One of the benefits of holding property or doing business through a limited liability company is that "entry of a charging order is the exclusive remedy by which a judgment creditor of a member or of any other owner of a membership interest may satisfy a judgment out of the judgment debtor's membership interest." Tex.Bus.Org. Code Sec. 101.112(d). But just how exclusive is that right? A recent Fifth Circuit opinion holds that a court may impose additional conditions on a judgment debtor's LLC in the name of carrying out the court's orders.  Thomas v. Hughes, Case No. 20-50827 (5th Cir. 3/3/22), a copy of which can be found here.What HappenedLou Ann Hughes was an attorney representing Performance Products, Inc. After Performance Products, Inc. filed Chapter 7 bankruptcy, the Chapter 7 Trustee, Johnny Thomas, and another party sued her for breach of fiduciary duty and other causes of action.  After a jury trial, the court rendered judgment against her for nearly $4 million. Prior to litigation being filed, Hughes owned a piece of real estate in San Antonio, Texas. She formed M.G. & Sons, LLC as a single member LLC and transferred the real estate into it. In September 2020, the U.S. District Court entered a charging order against Hughes's interest in M.G. & Sons stating that the Plaintiffs “have the right to receive any distribution to which Hughes would otherwise be entitled in respect of her membership interest in M. G. & Sons, LLC.” The order went on to provide that:Hughes and M. G. & Sons, LLC must obtain leave of this court before [a)] transferring the Property to any third party; b) transferring any funds to any third party except for transactions in the ordinary course of business; or c) transferring Hughes’[s] interest (or any part thereof) in M. G. & Sons, LLC to any third party.Opinion, p. 3. Hughes appealed contending that the additional language exceeded the "exclusive" remedy of a charging order under Texas law.The RulingThe Fifth Circuit analyzed the order under an abuse of discretion standard. It wrote that: The order at issue, in addition to charging Hughes’s distributions from M. G. & Sons, requiresHughes and M. G. & Sons to obtain leave from the district court before transferring the Property, any funds (excepting transactions in the ordinary course of business), or Hughes’s membership interest to any third party. Hughescontends that this restriction constitutes an improper “legal or equitable remed[y] with respect to[] the property of the limited liability company,” prohibited by the charging order statute. And because a charging order is the “exclusive remedy” by which Pearcy and Thomas,as judgment creditors, may satisfy their judgment out of Hughes’s interest in M. G. & Sons, Hughes asserts that the restriction on asset transfers is invalid. We disagree with Hughes’s reading of the district court’s order. It is axiomatic that federal courts possess “inherent power to enforce [their] judgments.” Peacock v. Thomas, 516 U.S. 349, 356 (1996); see also Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 577 (5th Cir. 2005) (“District courts can enter injunctions as a means to enforce prior judgments.”). Likewise, the Texas Supreme Court has held that “every court having jurisdiction to render a judgment has the inherent power to enforce its judgments” and “may employ suitable methods” to do so. Arndt v. Farris, 633 S.W.2d 497,499 (Tex. 1982). “Those methods include, among other things, chargingorders and injunctive relief.” M.W.M., 2020 WL 6054337,at *2. In M.W.M., the trial court entered a charging order that “charged” a “[f]ather’s interest in certain entities with [his ex-wife’s] judgments and ordered those entities not to pay [the f]ather any money or expend any money for [his] personal benefit until the judgments were paid.” Id. at *1. The father argued on appeal that the order “act[ed] as an injunction” and thus exceeded the court’s authority under the charging statute. Id. at *3. But the Texas Court of Appealsrejected that argument,finding that the statute “was not the trial court’s sole means of enforcing its judgments.” Id. Instead, the court held that “[i]njunctive relief is an available means to enforce a judgment.” Id.And in doing so, it affirmed the order’s restrictions on the LL Cs’payments as a form of injunctive relief.Id. The same reasoning applies here. The district court entered a valid charging order, requiring “any distribution to which Hughes would otherwise be entitled in respect of her membership interest in M. G. & Sons” to go to satisfy Pearcy and Thomas’s judgment. See Tex. Bus. Orgs. Code Ann. § 101.112(a)–(b). Then the district court added injunctive relief as a means of enforcing its judgment, just as in M.W.M. The district court did not abuseits discretion in fashioning reliefas it did.Opinion, pp. 5-7.  The Court did find that it was an error to grant relief against the LLC, since it was not a party to the action. However, it found that it was proper to require the judgment debtor, as sole owner of the LLC, to seek court permission before alienating the assets of the LLC.Implications for Owners of LL CsUnder the Fifth Circuit's opinion, creditors cannot directly access property owned by a limited liability company to satisfy debts of a judgment debtor. However, at the same time, those assets are not fully immunized. They remain safe while they are within the protective shield of the LLC. However, a court may prevent a judgment debtor from circumventing the charging order remedy. The injunctive language should be part of a collection lawyer's toolkit. In one of the James Bond movies, Bond is fighting with a Russian agent over a piece of top secret equipment when it goes sailing off a cliff. Bond says words to the effect of "That's detente for you. I don't have it and you don't have it." Bond's words effectively describe the effect of a charging order on an LLC. The judgment creditor can't access the LLC assets but neither can the judgment debtor. There are other ways that a single member LLC may be vulnerable as well. Tex.Civ.Prac. & Rem. Code Sec. 31.002(f) allows a court to appoint a receiver over the judgment debtor's non-exempt assets. Could a receiver be authorized to dissolve a single-member LLC and get at the asset that way? That is a much closer question than the one addressed here by the Fifth Circuit, but it is certainly a risk. This risk can be minimized by forming multi-member LL Cs. It can be further limited by including language in the LLC's governing documents that a member subject to a charging order or under the control of a receiver, may not vote on certain critical issues, such as disposing of assets. Part of the reason that the injunctive language in this case worked was that the LLC had a single member so that enjoining the owner effectively bound the LLC. This would not be the case if the LLC had multiple members. As a caveat, this might not be true if the second member of the LLC was married to the judgment debtor since the spouse's LLC interest would likely be community property.  

Bustle reports that actor Andrew Garfield claims bankruptcy was one of the best things that has ever happened to his family. His roles in The Social Network and The Amazing Spiderman brought Garfield fame and success, but his family had not always been so financially fortunate. Garfield looks back on those finacial struggles and views them in a somewhat positive light because he and his family were fortunate enough to learn important life lessons came from those struggles. When Garfield was about 12 years old, his father became bankrupt. Garfield claims it was the best thing to happen to their family because his father “…realized all the people he loved were still there… his wife, his kids, his friends, himself. He was brought to his knees and totally humbled, and then he started doing more of what he was called to do.” His father then went on to do what he loved: he became a swimming coach at a local club in Surrey, England. Seeing what his father went through taught Garfield a very valuable life lesson. “My main goal in this life is to cultivate and rub up against the people, the places, the projects, the practices — that’s alliteration there with the p’s — that make me feel most alive”. Seeing his father burdened financially and come out of it a happier person is what gave Garfield his drive to take up passion projects. This passion he accumulated displays in his successful career. In his 15+ year long career, Garfield has obtained hundreds of nominations including two Academy Award Nominations and has won several awards including a Golden Globe award & Tony Award. Garfield & his family are proof that some people just need a second chance. .fusion-button.button-1 {border-radius:2px;}Read The Full Article.fusion-body .fusion-builder-column-0{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-0 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:1138px) {.fusion-body .fusion-builder-column-0{width:100% !important;}.fusion-builder-column-0 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:900px) {.fusion-body .fusion-builder-column-0{width:100% !important;}.fusion-builder-column-0 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-1{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;} The post Andrew Garfield Claims Bankruptcy Was The “Best Thing” That Happened To His Family appeared first on Allmand Law Firm, PLLC.

Bustle reports that actor Andrew Garfield claims bankruptcy was one of the best things that has ever happened to his family. His roles in The Social Network and The Amazing Spiderman brought Garfield fame and success, but his family had not always been so financially fortunate. Garfield looks back on those finacial struggles and views them in a somewhat positive light because he and his family were fortunate enough to learn important life lessons came from those struggles. When Garfield was about 12 years old, his father became bankrupt. Garfield claims it was the best thing to happen to their family because his father “…realized all the people he loved were still there… his wife, his kids, his friends, himself. He was brought to his knees and totally humbled, and then he started doing more of what he was called to do.” His father then went on to do what he loved: he became a swimming coach at a local club in Surrey, England. Seeing what his father went through taught Garfield a very valuable life lesson. “My main goal in this life is to cultivate and rub up against the people, the places, the projects, the practices — that’s alliteration there with the p’s — that make me feel most alive”. Seeing his father burdened financially and come out of it a happier person is what gave Garfield his drive to take up passion projects. This passion he accumulated displays in his successful career. In his 15+ year long career, Garfield has obtained hundreds of nominations including two Academy Award Nominations and has won several awards including a Golden Globe award & Tony Award. Garfield & his family are proof that some people just need a second chance. The post Andrew Garfield Claims Bankruptcy Was The “Best Thing” That Happened To His Family appeared first on Allmand Law Firm, PLLC.

Supreme Court nominee Judge Ketanji Brown Jackson has played a variety of roles in her legal career. She has been a public defender, an attorney in private practice, a member of the U.S. Sentencing Commission, a U.S. District Judge and a Court of Appeals Judge. Unfortunately, these jobs have given her scant exposure to bankruptcy law.Below I will explore all three of her bankruptcy related opinions (out of a total of about 600). A Small Exposure to Bankruptcy She had two slight opinions in an appeal dealing with father and son debtors in Washington, D.C. and Tennessee with overlapping property interests. In the case, she was faced with rather mundane requests for a stay pending appeal and to supplement the record. In the Washington, D.C. case, the father claimed a homestead exemption and the bankruptcy judge overruled an objection to the exemption. In the Tennessee case, the trustee sought to sell whatever interest the estate might have in the D.C. property. The creditors sought a stay pending appeal in the appeal of the exemption appeal on the theory that the appeal of the D.C. order could affect proceedings in the Tennessee bankruptcy court. The appellants first filed their motion in the District Court. Faced with an order to show cause why they had not sought relief in the bankruptcy court first, they withdrew their motion and re-filed it in the bankruptcy court. The bankruptcy court denied the motion on the basis that the order being appealed could not have any possible effect on the estate being administered in Tennessee. Judge Ketanji Brown Jackson wisely adopted the Bankruptcy Judge's reasoning and denied the motion when filed in her court for the second time. Brekelmans v. Salas (In re Salas), 2019 U.S. Dist. LEXIS 111597 (D.D.C. 2019). This insignificant case shows that Judge Jackson is familiar with the Bankruptcy Rules and has the good sense to defer to a bankruptcy judge. In the same appeal, the appellants sought to supplement the record with statements made by the father and son debtors after the date of the order being appealed. In the alternative, they sought to remand the case to the bankruptcy court for further proceedings. Judge Jackson explained that the record could not be supplemented with evidence that could not have been available to the bankruptcy court in the first place. She treated the alternative request to remand the case as a request to voluntarily dismiss the appeal, which she granted. Salas v. Salas (In re Brekelmans), 2020 U.S. Dist. LEXIS 1582 (D.D.C. 2020).  This second opinion showed good common sense even if the issues were not earthshaking. Judge Jackson also showed remarkable patience in this opinion and the prior one with litigants did not seem to grasp basic concepts.  In another case, Judge Jackson considered whether a plaintiff who had failed to list certain FDCPA claims in his schedules had standing to pursue them in Judge Jackson's court. Dalley v. Mitchell Rubenstein & Assocs., 172 F.Supp. 3d (D.D.C. 2016).  The defendant moved to dismiss, arguing that the plaintiff lacked standing and that the claims were barred by judicial estoppel. The debtor argued that he had exempted the claims under the wild card exemption and that they were also exempt as claims for personal injury. Judge Jackson concluded that upon filing the bankruptcy case that the claims had vested in the bankruptcy estate and that the trustee had not abandoned them.  She also rejected the exemption argument. First, she noted that the FDCPA case did not allege bodily injury and therefore could not fit within that exemption. She also concluded that a debtor who makes a wild card exemption has an interest in the proceeds of litigation but not the ability to pursue the claim itself. This case demonstrates that Judge Jackson has some familiarity with consumer bankruptcy concepts.A Respected Judge Having exhausted Judge Jackson's bankruptcy jurisprudence, I could end here but will add a bit more. A LEXIS search turns up 681 opinions with her name. These include her many opinions as a U.S. District Judge. There are also opinions where she was an advocate during her time as a public defender and an attorney with Morrison & Foerster. There are also a handful of opinions in which she was one of a large group of judges named as defendants. The final category are opinions in which other judges praise her work. The Fifth Circuit found her "excellent opinion" to be persuasive in Forrest General Hospital v. Azar, 926 F.3d 221 (5th Cir. 2019).  In Wall v. Reliance Standard Life Insurance Co., 2022 U.S. Dist. LEXIS 34744 (D.D.C. 2022) and Da'Vage v. D.C. Housing Authority, 2022 U.S. Dist. LEXIS 16215 (D.D.C. 2022), her former colleagues in the District Court for Washington, D.C. cited her opinions in support of their reasoning. In reading through her opinions, I could find only a handful of instances in which her decisions were reversed. A Sampling of Judge Jackson's Opinions (That Probably Won't Be Mentioned At Her Confirmation Hearing) When Judge Jackson appears for her confirmation hearing, she will no doubt be condemned as an activist in judge's robes. However, her actual record is much more complex. Her most well-known opinion is probably Committee on the Judiciary v. McGahn, 415 F.Supp. 3d 148 (D.D.C. 2019), aff'd in part, rev'd in part, 2020 U.S. App. LEXIS 38298 (D.C. Cir. 2020)(en banc). In this case, former White House counsel Don McGahn asserted absolute immunity from being compelled to give testimony before the House Judiciary Committee, an assertion Judge Jackson rejected. In her massive opinion, she stated:Stated simply, the primary takeaway from the past 250 years of recorded American history is that Presidents are not kings. This means that they do not have subjects, bound by loyalty or blood, whose destiny they are entitled to control. Rather, in this land of liberty, it is indisputable that current and former employees of the White House work for the People of the United States, and that they take an oath to protect and defend the Constitution of the United States. 415 F.Supp. 3d at 213. On appeal, the en banc Court affirmed her holding that the Judiciary Committee had standing to seek to enforce its subpoena but remanded for further consideration of McGahn's challenges. While the McGahn opinion was unfavorable to the power of the Executive Branch, she had plenty of opinions where she deferred to Executive power. In Sierra Club v. United States Corps of Engineers, 990 F. Supp. 2d 9 (D.D.C. 2013), she refused to enjoin construction of a pipeline. Her opinion was later cited as authority to deny injunctive relief against construction of the XL Keystone Pipeline. In Las Americas Immigrant Advocacy Center v. Wolf, 507 F. Supp. 3d 1 (D.D.C. 2020), she ruled for the Department of Homeland Security on a case involving where persons seeking asylum would be housed prior to a credible fear review.  In Campaign for Accountability v. United States Department of Justice, 486 F.Supp. 3d 424 (D.D.C. 2020), she found that most of the Office of Legal Counsel opinions sought by an advocacy group were not subject to mandatory disclosure. In Prince v. Kobach, 2020 U.S. Dist. LEXIS 215880 (D.D.C. 2020), she found that a voter lacked standing to bring claims related to the election of Donald Trump.In another interesting opinion which cannot be interpreted on a strictly liberal-conservative spectrum, she implemented the First Step Act to reduce the sentence of a veteran suffering from PTSD who had an enhanced risk of exposure to Covid-19 from 41 months to time served. United States v. Johnson, 464 F.Supp. 3d 22 (D.D.C. 2020).  Some of her most entertaining opinions involved pro se litigants. In Brailich v. Fox News Network, Ltd.,2020 U.S. Dist. LEXIS 217943 (D.D.C. 2020), a litigant accused Fox News of directing hate speech toward him. Judge Jackson found that the complaint was "so broad and so vague that the pleading does not give the defendants fair notice of the claims asserted against them." In Clark v. Peru Republic, 2020 U.S. Dist. LEXIS 225310 (D.D.C. 2020), she found that a 133-page complaint failed to met Rule 8(a)'s requirement of a short and plain statement. "A complaint such as this this is excessively long, rambling, disjointed, incoherent, or full of irrelevant and confusing material will patently fail Rule 8(a)'s standard." In Naillieux v. Chain of Command, 2020 U.S. Dist. LEXIS 215882 (D.D.C. 2020), she found that "what factual contentions are identifiable are baseless and wholly incredible." In Kirkland v. Barr, 2020 U.S. Dist. LEXIS 215878 (D.D.C. 2020), she rejected a mandamus petition which "seeks to involve the federal government, through U.S. Attorney General William Barr, in paternity proceedings in Kansas courts."  What these short opinions show is that while much of her work involved dry and technical interpretation of federal statutes and regulations, she can wield a sharp pen at times. Finally, for those who are wondering, her name comes from Ketanji Onyika, which her parents were told means "lovely one." 

 CBS News (link below) has an article about impact of Omicron virus on restaurants. https://www.cbsnews.com/amp/news/restaurants-closing-2022-without-aid-restaurant-revitalization-fund/#appAt Shenwick & Associates we have been working with many restaurants whose business has been impacted by Omicron and the guarantors of those leases. Jim Shenwick 212 541 6224 [email protected]

Bankruptcy cases frequently have transfers of the bankruptcy estate’s property through court- approved sales.[2] Sometimes those sales are challenged.[3] Often those challenges are overruled.[4] Sometimes the order approving the sale is appealed… The post Do Bankruptcy Settlements (Fed.R.Bankr.P. 9019) On Appeal Get The Same Protections (11 U.S.C. § 363(m)) As Bankruptcy Sales (11 U.S.C. § 363(b)) On Appeal? [1] appeared first on Wayne Greenwald, P.C..

 Harold Israel, Esq.  at Levenfeld Pearlstein, LLC is reporting that the Sub V Bankruptcy Debt limits, which had been temporarily increased to $7,500,000.00, are posed to be made permanent.The article can be found at https://lnkd.in/dYQ BsF EyA detailed article about Subchapter V bankruptcy can be found at our blog at:https://lnkd.in/ewxRU2T

 https://patch.com/new-york/new-york-city/hundreds-taxi-medallions-repossessed-despite-rescue-deal-ended-hunger-0

 https://www.forbes.com/advisor/debt-relief/types-of-bankruptcies/

 Interesting article in newsy.com (URL below) about how the Biden Administration is addressing student loan debt. https://www.newsy.com/stories/president-biden-s-policy-on-student-loan-debt-cancellation/