The Bankruptcy Appellate Panel of the 8th Circuit had opportunity to examine whether failure to timely disclose assets, even if in bad faith, can preclude the debtor from exempting such assets.  InIn re Belew, No. 18-6007, 2018 WL 4231821 (B.A.P. 8th Cir. Sept. 6, 2018) the panel ruled that bankruptcy courts cannot deny such exemptions except on grounds specified in the code, and that bad faith is not specified as a basis to deny the exemption.     The asset at issue included a debit account disclosed at the meeting of creditors to the chapter 7 trustee.  A formal amendment to the schedules was filed a week later claiming the account as exempt.  After further investigation by the trustee, additional undisclosed assets were discovered, including an equitable interest in his spouse's checking account (valued by the debtor as 'unknown'), two unpublished and unedited fiction manuscripts (valued by the debtor at $100), and cash held in a safe at the residence (again valued by the debtor as 'unknown').  A second amended schedule and exemption was filed by the debtor upon discovery of these assets.   The trustee objected, asserting that the second amended claim of exemptions was filed in bad faith and was prejudicial to creditors.  The bankruptcy court overruled the exemption finding that there is no authority to deny an exemption except as specified in the bankruptcy code.   While the trustee raised on appeal the application of §522(g): allowing exemption of property recovered by a trustee if the debtor did not voluntarily transfer or conceal the property, since the issue was not raised in the bankruptcy court the appellate panel did not consider this argument.  The panel first looked to Justice Scalia's decision in Law v. Siegel, 571 U.S. 415, 134 S.Ct. 1188, 188 L.Ed.2d 146 (2014).  Here, the court ruled that exempt assets may not be used to pay administrative expenses incurred as a result of the debtor's misconduct, finding that §522 expressly allowed exemption of assets described therein, and that allowing an administrative expense as against such exemption exceeded the court's authority.  Justice Scalia went on to state    [Trustee] points out that a handful of courts have claimed authority to disallow an exemption (or to bar a debtor from amending his schedules to claim an exemption, which is much the same thing) based on the debtor's fraudulent concealment of the asset alleged to be exempt. He suggests that those decisions reflect a general, equitable power in bankruptcy courts to deny exemptions based on a debtor's bad-faith conduct. For the reasons we have given, the Bankruptcy Code admits no such power. It is of course true that when a debtor claims a state-created exemption, the exemption's scope is determined by state law, which may provide that certain types of debtor misconduct warrant denial of the exemption.... But federal law provides no authority for bankruptcy courts to deny an exemption on a ground not specified in the Code.  Law, 571 U.S. at 425, 134 S.Ct. 1188.   The panel considered this language to be dicta, and in contravention of prior 8th Circuit decisions, but determined that federal courts are bound by teh Supreme Court's considered dicta almost as firmly as by the Court's outright holdings, particularly when the dicta is of recent vintage and not enfeebled by later statements.1    The panel thus determined that this language in Law abrogated the contrary prior decisions by the 8th Circuit.  Thus the court concluded that a bankruptcy court cannot deny an exemption based on a bad faith or prejudice to creditors, or any ground not specified in the code, and sustained the decision of the bankruptcy court.1 In re Pre-Filled Propane Tank Antitrust Litigation, 860 F.3d 1059, 1064 (8th Cir. 2017)↩Michael Barnett www.hillsboroughbankrupty.com

  The appeal in In re: LINO MIRANDA MUNOZ, Debtor. SUPERIOR CLEANING SERVICE, LLC, Appellant, v. LINO MIRANDA MUNOZ, Appellee., No. 17-CV-1910-WJM-STV, 2018 WL 4214439,  (D. Colo. Sept. 5, 2018) involved a state court judgment of $3.00 for fraud and $90,733.79 for attorneys fees.  Superior provides cleaning services, and had subcontract with Munoz for window cleaning services.  Munoz sued Superior asserting a breach of this agreement.  Superior counterclaimed for breach of contract, fraud, violation of the Colorado Organized Crime Control Act, and civil theft.  When Munoz failed to answer, the clerk entered a default.  A request by new counsel to set aside the default was denied.  Upon a jury trial on liability and damages as to Munoz claim and for damages only as to Superior's counterclaim, the jury awarded $1 in breach of contract damages, $1 in fraud damages, and $12,500 in punitive fraud damages against Munoz.  No money was awarded on the other counts.  The state court reduced the punitive damages to $1 based on state law limiting punitive damages in excess of actual damages; leaving the final damages award against Munoz at $3.  Superior then requested fees under a fee-shifting clause in the contract and entered a single final judgment of $90,733.79.  No distinction was made between fees in prosecuting the counterclaim or in defending against Munoz's claim.  Munoz then filed for relief under chapter 13 of the bankruptcy code, and a timely adversary proceeding was filed asserting the entire $90,933.79 should be nondischargeable under §523(a)(2)(A).  The bankruptcy court granted summary judgement finding the judgment was entitled to collateral estoppel effect as to the $1 in actual damages and $1 of punitive damages for fraud.  It also concluded that the attorneys fees portion of the judgment derived from 'liability in contract' rather than fraud, and exempted only the $2 from discharge.  Superior appealed, asserting that dischargeability is an all or nothing proposition; that the fraud claim is inextricably intertwined with the other claims.    Superior based its argument on the 1998 decision in Cohen v. de la Cruz, 523 U.S. 213 (1998).   In this case an administrative agency had entered an order against a landlord requiring him to refund about $30,000 in rents in excess of the amounts allowed by a rent control ordinance.  When the landlord filed bankruptcy the tenants sought to have the debt nondischargeable under §523(a)(2)(A), along with treble damages under a state consumer fraud statute, and attorneys fees.  The bankruptcy court ruled in favor of the tenants for the entire claim, which was affirmed by the Supreme Court; finding that the nondischargeability claim extended beyond the value of what the debtor obtained by fraud to all liability arising from fraud.   The district court rejected Superior's argument that Cohen forbids a portion by portion analysis of the judgment.  Rather, the court found that Superior was confusing two distinct concepts discussed in Cohen: whether §523(a)(2)(A) is limited to the value obtained through fraud (no); and whether a portion of the allegedly nondischargeable debt 'arose from' amounts obtained by fraud.  The appeal before the district court deals solely with the latter issue.  Neither the $1 fraud award, nor the $1 punitive award correspond to the value of what Munoz obtained through the alleged fraud.   Superior also cited In re Tsamasfyros, 940 F.2d 605 (10th Cir. 1991) for the proposition that dischargeability is an all or nothing proposition.  The court looked beyond Tsamafyros to the case it was based on: In re Gerlach, 897 F.2d 1048 (10th Cir. 1990).  This case rejected the line of cases holding that a creditor seeking a nondischargeablility ruling must prove the portion of the debt corresponding to the loss the creditor suffered by fraud.  Rather, it agreed with the 11th Circuit's finding that if  the debt is attributable to fraud, then it is entirely nondischargeable.  Birmingham Trust Nat’l Bank v. Case, 755 F.2d 1474, 1477 (11th Cir. 1985).   In the Tsamasfyros case the 10th Circuit separates the state court's $7,000 award for breach of contract from the $162,500.92 damages for breach of fiduciary duty, making only the later nondischargeable.  The issue, then, is whether a specific portion of a judgement derives from fraud.     The district court found that Superior had waived its argument that the case should be remanded to the bankruptcy court to apportion the attorneys fees between those supporting superior's counter claim against Munoz and those defending against Munoz claim against it.   When a party is aware of an argument it could make and explicitly rejects the argument, the party has waived it in the strictest sense of that term: “intentional relinquishment or abandonment of a known right.” United States v. Dahda, 853 F.3d 1101, 1117–18 (10th Cir. 2017), aff’d, 138 S. Ct. 1491 (2018).  Superior failed to argue the plain error doctrine, which would not overcome the waiver argument in any case.  Further, the district court did not find plain error in the lower court's judgment.   The district court did remand the case to the bankruptcy court to determine whether Superior was entitled to fees as the prevailing party in the adversary proceeding, an issue not clearly determined the bankruptcy court's ruling.  The district court expressed no opinion as to whether such fee shifting should apply, or whether Superior should be deemed the prevailing party.  Otherwise, the judgment of the bankruptcy court was affirmed.Michael Barnett www.hillsboroughbankruptcy.com      

The August 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 from July. In August, there were 52 taxi medallion sales.2. 37 of the 52 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).  Three transfers were estate sales for no consideration and another transfer was from an individual to an LLC for no consideration, which also do not reflect fair market value and which we have also excluded from our analysis.3. However the large volume of foreclosure sales (approximately 71%) is in our opinion evidence of the continued weakness in the taxi medallion market. 4. The 11 regular sales for consideration ranged from a low of $150,000 (one medallion), $160,000 (one medallion), $170,000 (one medallion), $172,500 (two medallions), $175,000 (two medallions), $180,000 (one medallion), $182,300 (one medallion), $185,000 (one medallion) and a high of $200,000 (one medallion).5.  Accordingly, the median value of a medallion in August was $175,000, the same as in July.In Jim Shenwick’s opinion, the new NYC law restricting the number of Uber, Via and Lyft licenses does 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].

You may be surprised to learn that there are different types of bankruptcy. Each type is called a “chapter.” Most people who file for bankruptcy in Pennsylvania use either Chapter 7 or Chapter 13. It is crucial to understand how they are different, so that you are better able to select the best type of […] The post What is the Difference Between Chapter 7 and Chapter 13 Bankruptcy in Pennsylvania? appeared first on .

By James BarronMohammed Uddin was having a bad day, and it was only lunchtime. He was fourth in line at a green-taxi stand in Astoria, Queens, and not happy about it.But he was not waiting for a green cab to pull up. He was in a line of green cabs waiting for passengers to pick up in the shadow of the Astoria Boulevard subway station.“I started at 9 o’clock,” said Mr. Uddin, a green-taxi driver since he left a hotel job on Long Island in 2014. “I made $47 so far. That’s very bad. If Uber hadn’t come in, it wouldn’t be like this.”Uber and Lyft, the ride-share services that have transformed the way many New Yorkers get around, have plunged the yellow cab industry into an existential crisis. But green-cab drivers are no less angry about app-connected rides, saying that Uber and Lyft have torpedoed their fledgling segment of the taxi industry before it even had a chance to establish itself.Mayor Bill de Blasio recently signed a bill into law that capped ride-share vehicles at their current level, around 100,000, making it the first major American city to impose a limit on the booming industry. But drivers like Mr. Uddin said the cap was unlikely to create a new window of opportunity for green cabs, in part because ride-hail cars outnumber green cabs 30 to 1. City officials estimate the number of green cabs on city streets to be around 3,500.The city wanted green taxis to be an antidote to a longstanding problem: Yellow cabs rarely pick up people outside Manhattan, except at the airports. But their arrival more or less coincided with the rise of Uber, which, after establishing itself in Manhattan, expanded across the city.“Uber and Lyft really decimated the green cab sector,” said Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, which represents taxi and ride-hail drivers. “There was high expectation among drivers that this would be an opportunity to earn without the same level of pressure that you face in the yellow-cab industry.”Uber counters that it helps green cabs, because many green-taxi operators also drive for Uber. An Uber spokesman said the ride-hail service dispatches more than 50,000 trips to green taxis every month — of course, for passengers, it can be confusing to order an Uber car and have a green taxi pull up to the curb. The Uber spokesman, Jason Post, said Uber provided “an enormous earning opportunity by connecting drivers with more rides,” especially in far-flung neighborhoods where fewer green cabs circulate looking for passengers.Uber riders say it is often much easier and faster to get an Uber car with a couple of taps on a cellphone than to it is to look for a green cab to hail on the street.Figures from the city’s Taxi and Limousine Commission underscore how much business for green cabs has declined since ride-share cars arrived. In May, green taxis made 25,693 trips a day across the city, a 55 percent decrease from May 2015, the busiest month on record, which had 57,637 trips. By contrast, Uber says it handled more than 84,000 trips to or from a single neighborhood, East New York, Brooklyn, between July 18 and Aug. 15.For green cabs, revenue has declined proportionally as trips have dwindled, to $386,965 a day citywide in May 2018, from $862,099 in May 2015. Green-cab drivers are working less than they were, 5.7 hours in May 2018, compared with 6.5 hours in May 2015.Brooklyn accounted for a third of green-cab pickups from January through May of this year, according to the taxi commission. Almost another third, 31 percent, were in northern Manhattan, and 29.5 percent were in Queens. By contrast, only 5.3 percent were in the Bronx, and only one one-hundredth of one percent on Staten Island.And, while the number of ride-hail vehicles has soared, the number of green cabs has shrunk. A total of 8,345 permits have been issued since 2013, but the taxi commission considers only 3,514 active.As for whether Uber had hurt the green cabs, Mr. Post, the Uber spokesman, said, “I would say Uber has built a better mousetrap.”Green taxis were supposed to be that mousetrap — a new category for the entrenched taxi industry, created when Michael R. Bloomberg was mayor. “The right to hail a legal taxi in all five boroughs,” he said in 2013, was “something that New Yorkers have deserved and never had.” A survey by the taxi commission found that 95 percent of yellow taxis picked up passengers below 96th Street in Manhattan and at the airports.The solution — taxis that could only operate away from the areas dominated by yellow cabs — now seems so 2011, which is when the Bloomberg administration first proposed it. The new category of taxis that was created, the green cabs, could not pick up passengers in Manhattan south of East 96th Street or West 110th Street. They can stop if someone hails them anywhere in the other boroughs, except at the airports.By coincidence, 2011 is also when Uber began operating in New York.Now, some passengers say green cabs tried, but never fulfilled their promise.“They filled a crucial void in areas like Harlem where yellow cab service was spotty at best” when they first hit the streets, said Derek Q. Johnson, who lives in Harlem. “But I think it’s hard to dispute that the ride is better with Uber and Lyft and the reliability is more assured.”Different rules apply to green cabs at airports, where they can drop off passengers but cannot pick them up, except by prearrangement — for example, if they are sent there by a dispatcher. Many drivers complain that those rules force them to go to the airports empty if they are dispatched for a pickup or return empty if they take someone there. Unlike yellow cabs, they cannot wait in the taxi lines. Uber and the other ride-hailing apps are not bound by airport rules.The yellow-cab industry responded to the plan for green cabs by going to court. Yellow cab owners worried that the value of their million-dollar medallions would plummet.The city won the court challenge and the value plummeted, but not because of competition from the green cabs that went on the streets in 2013.“Unfortunately, they came along at the same time as Uber and Lyft,” said Mitchell L. Moss, a professor at New York University where he is the director of the Rudin Center for Transportation Policy and Management. “The benefit of Uber is it can come pick you up in highly dispersed locations, which the green taxi can’t really do because it’s got to stay near dense transit pickup locations.”Green cabs, he said, are “basically clustering at transit and retail hubs” — near where subway lines end, for example — because they are more likely to find passengers there than if they cruise the streets they are authorized to cruise where people are not used to seeing cabs. Indeed, Ms. Desai, of the Taxi Workers Alliance, said that “significant street-hail markets” had not developed outside Manhattan.But that was not the only problem for green cabs. “The city was kind of undercutting them by licensing all those other cars” — the ride-share vehicles, said Graham Hodges, a historian of the taxi industry and a professor at Colgate University, who predicted that a shakeout is coming.“There are far too many vehicles on the road, and that’s where I think the T.L.C. will tighten up regulation,” he said, referring to the taxi commission. “And when they do, the ones with those permits will be in the best legal situation. They’ll be the ones that survive.”Copyright 2018 The New York Times Company.  All rights reserved.

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: The Eastern, Middle and Western Districts. In Chapter 7 […] The post What Does a Bankruptcy Trustee Do? appeared first on .

How to Apply for Long Term Disability in Pennsylvania Long Term Disability Insurance provides insurers with income if they become ill or injured and cannot work for a certain period of time.  Most policies are an employer-provided policy governed by ERISA, the Employee Retirement Income Security Act.  To receive benefits, employees must file a timely […] The post Do You Need a Lawyer to File for Long Term Disability in Pennsylvania? appeared first on .

A Chapter 7 Bankruptcy, also known as liquidation, provides discharge of most unsecured debts, i.e. credit cards, medical bills, personal loans, under Bankruptcy protection. In approximately 95% of cases, Debtors do not have assets above the federal or state allowed limits and therefore there are no distributions to any Creditors. Therefore, in most Chapter 7 […] The post Why File a Chapter 13 Bankruptcy in Lieu of a Chapter 7 Bankruptcy appeared first on .

Here at Shenwick & Associates, we were one of the first law firms to foresee the taxi medallion valuation crisis.  And now, we see the potential for disruption to another integral aspect of life in New York City–the hospitality industry, including restaurants and bars.Starting on New Year’s Eve (January 1, 2019) NYC employers with 11 or more employees will be required to pay a minimum wage of $15/hour.  For employers with 10 or fewer employees, the minimum wage of $15/hour goes into effect on Dec. 31, 2019. In our opinion, the combination of the minimum wage increase with New York City’s already stratospheric commercial rent and operating expenses will have a severe impact on New York City’s restaurants and bars, especially smaller, independent and family–owned establishments resulting in the closure or bankruptcy of these businesses! We’ve already been contacted by several restaurateurs, who have expressed the following concerns: 1. Their restaurant or bar is breaking even or losing money, and with the coming increase in the minimum wage, should they close their business or file for bankruptcy? 2. Is the principal personally liable under either a guaranty (which makes the principal liable for rent and additional rent for the full term of the lease),  a “good guy” guaranty (which makes the principal liable until the business surrenders the premises to the landlord), for money owed to vendors, for sales tax or FICA/FUTA taxes as a “responsible person” or for unpaid wages to employees? 3. Should the entity that owns and operates the restaurant or bar close (“go dark”) or file for bankruptcy or negotiate with their landlord or vendors? Strategic considerations include: 1. Does the business file for bankruptcy?  If so, does it file under chapter 7 (liquidation) or chapter 11 (reorganization)? 2. Should the business simply wind up operations and close (“go dark”) or negotiate with their landlord and vendors? 3. As mentioned above, if there is a good guy guaranty, has the guarantor minimized his or her exposure under the good guy guaranty? 4. If there are three or more years left on the lease, has the principal thought about selling the business or subleasing the space? 5. Should the principal engage in asset protection planning, negotiate with creditors or consider filing for bankruptcy?At Shenwick & Associates we have a strong background in short sales, workouts, personal and business bankruptcy, asset protection planning and commercial leasing, providing a diverse set of possible strategies and solutions that we can help a restaurant or bar and their principal create or implement. Our analysis begins with an examination of the businesses’ books and records, including the balance sheet, income statement, lease and tax returns.  We also review the principal’s assets, liabilities and after-tax monthly budget. If you or your business need help, please call or email Jim Shenwick at (212) 541-6224 or [email protected].

by Herb WeisbaumCredit card delinquencies on the rise. Despite a strong economy and low unemployment, Americans are falling behind in paying off their credit card debt.The delinquency rate on all U.S. credit card loans is 2.47 percent — up from 2.42 percent at the beginning of 2017 and 2.12 percent in the second quarter of 2015, according to the Federal Reserve Bank of St. Louis.That means more than $23 billion in credit card debt is currently delinquent — 30 or more days overdue — according to a new report from the personal finance website NerdWallet.While lack of money is the most common reason for missing a payment, forgetting to pay the bill is often the case. For its 2018 Consumer Credit Card Report, NerdWallet surveyed 2,019 U.S. adults and found that:35 percent simply forgot to make the payment.33 percent needed the money to pay for essentials.32 percent needed the money for an unexpected expense.Kim Palmer, NerdWallet’s credit card expert, finds it “troubling” that so many people — 65 percent of those surveyed — did not pay their bill on time because they didn’t have the money. According to NerdWallet’s most-recent Household Credit Card Debt Study, income growth isn’t keeping up with some of people’s biggest expenses. Reasons for credit card delinquencies“People's budgets are really stretched because the cost of certain essentials, like healthcare, food and housing, continue to go up and really put pressure on people's budgets,” Palmer said. “And so, people are turning to credit cards as a way to bridge the gap when they can't afford their monthly bills and then they’re unable to make the payments at the end of the month.”Nerdwallet’s report found that 25 percent of those who’ve been delinquent on a credit card payment said it was because they prioritized paying off other debt.People's budgets are really stretched because the cost of certain essentials, like healthcare, food and housing, continue to go up and really put pressure on people's budgets.Research by the Federal Reserve in 2017 found that when there’s not enough money to cover all monthly bills, credit card bills are more likely than other debt payments — rent or mortgage, car payment, or student loan — to go unpaid or partially unpaid.The high cost of paying lateMore than one in five cardholders in the survey (21 percent) said they made a delinquent credit card payment sometime in their life. NerdWallet did the math: Using a late payment fee of $27, that’s more than $1.4 billion in penalty payments on a nationwide basis. And that’s on top of the interest charged for carrying a balance.Adding insult to injury, falling more than 60 days behind can trigger what’s called the “penalty APR” which can be as high as 29.99 percent with some cards. That penalty APR, which makes it more expensive to carry that balance, can last for up to six months before the credit card company reviews your account to see if the rate should be lowered.Let’s say you carry a balance of $3,000 on a card with a 15 percent interest rate and it takes you 18 months to pay off that balance. The Credit Card Payoff Calculator at Bankrate.com shows total interest will be $368. With a default rate of 29.99 percent, that jumps to $761, more than double the carrying cost.Missing a payment can also decimate your credit score, because card issuers report delinquent accounts to the credit bureaus.“The longer your account goes unpaid, the more damage you can do to your credit score and the more effort it will take to bring the account current,” said Bruce McClary, vice president for communications at the National Foundation for Credit Counseling (NFCC). “Once reported, a late payment could cause your credit score to drop more than 100 points in some situations.”A poor credit score will make the cost of borrowing money more expensive and could result in being rejected for a mortgage or car loan. In some case, it could make it difficult or impossible to rent an apartment.What you can doAll of these financial repercussions can be avoided with a more proactive approach, including:Use automatic bill paySet up email and text reminders of upcoming due datesAt least make the minimum payment to keep the account from going delinquentIf your statement comes at the wrong time of month for you, contact the credit card company to see if the statement date can be changed.When a late payment is unavoidable due to financial hardship, contact the credit card company before the due date to see if they can help you manage the situation. This would also be the time to get some expert guidance from a nonprofit credit counselor. You can find one near you on the NFCC website.“Silence will only lead to setbacks,” McClary told NBC News BETTER. “Keeping your credit card balances under control and spending within your budget will go a long way toward protecting your credit health and your bottom line.”Copyright 2018 NBC Universal.  All rights reserved.