Here at Shenwick & Associates, our clients are both debtors and creditors. When a person or entity files for bankruptcy protection (such as in the recent Sears bankruptcy), we’re often contacted by creditors who are seeking to protect their claim against the debtor. Usually, this requires the filing of a proof of claim. In this post, we’ll examine some of the basics of filing proofs of claim. 1. In the context of a chapter 7 case, claims and proofs of claims are not usually a factor, since most chapter 7 cases are “no asset cases” (there will be no assets for the chapter 7 trustee to distribute from the debtor’s bankruptcy estate after the debtor’s personal property is exempted). However, if the chapter 7 trustee does find assets in the bankruptcy estate (so creditors can have some recovery on their claims), the chapter 7 trustee will file a notice of assets and request to set claims bar date (which will trigger the bankruptcy court to send a notice to all creditors listed in that bankruptcy case, and proofs of claim must be filed by the “bar date”). 2. In the context of a Chapter 11 case, § 1111(a) of the Bankruptcy Code provides that a proof of claim is deemed “filed” for any claim that appears in the schedules except if it is listed as disputed, contingent or unliquidated. Therefore, to know whether to file a proof of claim, an unsecured creditor must examine the debtor’s bankruptcy schedules to determine how their claim was scheduled, i.e., whether it was listed as disputed, contingent (the claim is dependent on another event) or unliquidated (the claim amount is uncertain). Many creditors will just file a proof of claim when they receive notice of a bankruptcy filing. 3. Therefore, unless a creditor’s attorney or a creditor can obtain the schedules by going to court or through PACER, the better practice is to file a proof of claim as soon as possible. The best practice may be to file a notice of appearance and a proof of claim as soon as an attorney is retained to represent a creditor in a chapter 11 case. If an attorney or a creditor does not file a proof of claim early in a case, then they must file the proof of claim on or before the “bar date.” If the proof of claim is not filed by the “bar date,” then that creditor is barred from receiving a distribution in the case, unless the creditor was listed in the debtor's schedules as not having a claim that’s disputed, contingent or unliquidated.  Creditors should review the instructions for preparing a proof of claim.4. Once the proof of claim is signed, and backup (which will evidence the amount of the claim, such as invoices, a spreadsheet or collateral for the claim if the claim is secured, such as a mortgage) is attached to the proof of claim, the proof of claim should be filed with the bankruptcy court. It can be uploaded to the claims register for the case via ECF (Electronic Case Filing) or sent to the bankruptcy court by Federal Express or another delivery service with a short letter of direction requesting that the clerk file the proof of claim. In cases with many creditors (“megacases”), the bankruptcy court may require that the debtor retain a claims agent to process the proofs of claim instead of the bankruptcy court. Anyone who has questions regarding the filing of proofs of claims or creditors’ rights in bankruptcy cases should contact Jim Shenwick.

By Danielle Furfaro and Gabrielle FonrougeAnother debt-burdened New York City cabbie has committed suicide — the eighth for-hire driver to kill himself in the past year, Taxi and Limousine Commission officials confirmed on Wednesday.Roy Kim, 58, of Bayside, Queens, hanged himself with a belt in his home on Nov. 5, according to the city’s medical examiner’s office. There was no immediate sign of a suicide note. Kim, who had just purchased his taxi medallion last year, was more than $500,000 in debt from the deal and struggling to stay afloat, say friends. “He was in a lot of debt from that,” said fellow driver Young Lee, who made friends with Kim while picking up fares from airports. “For a while he was making money but then it just went slowly down and down and down. All drivers are really struggling.” For-hire drivers have been in a freefall for the past few years, and many blame the epidemic on the unchecked growth of ride-share companies such as Uber and Lyft. The city enacted regulations this summer, but some critics called them too little too late. TLC Commissioner Meera Joshi offered condolences to Kim’s friends and family and promised to look for more ways to help anguished drivers. “This tragedy underscores the importance of finding new ways for government, the industry and lenders to work in unity to address the financial challenges that are weighing so heavily on our licensees,” she said. “Modifying, restructuring and lowering loans would go a long way in providing relief and keeping taxi services available to New Yorkers for years to come.” Taxi driver advocates say the city and TLC need to do more to help. “Owner-drivers have suffered a deep and vicious slide from the middle class into crushing poverty, in a just a few short years,” said NY Taxi Workers Alliance Executive Director Bhairavi Desai. “This crisis can be fixed. The struggle for owner-drivers is reminiscent of the 2008 housing crisis. In that crisis, the industry, government, advocates, and philanthropy came to the table to find solutions. Now, banks and lenders need to work with the city and philanthropy to write off 20 percent of outstanding debts, lower interest rates, and restructure contracts so that no owner-driver has to lose more than 20 percent of their monthly income to the mortgage.” Kim is the fourth cabbie and eighth driver overall to commit suicide since November of last year. In October, Uber driver Fausto Luna jumped in front of an oncoming A train. In June, cash-strapped yellow cabbie Abdul Saleh, 59, hanged himself in his Brooklyn apartment. In May, another yellow cab driver Yu Mein “Kenny” Chow flung himself in the East River off the Upper East Side. In March, Nicanor Ochisor, 65 — another yellow cabbie — hanged himself in his garage in Maspeth, Queens. Corporate black car driver Douglas Schifter, 61, killed himself with a shotgun outside City Hall on Feb. 5. In December, livery hack Danilo Corporan Castillo, 57, wrote a suicide note on the back of a summons he received — and then jumped out the window of his Manhattan apartment. And in November, livery driver Alfredo Perez hanged himself. The news of the suicide comes on the same day that the city council passed a bill introduced by council member Ydanis Rodriguez that will create a commission to look at falling taxi medallion values and come up with ways to help struggling drivers. © 2018 NYP Holdings, Inc. All Rights Reserved.

Many drivers today wonder if they need to be concerned about driving a vehicle after they have had one glass of liquor, wine, or a beer. Most people believe that “one drink” can’t cause them to be subject to a drunk driving charge if they are subject to a traffic stop. Unfortunately, it is not […] The post Most Common Reasons for a DUI Charge in Pennsylvania appeared first on .

  Generally, if a debtor pays an unsecured creditor shortly (if not an insider, within 90 days) before a bankruptcy is filed, allowing the creditor to receive more than they would in the bankruptcy if no payment had been made, then the trustee can recover these funds.   Courts have created an equitable exception to the preference right where funds were provided to the debtor by a third party to pay a specific debt, concluding that such funds are not recoverable as a preference because the funds were never property of the debtor, thus the transfer does not disadvantage any creditor.  This doctrine was discussed regarding a motion for summary judgment in In re Barreto, 2018 Bankr. LEXIS 3504, Case #14-08712 (Bankr. D. Puerto Rico, 7 November 2018).   The debtor had paid $6,510 toward criminal restitution within 90 days of the filing of a chapter 7 bankruptcy.  The debtor asserted that the source of these funds was money lent to him from his sister, which loan was conditioned on the use of the funds to pay the criminal restitution.  The matter came up for summary judgement in the bankruptcy court, which the court denied finding there remained disputed issues of material fact.  However, the court went in some detail as to the requirements to satisfy the earmarking doctrine.  The trustee initially has the burden of proof to show by a preponderance of the evidence that all elements of 11 U.S.C. §547(b).  The statute provides that a trustee may avoid any transfer of an interest of the debtor in property-(1) to or for the benefit of a creditor; (2) for or on account of an antecedent debt owed by the debtor before such transfer was made;(3) made while the debtor was insolvent;(4) made-  (A) on or within 90 days before the date of the filing of the petition; or   (B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and(5) that enables such creditor to receive more than such creditor would receive if-  (A) the case were a case under chapter 7 of this [*9] title;  (B) the transfer had not been made; and   (C) such creditor received payment of such debt to the extent provided by the provisions of this title." 11 U.S.C. § 547(b).  If the trustee proves all these elements, then the defendant to whom the funds were paid can avoid paying the trustee if it can prove by a preponderance of the evidence that the transfer satisfies one of the exceptions contained in 11 U.S.C. 547(c).  The fact that the payment was for nondischargeable restitution does not prevent recovery.    The critical issue is whether the transfer allowed the creditor to receive more than it would under a chapter 7 liquidation.  Per the earmarking doctrine, if the funds were never under the control of the debtor, then the payment is not a preference as the money was never subject to an equitable interest of the debtor, and cannot be considered property of the estate under §541.1  The focus of the earmarking doctrine is not on what the creditor received, but what the debtor's estate has lost.  If the debtor had no equitable interest in the property transferred, there can be no preference.  Where the debtor was found to have control and authority over the disposition of funds, resulting in a diminishing of the debtor's estate, the doctrine has been held not to apply.2   A hypothetical chapter 7 liquidation analysis must be filed as part of a motion for summary judgment.   As an judicially created equitable exception the application of the ear marking doctrine must be narrowly construed.  The court found that if the facts showed that the sister lent the funds exclusively for the specific purpose of paying the restitution, the earmarking doctrine may be applicable, even though the funds came from an insider as defined in §101(31)(A)(1). 1 In re EUA Power Corporation, 147 B.R. 635, 640 (Bankr. D.N.H. 1992). See: In re Loggins, 513 B.R. 682, 701 (Bankr. E.D. Tex. 2014); Tabb, Law of Bankruptcy, Third Edition, 2013, § 6.11; 5 Collier on Bankruptcy, ¶ 2425547.03[2][a], Alan N. Resnick & Henry J. Sommer es., 16th ed. 2017).↩2 In re Bankvest Capital Corp., 374 B.R. 333, 344 (Bankr. S.D. Fla. 2007).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100hillsboroughbankruptcy.com

What is a Bankruptcy Trustee? A Bankruptcy Trustee is an individual who is appointed by the United States Trustee’s Office, (a Division of the United States Department of Justice), to administer bankruptcy cases within a particular State and District. In Pennsylvania, there are 3 Bankruptcy Districts: Eastern, Middle and Western Districts. Chapter 13 Trustees are […] The post The Role of a Trustee in a Chapter 13 Bankruptcy Filing in Pennsylvania appeared first on .

The October 2018 New York City Taxi & Limousine Commission (TLC) sales results have been released to the public. And as is our practice, provided below are Jim Shenwick’s comments about those sales results.1. The volume of transfers rose dramatically from September. In October, there were 106 unrestricted taxi medallion sales.2. However, 99 of the 106 sales were foreclosure sales, which means that the medallion owner defaulted on the bank loan and the banks were foreclosing to obtain possession of the medallion. We disregard these transfers in our analysis of the data, because we believe that they are outliers and not indicative of the true value of the medallion, which is a sale between a buyer and a seller under no pressure to sell (fair market value).  One transfer was an estate sale for no consideration and another transfer was from an individual to an LLC for no consideration, which also does not reflect fair market value and which we have also excluded from our analysis.3. The large volume of foreclosure sales (approximately 94%) is in our opinion evidence of the continued weakness in the taxi medallion market. 4. The five regular sales for consideration ranged from a low of $150,000 (one medallion), $160,000 (three medallions) and a high of $175,000 (one medallion).5.  Accordingly, the median value of a medallion in October was $160,000, down 8.5% from $175,000 in September.In Jim Shenwick’s opinion, the new NYC law restricting the number of Uber, Via and Lyft licensesdoes not seem to have yet increased the value of taxi medallions.Please continue to read our blog to see what happens to medallion pricing in the future. Any individuals or businesses with questions about taxi medallion valuations or workouts should contact Jim Shenwick at (212) 541-6224 or via email at [email protected].

Economists have always been fond of Uber. Its willingness to battle incumbents, use of technology to match buyers and sellers, and embrace of “surge” pricing to balance supply and demand make the ride-hailing giant a dismal scientist’s dream. Steven Levitt, the author of the bestselling “Freakonomics”, called it “the embodiment of what the economists would like the economy to look like”. But if economists subjected Uber and its competitors to a cost-benefit analysis, they might not be so impressed.This might surprise customers. A study in 2016 by researchers from Oxford University, the University of Chicago and Uber itself found sizeable benefits from ride-hailing services for consumers. Using data from 48m Uber trips taken in four American cities in 2015, they estimated the difference between how much customers were willing to pay and their actual fare. Each $1 spent on UberX rides generated a “consumer surplus” of $1.60. Across America, that surplus was estimated to be $6.8bn a year.Drivers also benefit. Few sign up for lack of anything else, as is true of some gig work: in America roughly eight in ten have left another job to get behind the wheel. The typical American Uber driver makes $16 per hour ($10 after expenses), higher than the federal minimum wage. In London earnings after expenses come to £11 ($14) per hour and a recent survey found Uber drivers reporting higher levels of life satisfaction on average than other workers.But against these benefits, there are costs to weigh. Far from reducing congestion by encouraging people to give up their cars, as many had hoped, ride-hailing seems to increase it. Bruce Schaller, a transport consultant, estimates that over half of all Uber and Lyft trips in big American cities would otherwise have been made on foot or by bike, bus, subway or train. He reckons that ride-hailing services add 2.8 vehicle miles of driving in those cities for every mile they subtract.A new working paper by John Barrios of the University of Chicago and Yael Hochberg and Hanyi Yi of Rice University spells out one deadly consequence of this increase in traffic. Using data from the federal transport department, they find that the introduction of ride-sharing to a city is associated with an increase in vehicle-miles travelled, petrol consumption and car registrations—and a 3.5% jump in fatal car accidents. At a national level, this translates into 987 extra deaths a year.What could be done to tip the balance back to benefits overall? “Congestion pricing is the most direct solution,” says Jonathan Hall of the University of Toronto. Several cities, including London, Stockholm and Singapore, have moved in this direction, charging drivers for entering busy areas at peak hours. If ride-hailing firms tweaked their pricing to encourage carpooling, that would help, too.One of the worst things a city can do, says Mr Barrios, is to cap the number of ride-hailing cars on their streets, as New York did in August. That marked a step back towards the days when barriers to entering the taxi market were high and competition was low. A dismal outcome, as most right-thinking economists would agree.Copyright © The Economist Newspaper Limited 2018. All rights reserved.

By Ashley CullinsWesley Snipes must pay millions to the IRS after failing to convince a tax court that he doesn't have the assets to pay more than six figures.After the IRS tried to collect $23.5 million in back taxes, the actor asked for an offer-in-compromise which would let him settle his debt for less than the amount owed and for the notice of federal tax lien that was filed against his home to be withdrawn. He put up just shy of $850,000 in cash as an OIC, but the IRS rejected the offer and sustained its lien. So Snipes filed a petition asking the tax court to overturn the decision.U.S. Tax Court Judge Kathleen Kerrigan on Thursday upheld the IRS decision finding Snipes failed to provide sufficient proof of his assets and financial condition and the settlement officer didn't abuse her discretion in rejecting his request.The lien was placed in August 2013, just a few months after the actor was released from prison following his conviction on related tax crimes. At the time, he owed $23.5 million for the years 2001 through 2006. Snipes then requested an installment agreement or OIC and made his cash payment. A settlement officer looked into his real estate holdings and assets but was unable to determine that he no longer owned certain properties that he claimed to have unloaded. Following the investigation, the officer determined that the reasonable amount that could be collected was about $17.5 million, but Snipes didn't increase his OIC offer.During the proceedings that followed, Snipes claimed his financial adviser had taken out loans and disposed of assets without his knowledge and offered up an affidavit from the adviser admitting to misconduct — but he didn't provide documentation showing the diversion of the assets.The settlement officer later reduced Snipes' estimated liability to $9.5 million, but Snipes stayed with his original offer."Given the disparity between petitioner’s $842,061 OIC and the settlement officer’s calculation of $9,581,027 as his RCP, as well as petitioner’s inability to credibly document his assets, the settlement officer and her manager had ample justification to reject the offer," writes Kerrigan in the opinion, also noting that Snipes failed to show paying the bill would result in economic hardship. "Accordingly, we conclude that the settlement officer did not abuse her discretion in determining that acceptance of petitioner’s OIC was not in the best interest of the United States."© 2018 The Hollywood Reporter.  All rights reserved.

When filing for bankruptcy, one of the central themes behind the Bankruptcy laws is to provide people with a fresh financial start. Central to that idea is that they need not be destitute when filing. Thus, the Federal Bankruptcy Exemptions were created by Congress to allow bankruptcy filers to retain a certain amount of personal […] The post What are Bankruptcy Exceptions and Can They Be Amended in Pennsylvania or NJ? appeared first on .

  Too often counsel do not fully disclose fees and limits of representation in the fee disclosure required by Rule 2016(b).  A court in New Jersey examined this issue in In re Busillo, 2018 Bankr. LEXIS 3352, Case #15-15627 (Bankr. D.N.J. Oct 29 2018).   The court examined three cases by the same firm, in which the firm filed 2016(b) statements asserting $3,500 received prior to the filing of the statements, with a balance due of $0, and that:In return of the above disclosed fee, I have agreed to render legal services for all aspects of the bankruptcy case, including:a. Analysis of the debtor's financial situation, and rendering advice to the debtor in determining whether to file a petition in bankruptcy;b. Preparation and filing of any petition, schedules, statement of affairs and plan which may be required;c. Representation of the debtor at the meeting of creditors and confirmation hearing, and any adjourned hearings thereof;d. Representation of the debtor in adversary proceedings and other contested matters;e. [Other provisions as needed].The section entitled services excluded from the fee was left blank.   When the firm filed fee applications asserting that the $3,500 was simply a retainer, and sought an additional $3,500 fee award (along with amended 2016(b) statements in 2 of the 3 cases) the court expressed concern over 1) whether the 2016(b) statement or the engagement letter controls; 2) whether the clients were notified of an increase in hourly rates, and if such increases were agreed upon; 3) whether the court can award fees for pre-petition representation, and 4) any other issues that may arise.  The court noted a 2009 decision holding that where counsel filed a 2016(b) disclosure that conflicted with his retainer agreement, counsel was bound by the 2016(b) statement.1  Counsel also noted that additional funds received post-petition had been applied to each Debtor's account, even though the Court had not approved the fee applications.    The court found that it had an independent duty to review fee applications, even if no objection is filed, pursuant to 11 U.S.C. 329.  This section requires any attorney representing a debtor to file a statement of compensation paid within a year of filing or agreed to be paid in contemplation of or in connection with a case by such attorney, and the source of such payment.  This statute is implemented by Rule 2016(b) and mandates the filing of such statement, even if counsel does not request fees through the case.  The court found that counsel cannot withdraw against a retainer while representing a debtor in bankruptcy, prior to approval of such fees.2   Such conduct also may be considered a violation of the rules of professional conduct.  See RPC 1.15(a)  ("A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property.").   The court rejected counsel's argument that the schedules and plan showed that the firm sought to be paid on an hourly basis, stating it is not the court's duty to sift through other pleadings to determine the fee sought by the law firm.  Based on the firm's failure to comply with Rule 2016(b) the court found it could cap the fees at $3,500 or require the firm to disgorge fees.    However, lacking objection by any party in interest, the court exercised its discretion to allow the firm to receive the no-look fee plus supplemental fees in each case.  The court found the Busillo case to be typical.  Counsel had sought fees of $4,697.50 and $1,180.81 in costs.  The firm assisted in confirming a plan and a modified plan.  The court allowed the no look fee plus $400 supplemental fees for preparing and filing a modified plan ($300) and amended schedules ($100).  No hourly fee award was allowed as there was no showing why the work provided was more difficult or required more time than what is provided in the supplemental fee form.  The court found that the requirement to file a 2016(b) disclosure did not apply in the Crane case, as the retainer was received more than one year before the petition date.  But, since the firm in fact filed a 2016(b) statement, it had a duty to accurately state the terms of its retention.   This case involved an attempt to cram down a mortgage claim under §1322(b)(2) arguing that the mortgage was secured by two adjoining lots, when the home was situated on only one lot.  This involved litigation ultimately resulting in a settlement.  The court allowed reduced fees for a total of $14,347.50 fees and $960.95 in expenses.  In the third case, Reed, the court again allowed the no look fee lus supplemental fees of $3,305 for filing amended plans, attending additional confirmation hearings, filing motions to expunge claims, and amending schedules, as well as an hourly rate for negotiating a loan modification.1  In re Jackson, 401 B.R. 333 (Bankr. N.D. Ill. 2009)↩2 In re Chapel Gate Apts., Ltd., 64 B.R. 569, 575 (Banks. N.D. Tex. 1986)↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703www.hillsboroughbankruptcy.com