exempted them from future liability lawsuits.

Other than protecting the Sackler family from future opioid-related lawsuits, the terms of the pact would have allowed them to keep much of the money they made from Purdue, without requiring them to admit to any wrongdoing.

In a statement, New York Attorney General Letitia James, who helped settle the bankruptcy settlement, said Purdue Pharma and the Sackler family remain the defendants in the ongoing litigation and will be held responsible for their illegal behavior one way or another.

According to court documents, between 2008 and 2010, the business owners took 70 percent of Purdues revenue each year, and 40 percent and 55 percent between 2011 and 2016 between. From 2008 to 2018, the amount drawn was more than $ 10.7 billion.

Authorities said nearly 500,000 people died in the United States from opioid overdoses between 1999 and 2019.

More than 93,000 people died from drug overdoses In 2020 according to the National Center for Health Statistics, a 30 percent increase from the previous year, which had also surpassed a record.

Of those deaths, 69,710 were attributed to opioid overdoses. EFE

asl/lds

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US judge annuls pharmaceutical company Purdue's bankruptcy agreement - La Prensa Latina

Ed. note: Litigation finance is transforming the fields of both law and finance. To help our readers gain a better understanding of what litigation finance entails, weve partnered with Lake Whillans to present an ongoing series so you can better understand how litigation funding works, its pros and cons, and its past, present, and future.

The COVID-19 pandemic thrust law firm bankruptcy practices into the spotlight, with high-profile corporate bankruptcies reaching levels not seen since 2010. For example, over the course of 2020, S&P Global Market Intelligence counted 630 bankruptcies of public companies with either assets or liabilities valued at $2 million, or private companies with public debt and at least $10 million in assets or liabilities. (There were 578 such bankruptcies in 2019.)

At the same time, the disruption coincided with the growth of utilization of litigation finance as a tool for financing litigation. Add a bankruptcy environment where traditional sources of financing by outside lenders, creditors, and law firms may be constrained, it is unsurprising that restructuring attorneys and advisors are increasingly turning to litigation finance.

Litigation finance can preserve or increase estate resources for creditors and enable additional recoveries. Financing can be useful for debtors (or potential debtors), but can also be useful for creditors in intercreditor disputes or other matters and especially useful for a litigation or liquidation trust seeking to prosecute ongoing claims. Fortunately, courts are recognizing that funding can play an appropriate role in bankruptcy proceedings, with two recent district court opinions leaving intact funding arrangements approved by the bankruptcy court.

Lake Whillans has expertise with litigation finance in a variety of distressed situations. Below we describe some of the most common scenarios.

Pre-filingCompanies in distress that have significant litigation or litigation-related claims may look to litigation finance to free up, or even increase, cash reserves through financing the costs of prosecuting a claim or by monetizing some or all of a claim. Litigation finance can provide these companies the necessary runway to see through recovery of the business and the realization of litigation proceeds.

Debtor FinancingMany bankruptcy estates have options with respect to debtor-in-possession (DIP) financing from traditional lenders. But there may be instances where the estates most valuable assets are litigation claims in that case it may make sense to discuss potential DIP financing with a commercial litigation funder. Crystallex, for example, secured this very type of financing (in its Canadian bankruptcy proceeding) from a litigation funder to prosecute a $3.4 billion claim against Venezuela for expropriation of a gold mine it had developed. The Canadian court approved the funding agreement finding that there is a single pot of gold asset which, if realized, will provide significantly more than required to repay the creditors.

A federal district court in the Middle District of Florida recently rejected an appeal challenging the approval of a funding arrangement of this sort in Valley National Bank v. Warren. The chapter 11 liquidating trustee negotiated funding from a third-party to cover the costs of pursuing claims against a bank for aiding and abetting breach of fiduciary duty and for the avoidance and recovery of $3 million in fraudulent transfers. The bankruptcy court approved the arrangement finding that the agreement best served the Debtors, creditors, and other parties and that it is neither champertous nor usurious. The defendant bank objected to the arrangement arguing that the financial interests of the funder could impair settlement negotiations. In its April 2021 opinion, the district court held that the bank lacked Article III standing to appeal the Bankruptcy Courts decision and failed the person aggrieved test that must be satisfied in order to appeal under the Bankruptcy Code.

Creditor FinancingIn some bankruptcies, funding to pursue litigation claims has been provided by creditors to the estate. For example, in the National Events bankruptcy, a litigation funding DIP funded by creditors sought to investigate potential claims on behalf of the essentially defunct debtor. A related party also provided funding under DIP provisions in the Welded Construction bankruptcy, seeking to recover funds from a construction dispute. Styled as a litigation funding agreement, the arrangement also resolved some of the claims the funder had against the debtor due to its existing business relationship.

In Dean v. Seidel, a creditor of the bankruptcy estate agreed to advance up to $200,000 to chapter 7 trustee Seidel to fund the cost of litigation against third parties. As approved by the bankruptcy court in the Northern District of Texas in April 2021, the arrangement provided for the following split of any litigation proceeds: (1) pay the trustees statutory commission and allowed expenses; (2) reimburse the advancing creditor; (3) pay that creditor a 30% return on investment; (4) distribute the remainder to creditors. On appeal to the district court, debtor Dean challenged the funding arrangement as permitting one creditor to receive a disproportionate share of litigation proceeds relative to similarly situated creditors, in violation of the priority scheme of Bankruptcy Code Section 507. Dean further asserted that any litigation recovery must be for the benefit of the estate. The district court noted with some concern the lack of controlling case law regarding an agreement of this type, but applying a clear error standard of review, it affirmed the bankruptcy court. The Fifth Circuit affirmed the district courts ruling on standing grounds.

In the preceding examples, related parties presumably provided funding because they had the most to gain from successful litigation. However, an unrelated litigation funder could instead have funded the claims in coordination with the debtor and creditors of the estate. Engaging a litigation funder could be appealing if related parties and creditors are unwilling or unable to provide additional funding. It is also possible that a litigation funder specialized in assessing litigation risk may be able to provide funds at the lowest cost of capital.Sale of Litigation Assets A bankruptcy estate can sell a stake in its litigation or litigation-related claims much in the same way that it sells other assets in its bankruptcy process.Many companies hold litigation-related assets, for example, in large class actions, and these can be sold like a traditional asset in a bankruptcy. Numerous companies have sold claims in the Visa Mastercard class action (In re Payment Card Interchange) through bankruptcy asset sales. (See, for example, Shopkos motion to sell its claim for $2.2 million during its bankruptcy process last year.)

Bankruptcy estates may also have more traditional litigation claims available for monetization during a bankruptcy process (including claims stemming from the bankruptcy itself). These claims are much harder for the estate to value and their continued prosecution often requires expenses and resources of the bankrupt entity or its representatives. A bankruptcy estate may wish to sell or monetize a portion of its litigation claims to accelerate cash recoveries for the estate, reduce or offset estate expenses (including funding the litigation), and hedge its risk of loss in the litigation. The most significant example of this type of sale was the 2016 sale of a judgment resulting from a jury award in the Magcorp bankruptcy pending an appeal following an intensive bidding and auction process. A litigation funder paid $26.2 million to acquire a $50 million interest in the judgment, which allowed creditors to be paid sooner, off-load some risk of a loss on appeal and to fund the appeals process itself.

Litigation or liquidation trustsLitigation trusts and liquidation trusts can also be prime candidates for litigation funding. The establishment of these trusts generally allows for the confirmation of a plan of reorganization while litigation claims that may take years to play out continue to progress. The litigation trusts typically benefit unsecured creditors who might otherwise end up with little or nothing from the bankruptcy. These trusts sometimes receive seed funding from the estate or from beneficiaries of the trust or rely on contingency arrangements with law firms, but because the assets they hold are litigation-related, and because funds expended on the fees or expenses of litigation might otherwise be returned to creditors if not used for litigation, these trusts make excellent candidates for litigation funding.

The General Motors Avoidance Action presents a prime example of how this funding can be used. The long-running dispute stemmed from the alleged improper repayment of GMs term lenders during the automakers bankruptcy. This intercreditor dispute centered on whether the term lenders security interest had been terminated prior to repayment and, if so, how much of the funds paid to the term lenders should have gone to other creditors. The action proceeded with $1.6 million in seed funding from the estate, but that amount and additional amounts provided by various funding sources, including the U.S. Department of Treasury and Export Development Canada and a private funder, were exhausted after lengthy litigation. Finally Lake Whillans (through an SPV) provided a $10 million facility in anticipation of trial. Eventually, the matter settled for $231 million, an amount that would certainly not have been possible without funding for the protracted and costly litigation that took nearly 10 years to resolve, and included a two-week representative trial that narrowed the issues between the parties.

To underscore how valuable this type of funding can be for a standalone litigation trust consider the Tropicana matter. After the casino operator went bankrupt in 2008, the estate eventually formed a litigation trust to pursue claims (backed largely by investor Carl Icahn) in an adversary proceeding against its former CEO. More than a decade later, those claims survived a summary judgment motion, which wouldnt have been possible without an additional cash infusion from Icahn and other funders in 2016.

As more restructuring professionals become aware of bankruptcy and district court decisions approving litigation funding in distressed situations, we expect litigation finance will be used with increasing infrequency in the bankruptcy context. Litigation finance provides a creative tool for companies to consider as they plan for what may be long-running and cost-intensive litigation.

* * *If practitioners have questions about employing litigation funding in a bankruptcy situation, Lake Whillans would be happy to discuss the particular circumstances of your case. We invite you to contact us.

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Litigation Funding In Bankruptcy And Distressed Situations - Above the LawAbove the Law - Above the Law

Many creditors have been warned of the need to halt collection efforts once they are put on notice that a debtor has filed for bankruptcy. However, the why behind this warning, mainly the automatic stay, is often misunderstood or disregarded. Since violations of the automatic stay can have serious ramifications, it is crucial that creditors know what the automatic stay is, what it protects, and how to get relief from the stay so that the creditor can proceed with collection efforts.

A debtor commences a bankruptcy by filing a bankruptcy petition. This is the case regardless of whether the debtor files under Chapter 7, 11, 13, or any other chapter of the United States Bankruptcy Code. Pursuant to 11 U.S.C. 362 et seq., the filing of the bankruptcy petition also triggers an automatic stay of all collection activities against the debtor and the debtors bankruptcy estate. Immediately upon the filing of the bankruptcy petition, the debtors bankruptcy estate is formed.

The bankruptcy estate is comprised of virtually all interests of the debtor, including, but not limited to, equipment, inventory, tangible property, cash, outstanding accounts receivable, unpaid contract balances, etc. When in doubt, a creditor of a bankrupt debtor should assume that the collateral in which the creditor claims an interest is part of the debtors bankruptcy estate.

Upon receiving notice of the bankruptcy petition being filed, the creditor is prohibited from taking action to collect any debts from the debtor that arose prior to the case being filed. Said differently, until you can get advice from bankruptcy counsel:

While the protections of the automatic stay are instantaneous, they are not indefinite. Through the filing of a motion for relief from stay, a creditor can ask the court for permission to pursue collection efforts against a debtor and specifically against an asset of the bankruptcy estate. For example, a mortgage creditor can ask for relief to foreclose on a piece of property that is under water. Likewise, a lender can request relief to repossess an under-secured asset like a vehicle. In each instance, the creditor must show the court that cause exists to lift the automatic stay.

Please click here to access a visual outlining the stay relief process and considerations that creditors should examine when determining whether to file a motion for stay relief.

In making the decision of whether or not cause exists to lift the stay, courts will look to a number of factors, including:

If a debtor fails in any one of these categories, a court may find cause to lift the automatic stay. If the creditors motion for relief from stay is granted, the creditor can then proceed with all collection efforts vis--vis the collateral that is no longer subject to the automatic stay. It is critical that the creditor only proceed against that collateral that is specifically listed in the motion for relief and order granting same. If the creditor takes collection action against other property of the estate or the debtor personally, the creditor may still be sanctioned for violating the automatic stay.

Conversely, a court may deny a creditors motion for relief from the automatic stay. If so, the collateral remains part of the bankruptcy estate and subject to the protections of the stay. This means no foreclosures, no litigation, no repossessions, etc. Importantly, creditors can have more than one bite at the apple. A creditor whose motion is originally denied may file another motion for relief if, a few months into the bankruptcy, the debtor is, for example, still not making payments, destroying the property, or failing to maintain the required insurance.

In summary, creditors should heed the warnings given to them when it comes to dealing with debtors in bankruptcy. Indeed, it is better to ask a bankruptcy court for relief from the stay rather than forgiveness for violations of the stay. Why?

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Bradleys Bankruptcy Basics: The Automatic Stay and the Why Behind the Warnings: What Happens Once a Debtor Files for Bankruptcy? - JD Supra

The healthcare industry has been under financial stress for years, with a record-setting number of bankruptcy filings in 2018. High filing numbers continued into 2019 and 2020, as effects from the pandemic exacerbated the situation. According to Epiq AACER reports, in 2021, there was a 48.7% decrease in Chapter 11 filings as compared to the previous year. This absence of bankruptcies, however, does not indicate that financial conditions have improved overall but rather can be directly attributed to substantial government stimulus duringand continuing throughthe pandemic. While the general economy appears healthy, the healthcare economy is farther along in its financial deterioration and could very well be one of the industry sectors to seek bankruptcy protection in the coming years. Many healthcare systems are highly dependent upon government assistance and their operators are very interested in how to prepare for an unknown future.

To predict what the next few years may hold, it is crucial to understand the assistance that has helped many healthcare organizations remain viable. The Provider Relief Fund has been the most comprehensive funding mechanism and does not invoke repayment unless the organization fails to fulfill the proscribed conditions. As of May 2021, the fund distributed $119 billion to distressed organizations and this was not even the entire pool of money available. In September 2021, the administration announced $25.5 billion additional pandemic-related funding, $17 billion of which goes directly into the Provider Relief Fund. Some healthcare organizations have also taken advantage of Paycheck Protection Program loans, which are forgiven when certain criteria are met such as not laying off staff and maintaining initial payroll costs. These are just two examples of pandemic assistance that has contributed to lower bankruptcy filings. Other loans, payment forgiveness, extensions, funds, and reimbursements have also helped.

Since many healthcare organizations were already operating on business models taxed beyond their limits, it is a safe bet that temporary government aid during a time of crisis will unfortunately not cure larger issues. Some factors contributing to distress in the healthcare industry over the last decade include increased costs associated with new medical technologies, staffing needs, and heavy pharmaceutical fees. With more competition and innovative business offerings, many healthcare organizations will need to make decisions regarding bankruptcy in the coming years.

One prediction for 2022 is that healthcare filings will start to increase again unless there is more regular aid distribution to help fend off the filings. Even if continued assistance trickles into next year, 2023 or 2024 will probably see an uptick in filings. While repayment forgiveness for pandemic aid has helped some organizations curb their debt, organizations that were in distress before unfortunately have a higher risk of that resurfacing, especially with medical supply and service costs rising. Another prediction building off the first one is that financially vulnerable organizations like nursing facilities or small practices may not be able to survive and will make up the bulk of future bankruptcy filings.

However, the rise in digital healthcare could come to the industrys rescue so it is a critical time to pay attention to those trends.

As part of the continuing transformation of healthcare, the use of digital medical appointments through telemedicine or alternate communication forms has been growing. This was another area of the economy where the pandemic accelerated an already emerging trend.

Like the pivot to ecommerce by retailers, digital healthcare may be the healthcare standard of the future. It includes telemedicine, at-home monitoring devices, mobile health apps, and electronic patient portals. Now, healthcare organizations of all sizes and functions are starting to use more digital tools and tracking their success. From a small private practice to large hospital systems, technology can offer a range of benefits to improve patient care while better managing internal resources and expenditures. One example is how telemedicine appointments can decrease costs associated with physical appointments such as supplies or the need for larger office spaces while also improving engagement between doctors and their patients. Another is the use of wearable devices to provide continuous insights so practitioners can make more informed and focused decisions about patient health and better manage diagnosed conditions.

Delivering quality medical care in this fashion is becoming increasingly popular and receiving more corporate acceptance due to key benefits such as ease of access and cost savings. Adoption and investment will likely continue rising, especially in areas proven successful such as mental health and palliative care services. Incorporating or increasing digital offerings into business models could help curb revenue declines or avoid a future bankruptcy. It is important to determine the most cost-efficient manner to incorporate digital health offerings into a specific practice, as needs will vary greatly and too much investment without strong returns could keep bankruptcy on the table. Widespread adoption and research on innovative digital health offerings can help guide these decisions.

As virtual medicine becomes more prominent, federal, and state authorities will also issue regulations to safeguard and protect privacy requirements to ensure compliance. It is crucial to continue monitoring legal developments in this space.

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Healthcare Organizations and Bankruptcy: Is Telemedicine the Savior? - JD Supra

The pandemic has pushed the billionaire Carlson family, one of the wealthiest in Minnesota, out of the business where they made their fortune.

Carlson Travel Inc. and 37 related companies tumbled into bankruptcy last month after they were no longer able to withstand the worldwide collapse of corporate travel caused by efforts to slow the spread of coronavirus.

As the firms restructured $1.6 billion in debt, members of the founding family traded their ownership interest in the firms for debt forgiveness.

"The companies are now owned by a group of financial institutions and bondholders," Julian Walker, a Carlson Travel spokesman said. The family members "have no skin in the game."

The outcome is another major turning point for the Carlson family, now led by Marilyn Carlson Nelson and Barbara Carlson Gage, daughters of Curt Carlson, who started the Gold Bond Stamp Co. in 1938 and then the Carlson hotel and travel companies in the 1960s.

Carlson Cos., with its then-portfolio of 1,400 hotels, was sold in 2016 to the Chinese conglomerate HNA Tourism Group. With the exit now from the travel entities, the family's assets are chiefly in other investments.

The restructuring does not involve Carlson Private Capital Partners, the family's private equity firm in Minnetonka.

Carlson Travel will maintain its headquarters at the company's campus at the intersection of Interstate 394 and Interstate 494 in Minnetonka.

The company, which makes money by booking business trips and meeting and event planning, said in court filings that it does not expect its business to return to pre-pandemic levels in the next three years.

"Though the COVID-19 pandemic adversely affected many industries, few industries were as radically affected as the travel industry," Carlson Travel CEO Michelle Frymire said in an affidavit filed in bankruptcy court. "Corporate travel and in-person events and conferences came to an abrupt halt nearly overnight."

Carlson Travel expects to lose $15 million on revenue of $701 million next year, a substantial downturn from 2019, when Carlson Travel earned $239 million on $1.5 billion in revenue, court records show.

In the United States, business travel revenue in 2021 is projected to remain more than $59 billion below 2019 revenues, according to a recent report from the American Hotel & Lodging Association, a trade group. In 2020, business travel fell $49 billion. Hotels have shed nearly 500,000 jobs in the last two years, according to the trade group.

Minnesota has seen one of the steepest declines, with business travel revenue expected to be 72% lower this year than it was in 2019. Only eight other states will see bigger drops, with Massachusetts leading the way at 85%.

The primary business of Carlson Travel is CWT, formerly Carlson Wagonlit Travel, a global travel services company that employs more than 12,000 people in 45 countries. In 2019, CWT was a leader in corporate travel, booking thousands of business trips daily for government agencies, corporate giants and small- and mid-sized businesses around the world.

On an average day before COVID-19, CWT managed about 100 meetings and events, communicated to 70,000 travelers and facilitated more than 240,000 transactions, bankruptcy records show. The company processed more than $23 billion in hotel bookings, airplane flights, car rentals and other corporate travel expenses in 2019.

When the pandemic hit and travel collapsed, Carlson Travel executives sought to reorganize the company's finances, bankruptcy records show.

The company slashed costs through furloughs and pay cuts in 33 countries, saving $500 million. Altogether, the company temporarily eliminated about 5,000 jobs. It also renegotiated key contracts and leases, suspended capital-intensive projects and curtailed nearly all incentive compensation programs. Those changes permanently reduced operating costs by about $300 million a year, records show.

This May, the company hired investment banker Houlihan Lokey to contact 50 potential buyers and gauge their interest in buying some or all of Carlson Travel's assets.

Those talks ended after just one bidder emerged with an informal offer that failed to gain the support of Carlson's bondholders. In a liquidation analysis filed in court, Carlson Travel and its affiliates were valued at $1.1 billion, but creditors were unlikely to get back more than $202 million in a sale, records show.

The company also obtained $125 million in new equity from its owners and borrowed $260 million. Executives thought those moves would be enough. But then, as travel started to recover this year, COVID-19 cases rose again.

"In the United States, where recovery was initially perceived to be strong, the recent surge in the Delta variant and nationwide delays in 'return to office' initiatives injected significant uncertainty'' into the domestic travel recovery, Frymire said in the affidavit.

The company sought Chapter 11 protection last month with a prepackaged reorganization plan, one that had approval from owners and lenders. The plan will eliminate about half of the company's $1.6 billion in debt and provide $350 million in new equity capital. Carlson Travel plans to spend a portion of that on a new technology platform.

The company asked the court to approve the plan 18 hours after filing the case in Texas, noting that a delay of just a few days could mean the loss of customers and revenue.

However, the U.S. Trustee in Texas asked for a delay, saying the company's "breakneck schedule" made it impossible for creditors to evaluate and react to 38 bankruptcy cases.

Despite the protest, a Texas bankruptcy judge approved Carlson's plan the same day the trustee filed its complaint without commenting on the objection.

"We are pleased to have received prompt court approval of the agreement we reached with CWT's financial stakeholders, which positions the company for long-term success and provides significant financial resources to further grow and develop our business," Frymire said in a statement.

Carlson Travel asked the bankruptcy judge last week for permission to hire an investment banker to evaluate potential bids for the company. But that filing was made in order to pay the firm for an aborted sales effort earlier this year.

"We are not up for sale," Walker said.

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Pandemic drives Carlson family out of the business where they made a fortune - Minneapolis Star Tribune

Three JAMS neutrals share their perspectives on business interruption and the impact COVID-19 has had on bankruptcy courts

You might reasonably assume, given the ongoing economic upheaval due to the COVID-19 pandemic, that the number of personal and corporate bankruptcies would have skyrocketed. But thats not been the experience for three JAMS neutrals who operate in that area: Ann Marshall, Patrick McManemin and Charles Clevert. In fact, quite the opposite has occurred. Bankruptcy filings in the Pacific Northwest were going down in 2019, and that trend continued through 2020, says Marshall. And then, to most peoples surprise, it continued through 2021. Every month, year-over-year, bankruptcy filings have gone down.

Marshall, who has experience with consumer bankruptcy cases, surmises that government intervention explains this trendfor example, foreclosure moratoriums and other types of government assistance. McManemin, whose area of expertise is corporate bankruptcy, offers another interesting theory: While cases might be filed, theyre not moving as fast. Before the pandemic, those cases would have moved almost right out of the box. But now, they might not get off the ground until 60 or even 90 days. The reason for this, McManemin suggests, is twofold: First, the courts were completely closed for a period of time during the pandemic, creating a considerable backlog. And second, because its often the case that it benefits one party to prolong bankruptcy proceedings, its not uncommon for that party to use stall tactics. In an ordinary situation, judges see that tactic, and they can overcome it pretty quickly. But in the COVID context, it became virtually impossible to get a hearing unless everybody was willing to do it on Zoom. That made it very tough to move cases along unless everybody involved in the case wanted it to move.

All three neutrals predict that as the effects of COVID-19 recede, the number of bankruptcy cases will increase. I do expect there to be a rise in the number of filings and in the number of instances where creditors are going to be pursuing claimants, says Clevert. But their opinions on what might precipitate that increase vary. But most people seem to think that the foreclosure moratoriums will start to expire. And when that happens, foreclosures will increase, followed by bankruptcies, says Marshall. Clevert, whose cases during the pandemic have thus far related primarily to credit issues, has a slightly different hypothesis: When people go back to work, and they have income, creditors are more likely to pursue them, he says. When that happens, he explains, individuals are more likely to file petitions in bankruptcy court or in state court for some type of debt relief. As for McManemin, he believes the precipitating event will be when the government turns off its spigotfor individuals and corporations. On the individual level, people arent going to have that much money to spend, says McManemin. That, in turn, will result in a contraction of demand, which will have an effect on the businesses where those individuals conduct commerce. At the same time, those same businesses will no doubt have already spent any Paycheck Protection Program funds they have received from the government, putting them even further in the hole. All that, plus the inevitable rise in interest rates, means that theres going to be a margin of borrowers who arent going to have the cash flow they had before, and theyre going to be in big trouble, says McManemin.

In the meantime, for the bankruptcy cases they already have, all three neutrals have had to adjust to the use of virtual proceedings using platforms like Zoom. I like the virtual proceedings, says Clevert. I think they lend themselves to greater participation of entities and executives that might not otherwise be able to take part in the process. And it helps eliminate the delays you would have if someone were not present because of travel limitations. Virtual proceedings can be particularly beneficial to debtors. Handling matters virtually means there isnt a need for debtors to take off work at what may be a very critical time in terms of employment. It also reduces the attorneys costs they will have to incur. Perhaps even more importantly, it widens the access of debtors to experienced attorneys from outside their home areas. Marshall also sees virtual proceedings in a positive light. I think mediation is efficient both in time and cost. It allows you to work through some really thorny issues like detailed escrow account disputes more efficiently when the debtor and creditor can address and discuss the dispute at a mediation. For his part, McManemin still prefers in-person mediation, but he agrees that the cost and convenience of virtual proceedings make them an attractive option for clients. In any case, all three neutrals believe virtual proceedings are here to stay. I think it's gotten to the point where people feel much more comfortable with the process, and I don't think it's going to go away, says Clevert. Clevert also predicts increased use of hybrid proceedings, where some people appear in person and others appear virtually.

Its difficult to predict what will happen with filings in 2022, says Marshall. Clevert foresees an increase in efforts to bring class action suitsfor example, against creditors who may have pursued debtors in unethical or illegal ways. This, he says, could help debtors who might otherwise find it difficult to obtain legal representation. And McManemin theorizes that lawyers will become quite creative in their attempts to address COVID-19-related losses with insurance companies.

What seems certain is that as painful as the pandemic has been, certain effects of the pandemicthings like backed-up courts and the increased use of virtual proceedingspresent opportunities to expand the use of mediation to resolve bankruptcy disputes. For example, Marshall predicts an increased use of mediation for cases involving smaller dollar amounts. She explains: Normally, in a bankruptcy mediation, if its in person, the bank has to send somebody. Youve got flights. Youve got hotels. Youve got loss of time. And in a smaller case, that just wouldnt happen. But Zoom opens the door to that happening more. Marshall also suggests that mediation could substantially help courts with high caseloads if bankruptcy filings increase dramatically next year. Finally, parties on both sides of a bankruptcy claim might appreciate the traditional advantages associated with mediation, such as privacy, flexibility and the ability to devise a solution that works for all parties. Ultimately, says McManemin, the question in my mind is, how are bankruptcy judges going to deal with things? Will they prioritize mediation as the first alternative? Or are they going to look for other ways to solve these problems?

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Bankruptcy Matters: The New Pandemic Wave is Coming - JD Supra

Boy Scouts files for bankruptcy amid deluge of child sex abuse cases

Boy Scouts of America filed for bankruptcy after a flood of sex abuse cases, reports of declining membership, & legal battles with insurance companies.

Alexis Arnold, USA TODAY

The Boy Scouts of America bankruptcy case has reached a critical step: Sexual abuse survivors are being asked to vote on the organization's restructuring plan. A two-thirds majority is needed to pass. If survivors vote in favor of the plan, itwill be evaluated by Judge Laurie Selber Silverstein at hearings in January.

So what led up to this point? And what's in the plan? Below is a synopsis of the bankruptcy case sofar.

If you are one of the 82,000 who filed a claim in the case, visit the Boy Scouts' restructuring website for more information including contact information for questions. Voting information can also be found on the website.

Aftermonthsof speculationand mountingcivil litigation, Boy Scouts filed Chapter 11 paperwork in February 2020in U.S. Bankruptcy Court in Delaware, amid declining membership and a drumbeat ofchild sexual abuse allegations. Even in the beginning, the Scouts' case was unprecedented in bothscope and complexity.

In court filings, the Boy Scouts said it faced275 abuse lawsuits in state and federal courts around the country, plus another 1,400 potential claims.

BANKRUPTCY PROTECTION: Boy Scouts files Chapter 11 in the face of thousands of child abuse allegations

FUTURE OF SCOUTING:What we know about victims, assets and the future ofthe BSA

Boy Scoutsof Americahas argued thatthe national organization should be the only entity required to coverfinancial settlements in thesexual abuse casesthatlanded the organization in dire financial straits.

The national organization describes its relationship with local councils asessentiallya franchise arrangement:The national group handles the development of Scout content and structure, licensing, training, human resources, legal support and information technology; the local councils are separate legal entities that run the troops.

However, attorneys for survivors of abuse say the local councils bear much of the responsibility for that abuse, and shouldn't be protected from liability. They further accusedBoy Scouts of attempting to shield assets the majority of which are owned by local councils, notthe national organization.

In theoriginalbankruptcy filing, the national organizationestimated it owns$70 million in land and buildings.

The USA TODAY Network found$101 million in local councils property in the state of New York alone.

TENSIONS RISE: What is the role oflocal councils' role in Boy Scouts bankruptcy proceedings?

A historic 90,000 plus sexual abuse claims werefiled by the November 2020 deadline making it thelargest-ever child sex abuse caseinvolving a single national organization.

Roughly 10% of those claims were duplicates, dropping the number to 82,000.

Additional vetting will happen after a plan is confirmed and a trustee is appointed to administer the trust. That process islikely to include a review of information provided by claimants, including the name of their abuser as well as the location and date of the abuse.

UNPRECEDENTED: Nearly 90,000 file sexual abuse claims against the Boy Scouts

In March, Scouts proposedpaying roughly $220 milliontoward a trust to compensate survivors, andanother$300 million from a voluntary contribution from local councils.

The number is a fraction of the $1 billion of the organization's estimated value, and a sliver of the value of its subsidiaries, including local councils and various trusts and endowments, which USA TODAY estimates could exceed $3.7billion.

The proposal equated to roughly $6,000 per survivor if divided evenly and was universally met with pushback.

More: Boy Scouts of America plan to exit bankruptcy would pay abuse survivors an average of $6,000 each

More: Boy Scouts says it's safe, and offers sex abuse victims just 80 days to file claim. Victims balk.

Attorney: Boy Scout plan "woefully inadequate"

An attorney representing over a thousand former Scouts calls the bankruptcy reorganization plan submitted by The Boy Scouts of America this week "woefully inadequate." Michael Pfau said the plan "is short on facts and frankly, short on money." (March 2)

AP

In July, Boy Scouts more than doubled itsinitial offer of compensation to sexual abuse survivors increasing the contribution from the national organization to $219 million and from the local councils to $600 million.

The$850 million settlementhas been praisedas the largest for sex abuse claims in U.S. history.Yet,it remains unclear how the plan would get anywhere close to Boy Scouts' own estimation of thevalue of theclaims, which they say isbetween $2.4 billion and $7.1 billion.In a footnote, Scouts acknowledgedthe settlement reached with victims attorneys will only cover 10% to 30% of thetotal value.

At issue is whetherclaims that are time-barred under statutesof limitations will be eligible for payouts. In many states, victimsare barred from filing lawsuits over abuse after aperiod of time has passed; however,laws in roughly two dozen states have changed in recent years.

Under theBoy Scouts' plan, claimants wholive in states with restrictive statutes of limitationswill be dinged an unspecified amount, or they can take an expedited payment of $3,500. Insurers argue that any plan requiring them to pay those claims violates both their policies and bankruptcy code because lawsuits on those same claims wouldn't be viablein civil court.

HISTORIC SETTLEMENT: Boy Scouts offer to compensate sexual abuse victims$850

UPDATES:Settlement OK'd by judge, but amounts for survivors still unknown

Within the hundreds of pages of the Boy Scouts' reorganization plan and accompanying court documents are explanations for how the 82,000 abuse claims will be vetted and paid out.

One person the bankruptcy trustee will make the decisions, guided by three main topics: how severe the abuse was, where it occurred and how well the claimants can document it.

How much money will be available for victims once their claims areevaluated is another of many unknowns holding up the case 18 months after it was filed.

A USA TODAY analysis of court filings suggests that as many as half of those who filed claims could end up with a few thousand dollars a fraction of what their counterparts have been allotted in more than a dozen bankruptcy cases involving Catholic dioceses.

The plan also sets up commitments to keep scouts safer, including:

PAYOUTS: In Boy Scouts bankruptcy, which sexual abuse victims will get a settlement?

Judge Silverstein signed an order in late September allowing the nonprofit'splan for reorganizationto be voted on bycreditors,includingtens of thousands of sexual abuse survivors.

It marked the first time abuse survivors had a direct say in theBoy Scouts' plan.

On Dec. 13, an $800 settlement was announced with another of Boy Scouts' primary insurers, Century Indemnity Company. Also included is an additional $40 million from local councils, upping their contribution to $640 million.

The settlement would increase the value of the trust for survivors to around $2.6billion.

VOTE: Survivors will soon vote on Boy Scout's plan to exit bankruptcy, a crucial next-step in case

Read more:

Boy Scouts of America bankruptcy updates: What we know about settlements, payouts, more - USA TODAY

Tuesday, December 14, 2021

Many creditors have been warned of the need to halt collection efforts once they are put on notice that a debtor has filed for bankruptcy. However, the why behind this warning, mainly the automatic stay, is often misunderstood or disregarded. Since violations of the automatic stay can have serious ramifications, it is crucial that creditors know what the automatic stay is, what it protects, and how to get relief from the stay so that the creditor can proceed with collection efforts.

A debtor commences a bankruptcy by filing a bankruptcy petition. This is the case regardless of whether the debtor files under Chapter 7, 11, 13, or any other chapter of the United States Bankruptcy Code. Pursuant to 11 U.S.C. 362 et seq., the filing of the bankruptcy petition also triggers an automatic stay of all collection activities against the debtor and the debtors bankruptcy estate. Immediately upon the filing of the bankruptcy petition, the debtors bankruptcy estate is formed.

The bankruptcy estate is comprised of virtually all interests of the debtor, including, but not limited to, equipment, inventory, tangible property, cash, outstanding accounts receivable, unpaid contract balances, etc. When in doubt, a creditor of a bankrupt debtor should assume that the collateral in which the creditor claims an interest is part of the debtors bankruptcy estate.

Upon receiving notice of the bankruptcy petition being filed, the creditor is prohibited from taking action to collect any debts from the debtor that arose prior to the case being filed. Said differently, until you can get advice from bankruptcy counsel:

Stop contact: Automatic robo calls, standard collection calls, emails, letters, etc.

Stop collections efforts: Litigation, foreclosure proceedings, enforcement actions, etc.

Stopnewcontracting: Renegotiating contracts, refinancing, mortgage modifications, wage garnishment arrangements, payoff plans, etc. A creditor shouldnot, however, terminate a contract with a debtor because a debtor files for bankruptcy.

What Can a Creditor Do in Order to Collect?

While the protections of the automatic stay are instantaneous, they are not indefinite. Through the filing of a motion for relief from stay, a creditor can ask the court for permission to pursue collection efforts against a debtor and specifically against an asset of the bankruptcy estate. For example, a mortgage creditor can ask for relief to foreclose on a piece of property that is under water. Likewise, a lender can request relief to repossess an under-secured asset like a vehicle. In each instance, the creditor must show the court that cause exists to lift the automatic stay.

Pleaseclick hereto access a visual outlining the stay relief process and considerations that creditors should examine when determining whether to file a motion for stay relief.

In making the decision of whether or not cause exists to lift the stay, courts will look to a number of factors, including:

Whether the collateral is properly insured;

Whether the debtor is taking proper care to maintain the collateral;

Whether the debtor has failed to pay taxes on the collateral;

Whether the debtor is making interim payments on the collateral (i.e., adequate protection payments);

Whether there is any equity in the collateral;

Whether the collateral is needed for the debtor to reorganize (i.e., a mechanic who needs his mortgaged garage to repair cars and run his business);

Whether the collateral is diminishing in value; and

Whether the debtor is causing undue delay in the bankruptcy case.

If a debtor fails in any one of these categories, a court may find cause to lift the automatic stay. If the creditors motion for relief from stay is granted, the creditor can then proceed with all collection efforts vis--vis the collateral that is no longer subject to the automatic stay. It is critical that the creditor only proceed against that collateral that is specifically listed in the motion for relief and order granting same. If the creditor takes collection action against other property of the estate or the debtor personally, the creditor may still be sanctioned for violating the automatic stay.

Conversely, a court may deny a creditors motion for relief from the automatic stay. If so, the collateral remains part of the bankruptcy estate and subject to the protections of the stay. This means no foreclosures, no litigation, no repossessions, etc. Importantly, creditors can have more than one bite at the apple. A creditor whose motion is originally denied may file another motion for relief if, a few months into the bankruptcy, the debtor is, for example, still not making payments, destroying the property, or failing to maintain the required insurance.

In summary, creditors should heed the warnings given to them when it comes to dealing with debtors in bankruptcy. Indeed, it is better to ask a bankruptcy court for relief from the stay rather than forgiveness for violations of the stay.

2021 Bradley Arant Boult Cummings LLPNational Law Review, Volume XI, Number 348

The rest is here:

The Automatic Stay and Debtors Filing for Bankruptcy - The National Law Review