Understanding Your Bankruptcy Filing: Schedules G, H, I, and J In our last several blog posts, we have covered the types of information that are needed when you file your bankruptcy petition. We discuss the final schedules included in your petition in this article. The post Understanding Schedules G, H, I and J in Bankruptcy appeared first on Tucson Bankruptcy Attorney.

It is a good idea to consult with an experienced Chicago bankruptcy attorney before acting.  Bankruptcy is a big decision and can provide the financial freedom you desperately need.  However, it should not be entered into lightly.   Bankruptcy does require planning before you file your case Don’t use your credit cards once you make the decision to file bankruptcy.  Under the Bankruptcy Code, incurring debt in the 90 days before filing for bankruptcy for the purchase of luxury goods or services is presumed non-dischargeable.  Even if you use your credit card for non-luxury goods or services, you will face an uphill battle in proving to the credit card company that your purchases were not used for luxury purposes.  Discontinuing credit card use also has a practical purpose; it prepares you for a life without the credit you have come to rely upon. Don’t repay family members.  Family members may be willing to loan you money in your time of need and naturally, you feel a moral obligation to pay them back.  But under the Bankruptcy Code, you can’t treat family members better than other creditors.  Because you are more likely to payback a family member than a credit card company, the look-back period is one year before you file for bankruptcy.  If you do repay a family member, the trustee could sue your family member to get the money back. Don’t transfer property out of your name.  Bankruptcy is scary to think about, particularly when you hear that a trustee could sell your property to pay your creditors in Chapter 7.  However, you will only make things worse if you transfer property to someone else before filing for bankruptcy.  When you file for bankruptcy, you must disclose all transfers of property within 2 years before filing.  If a trustee thinks that you transferred the property fraudulently, they could avoid the transfer. Don’t touch your retirement account.  Many times when people are struggling with debt, they cash out an IRA or take a 401(k) loan to pay their creditors.  However, retirement funds are fully exempt from the collection of creditors in Illinois.  This means that if you are sued by a creditor, they cannot seize your retirement account.  A trustee in bankruptcy can’t take even a penny of your retirement account. These are just a few of the mistakes that you should avoid before filing for bankruptcy.  If you are considering bankruptcy, you should consult with a Waukegan bankruptcy attorney if you are thinking about filing for bankruptcy in Lake County, Illinois.

The only thing constant is change, we’re told. So, here are the important changes to the rules of bankruptcy procedure and the official forms effective December 1. Bankruptcy rules Rule 1007  now permits the provider of the personal financial management course to notify the court of the debtor’s completion thereof.  The debtor is relieved of filing the declaration if the provider files it.  If not, the debtor can file as currently done. Rule 4004   adds to the list of circumstances where the court doesn’t enter the discharge to include the pendency of a hearing on a reaffirmation. Bankruptcy forms Three form changes are significant in a consumer practice. Schedules I and J in cases involving individuals have been revised and “modernized” to be more easily used by pro pers.  I wonder if the rules committee will find themselves muttering “be careful what you wish for.” Schedule I has gone from one page to two.  It specifically asks for inclusion of non cash public benefits and for family support payments received by a dependent. There are official instructions and committee notes. that cover I and J. Schedule J grows to three pages.  It calls for more detailed information on dependents, including any relationship they have to the debtor and whether they live with the debtor. There is now a separate line entry for junior mortgage expenses on the debtor’s home and separate lines for the expenses of other real estate. The reaffirmation cover sheet is  not one sheet, but two.  It attempts to summarize the debtor’s current financial situation and the terms of the proposed reafffirmation.  The committee notes  appear unchanged from 2009. See the full list of form changes. More change proposed Before you feel too complacent (these changes weren’t too challenging, you say), more is afoot.  The comment period for another swath of changes is now open. Comments are being solicited for changes to  Bankruptcy Rules 2002, 3002, 3007, 3012, 3015, 4003, 5005, 5009, 7001, 9006, and 9009, and Official Forms 17A, 17B, 17C, 22A-1, 22A-1Supp, 22A-2, 22B, 22C-1, 22C-2, 101, 101A, 101B, 104, 105, 106Sum, 106A/B, 106C, 106D, 106E/F, 106G, 106H, 106Dec, 107, 112, 113, 119, 121, 318, 423, and 427. Comments are being solicited until February 15, 2014 here.  Incredibly, only 27 comments have been received. Are we really encountering lawyers without opinions? Like the traditional wedding service says, speak now or forever hold your peace. Image courtesy of Wikimedia and Felix Burton.

This is the case of Willie Banister from Chicago, Illinois who was appearing for a Chapter 13 bankruptcy consultation.  Mr. Banister has never filed a bankruptcy before.  He is not a homeowner.  He is renting on a month to month lease from a landlord in Chicago.  He does not own a motor vehicle.  In terms+ Read MoreThe post Repay Parking Tickets Over A Five Year Period appeared first on David M. Siegel.

Lately there has been a lot of attention focused on venue reform including an ABI Commission hearing.   I have a simple proposal that would eliminate this problem once and for all.    My suggestion is to let each of the circuits compete for the big cases, say those with over $100 million in assets.    Here is how it would work.   Each circuit would select one male and one female associate to compete in the Venue Games.   Delaware and the Southern District of New York would be counted as an additional circuit in order to bring the number of tributes to twenty-four. The tributes would then fight to the death in a televised competition taking place in a specially designed arena with hazards designed to kill off the weaker circuits.  In order to match current reality, the tributes from Delaware and New York would receive special training from the moment they were licensed to compete in the games.  The winner of the game would be made a partner and given a corner office in a specially designed Victor's Tower and would be exempt from future games.   For the next year, all mega cases would be filed in the victor's court of choice.    Would this be an improvement over the current system?(Disclaimer:  Any similarity between my proposal and a popular trilogy of young adult fiction books and movies is purely coincidental).   

Joint bank accounts present one of the most vexing problems for a bankruptcy lawyer. Too often, your client is a signatory on an account containing someone else’s money. The parties think a joint account is a convenience; often it’s a hedge so that the client can care for a parent or other dependent person should the other become incapacitated. It becomes a lot less convenient when your client hits financial difficulties.  The account becomes vulnerable to levy by judgment creditors, offset by the depository institution, and perhaps turnover by a bankruptcy trustee. The problem is compounded when your client forgets to mention it because, in her mind, it’s not her money. What do you do when “others” don’t share that view?  Without statutory help If you are lucky, the other party’s Social Security number was used when the bank account was opened.  That strengthens the argument that the money isn’t really the debtor’s money. If you aren’t so lucky, prudence may suggest you want to drain or close the joint account.  If the account is worthless at filing, the other party isn’t exposed to having the money seized by the trustee while you argue the law and equity of the situation. Yet I am reluctant to have my client, the prospective debtor, close the account or write the check for “balance of the account”.  First it looks bad, and reinforces the idea that the money was the debtor’s to spend.  Second, it clearly has to be disclosed under transfers and closed accounts on the SOFA. When possible, I propose that the party whose money it is make the withdrawal and deposit the funds elsewhere.  I believe disclosure is still necessary, but the threat of immediate turnover to the trustee is overcome. But there may be help elsewhere. The statutory fix State law determines what it is that the debtor owns.  And the law of California, where I practice, has this statutory gem:  An account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each, unless there is clear and convincing evidence of a different intent.  Cal. Probate C. 5301 Until another lawyer pointed me to this provision, I would never have thought to look in the Probate Code for help arguing that my client was not really the owner of a bank account on which she could draw down the entire account. But there it is.  Clear law that says that ownership is in proportion to the contribution of each person named on the account. California can’t be the only state to have addressed this issue in its legal code. Your mission:  hunt down comparable law where you practice to protect joint accounts in bankruptcy. Image courtesy of Flickr and MontyAustin  

New Fairfax County bankruptcy lawyer office open near Springfield To better serve Springfield, Falls Church and central Fairfax County, we’re opening a new bankruptcy lawyer office at 5019-C Backlick Rd, Annandale VA My experienced bankruptcy paralegal, Laura Jones, is moving from my Alexandria location to the new Annandale office. Fairfax County is home to two […]The post Fairfax County bankruptcy lawyer office open in Annandale appeared first on Robert Weed.

Venue occupied the second half of the commission hearing held on November 22, 2013 and produced some of the liveliest discussion.  While there were five panelists slated to discuss venue, Judge Greendyke and Buzz Rochelle added their comments as well.   (I mention them here out of order for clarity of presentation).   The Case for ReformFormer Judge Greendyke related his experiences with two Texas debtors that filed out of state.   He said that when Enron filed in New York, "I had to go to church and answer questions about why the company was filing there."   When American Airlines filed for bankruptcy in the same location, he expressed frustration that "you're going to have to rely on ABC News to find out what is going on."   Mr. Rochelle emphasized that "chapter 11 needs to be seen and not just occur" and that "when it happens halfway across the country" this doesn't happen.  He emphasized the need for "the judge in the local community to make decisions."First up on the venue panel was Judge Steven Rhodes from the Eastern District of Michigan. Judge Rhodes started with the "blunt observation" that:The venue law we have is a venue non-law.   Any lawyer can figure out a way to file any case in any location.Judge Rhodes urged the Commission to take a fresh look at the current "non-law" and to consider the purpose of venue laws.  He identified two key purposes as the interests of the parties and the institution as a whole.   He said that venue laws should "protect the parties who the moving party brings into court from inconvenience arising from choices made by" the debtor.    He said that the institutional purpose for venue laws was to provide legitimacy to the court and its proceedings. He acknowledged that there were no perfect solutions in a world with multi-state and multi-national parties but said that "that doesn't excuse us from doing the best we can."    Judge Rhodes recommended principal place of business as the best solution for venue.Judge Rhodes responded to the argument that concentrating cases in two forums creates predictability in how the law will be applied by saying that "if we had perfect predictability we wouldn't need judges."   He added that, "The biggest problem with predictability is that (people who use the term) mean predictability that I'm going to win."   He said that too much concentration reduces innovation and experimentation and thereby the opportunity to improve.   He concluded with a plea for integrity.   He said:Courts work because people have confidence they can send disputes to them, be heard and have a just result.   Everything that we do that enhances confidence needs to be encouraged.   Our non-law detracts from legitimacy.Douglas Rosner of Goulston & Storrs in Boston testified on behalf of an ad hoc group of over 100 attorneys in 35 states seeking venue reform.   (Disclosure:   The Commercial Law League of America of which I am a member supports this effort and I helped Doug prepare for his testimony.).Mr. Rosner laid out the statistical case for reform stating:Substantial evidence demonstrates that a disproportionate number of chapter 11 cases are being filed in Delaware and New York which have little connection to those forums. A recent study by Associate Prof. Samir Parikh of Lewis & Clark School of Law found that 70% of large public companies that have filed bankruptcy in the last 5 years have forum shopped; 80% of which filed in Delaware or the Southern District of New York. Unlike the studies done in the mid-1990s, we know now that forum shopping affects companies of all sizes. In fact, almost half of the 559 out-of-state cases that filed in Delaware since 2003 had assets of less than fifteen million dollars and middle market companies comprise the vast majority of the filings in Delaware. The statistics demonstrate that chapter 11 debtors forum shop at such a staggering rate, it can no longer be ignored. Rosner also gave examples from his home state of Massachusetts in which 33 companies with assets of over $6.2 billion and 65,000 employees filed in other states over a ten year period. Examples included Evergreen Solar, a company that received $58 million of assistance from Massachusetts, Polaroid, which drastically affected local employees and retirees, and Friendly Ice Cream, a cultural institution in Massachusetts for more than 75 years. (Ed.: Imagine the furor that would result if Bluebell filed for bankruptcy in Delaware).Mr. Rosner also raised the specter of manipulation, pointing out that "The chapter 11 landscape is littered with examples of debtors trying to manufacture venue or using immaterial affiliates as a hook to establish venue."   He also addressed creditor expectations, stating:Prior to a bankruptcy filing, a debtor’s creditors and employees are used to dealing with the company’s headquarters. When they read in the papers that the company filed in another jurisdiction, their reaction is likely to be one of suspicion. They can reasonably question whether the company filed in a distant forum to obtain an advantage over other parties or discourage participation by local interests.Mr. Rosner argued that the transfer of venue for Patriot Coal out of New York was not proof that the system is working.   He pointed out that the process took four months and millions of dollars in professional fees.   He quoted Bloomberg News for the prospect that Patriot Coal proved "the near impossibility of having venue transferred in large cases." Next up was Prof. Jay Westbrook of the University of Texas School of Law who said he was delighted to see the attention being given to the venue issue.   Sounding a familiar theme, he said that:Justice must not only be done; it must be seen to be done.   If not, the system fails in an important part of its social, political and economic role.Prof. Westbrook argued that reform often comes from "spectacular trials or puzzling verdicts."   He said that "proceedings in a distant court will not receive the same coverage" as a local case would, being relegated to the financial press rather than the local media on which most people rely.   He also stated that when cases are filed closer to home, that local officials will be more likely to intervene.He summed up his thoughts with the memorable phrase that when debtors are required to file in their principal place of business "the windows of justice will not be frosted by distance.""There Is No Problem" James Patton of Young, Conaway, Stargatt & Taylor in Delaware was the first of two witnesses favoring the status quo.   He argued that place of incorporation was the "only uncontestable standard" for venue and that a principal place of business requirement would lead to litigation such as encountered in Chapter 15 cases over the Center of Main Interest.   (The requirement in Chapter 15 cases that the proceeding be filed where the business has its main economic activity).   Mr. Patton praised the experience of the Delaware bench, stating that they provide "the opportunity to go to a court with a great deal of depth and a great deal of experience."    He said that if state of incorporation venue was abolishedwe will never again be able to grow another forum with the depth of experience and body of case law.   There will be no other place where cases can be concentrated.    He also argued for predictability, stating:We can argue about whether "law shopping" is a good thing or a bad thing, but loss of flexibility means less chances to maximize value for stakeholders.(Note:  law shopping refers to the practice of filing in a venue where judges take the legal position that you favor.  It is a variant on forum shopping).    Mr. Patton argued that requests for transfer of venue are "granted far more often than denied" and that cases with "a clear center of gravity" are being adequately addressed through transfer of venue.Finally, he said that principal place of business would not eliminate forum shopping, pointing to a survey of 50,000 companies which had an average of 15 headquarters each.   In response to a question from Commissioner Deborah Williamson, Mr. Patton admitted that Delaware's local counsel rule was outdated.Michael Luskin, appearing on behalf of the New York City Bar Association's Committee on Bankruptcy and Corporate Reorganization bucked the prevailing mood when he boldly stated, "This is a solution in search of a problem.   There is no problem."    He argued that the current system "as applied by judges and practitioners serves efficiency and justice" and that "cases get transferred when they need to be."Like his colleague from Delaware, Mr. Luskin raised the specter that a nerve center test would lead to endless litigation.His suggestion was to ensure that all constituencies be represented through committees.    He said that committees are able to find superb representation for cases in Delaware and New York which protects parties.   He also said that "what's important" is that parties are able to "participate in a meaningful way" in negotiating the DIP order, plan and exit financing.   Mr. Luskin pointed out that while airline cases have been filed across the country, the same firm represents the employees regardless of where the case is filed.He said that "it is a fact that you can't run from" that people don't have a problem traveling to New York.Luskin also sang the praises of the New York court, stating that it is a great advantage to have a case administered by a court that has a deep bench and where "the whole courthouse is set up for it."    He said that another solution would be televising hearings much as the ABI Commission hearing was being livestreamed. Judge Rhodes pointed out that the current policy of the administrative office of the courts prevents audio or video broadcasting of court proceedings. He said that he requested permission to broadcast hearings in the City of Detroit case and was turned down. Thinking Outside the BoxEach of the five venue panelists was asked to step outside of the box and propose a solution other than their proposed resolution.Judge Rhodes said that having a national bankruptcy court process might be a solution but that "the devil is in the details."     He also suggested re-examining the appellate structure for bankruptcy courts to avoid avoid law shopping.     Douglas Rosner said that a possibility would be making principal place of business the presumptive choice and placing the burden on the debtor to justify a filing elsewhere.    Prof. Westbrook said that a national bankruptcy court was not the solution, even if judges were appointed from across the country, because it would not solve the problem of engaging the local community.   James Patton said that the community problem would not be solved by venue reform because "there's always going to be a choice."   He suggested having a hearing at the beginning of a case to determine whether there is a better place to administer the case and what could be done to make the present venue a better place.   He gave the example of a Delaware case involving a Florida debtor where local Florida officials wanted the case transferred but other parties, including Florida creditors, did not want the case transferred.   In that instance, the court did not transfer venue but did order that the debtor pay for first class plane tickets and hotel accommodations for the local officials so that they could attend the proceedings.   Mr. Luskin suggested that they should make it easier to get to court.   He proposed a system of national admission.   He said he was "horrified" to hear that the judicial conference prohibited broadcasting  and said "I can't think of a single reason not to do that."  He also went back to his suggestion to have more committees.    (Ed.:  Was it Marie Antoinette who said, "Let them have committees?").   Commissioner James Markus asked Judge Rhodes about how his experience with the City of Detroit Chapter 9 bankruptcy compared to Chapter 11.Judge Rhodes said that the City of Detroit case illustrated two points about the importance of having cases in the local community.First, he said, citizens came to every hearing.   He used the largest courtroom available to him as well as two overflow rooms where citizens could watch on closed-circuit television.   (Apparently this does not constitute broadcasting).    He said that the citizens who came were very attentive and very interested in everything that occurred.Second, he said that he devoted a full day to hearing remarks from 90 citizens who filed pro se objections to the City's eligibility for chapter 9.    Judge Rhodes said that the citizen comments were thoughtful, objective and angry and that he found them to be "of extraordinary value."    The Judge added that it was "an extraordinary day of process" and that he was "as grateful as I could be to have participated in that day."   Closing ThoughtsThe venue discussion was lively and thoughtful.   The advocates for change focused on the political and social values that are lost when cases are heard in distant forums while the advocates for the status quo argued that they had superior courts which knew how to transfer venue when it was needed.    As I have disclosed above, I am biased in favor of Texas companies filing bankruptcy in Texas, and yes, part of the reason is that I would like to see Texas firms get the work.   I thought that the Delaware and New York representatives were a bit patronizing toward judges in the rest of the country.   I have no doubt that there are some really good judges in Delaware and New York.   However, what does that make the judges in the other 88 districts?    Are they so sub-par that big cases have to be kept out of their reach?   I don't think so.   Also, I don't buy the argument that it is so easy to transfer venue.  According to James Patton, the Delaware Courts granted motions to transfer venue in nine out of thirteen cases between 2006 and 2012.   The fact that only two venue transfer motions per year are filed in Delaware says something.   It could say that most people feel that Delaware is a superior forum and are happy to have their case litigated there.   However, I think it is more likely that most creditors are too intimidated to hire a Delaware lawyer to tell a Delaware Judge that the case should be somewhere else.   While Mr. Luskin believes that no one has a problem traveling to New York,  that doesn't mean that it is affordable for small creditors to travel to Delaware or New York.   Delaware is a poster child for parochialism.   Its local counsel requirement (which Mr. Patton agreed was outmoded) requires creditors wanting to appear in that court to hire an attorney with an office in Delaware.  To get to Delaware, it is necessary to fly into Philadelphia and take a 30 mile ride by car or limo.   New York has much better access.   However, once you get there, a hotel will run you $250-$400/night.   I can somewhat understand the argument for filing large cases in the Southern District of New York.  New York is a major center of commerce, but so are Houston, Chicago and Los Angeles.  And Delaware:  Delaware is a state where companies go to incorporate   While half of the companies in the counrty are incorporated in Delaware, only two Fortune 500 companies have their headquarters there, compared to 53 in California, 52 in Texas, 50 in New York and 32 in Illinois.  Having two Fortune 500 companies located there places Delaware on a par with such states as Oregon and Rhode Island.   What Delaware does have is friendly corporation and tax laws.   According to the New York Times, the Cayman Islands complain that "Delaware is today playing faster and looser than the offshore jurisdictions that raise hackles in Washington."   Thus, while the Delaware courts possess a certain expertise, this is as a result of an historical accident favoring incorporation there. However, Nevada is also gaining a reputation as a tax haven.   I wonder whether the proponents of state of incorporation venue would be quite so bullish on this theory if Nevada started to usurp their business.  

The ABI Commission studying reform of Chapter 11 met for its seventeenth and final time at the UT Bankruptcy Conference in Austin, Texas on Friday November 22, 2013.   The Commission heard from a total of eight witnesses on a variety of topics.   Seven of the eight witnesses touched on the venue issue with a substantial majority favoring reform.   Part 1 will discuss the future of Chapter 11 and proposed reforms to address the Stern problem, while Part 2 will discuss venue.The Future of Chapter 11Commission Co-Chair Al Togut introduced the topic with a discussion of how the world had changed since the Bankruptcy Code was adopted. He stated that in 1979, companies were likely to be based in the United States, employ American workers and have very little secured debt. Today, companies are likely to be multinational and have manufacturing facilities overseas with assets that are frequently leveraged to the point that unsecured creditors are out of the money. He stated that Commissioner Ken Klee who worked on drafting the Bankruptcy Code estimated that the Code would have a shelf life of no more than 30 years and then would have to be reworked. This set the stage for a discussion on the future of chapter 11.Former Bankruptcy Judge William Greendyke and practitioner Buzz Rochelle discussed the future of chapter 11 with particular emphasis on the results of a survey of Texas bankruptcy lawyers. Among the conclusions of the survey were that Chapter 11 is being used for more section 363 sales, the process is faster today, the use of Chief Restructuring Officers is largely positive and Chapter 11 fills a role in providing clean assets to buy but that Chapter 11 has gotten more expensive. In response to a question, Greendyke stated that section 363 and increased costs make cases move faster. He said that "faster is less expensive and less expensive is better." By a two to one margin, respondents felt that the U.S. Trustee has been a net negative in chapter 11 cases. One commenter described the U.S. Trustee as "bring(ing) only the ants to the picnic." Judge Greendyke was more sanguine stating that his experiences with the U.S. Trustee's program as a judge had been positive. He said that the reason for the negative responses was "difficult to discern from the survey results" but that "there are different personalities in different offices" and there can be disparities in prosecutorial discretion. Buzz Rochelle (brother of Bloomberg News correspondent Bill Rochelle) described how problems with the jurisdictional system of the Bankruptcy Courts have persisted. He stated:I went to college on what my father earned litigating jurisdiction. My sons went to college on what I earned on jurisdiction. He said that the problems in the current system were "way past the irritation point" and used the illustration of a lawyer who told a Dallas bankruptcy judge that she was not bound by the Court's confirmation order "because Stern said she wasn't." Rochelle also sounded an apocalyptic note about the future of bankruptcy, stating that "unsecured creditors do not regard the bankruptcy court as their friend" and that "the message sent is that this is a place for debtor's management and more than that for secured creditors." He urged the commission to reconsider the absolute priority rule saying that "it is not holy writ." Rochelle argued that the absolute priority rule was originally intended to lead to a reasonable accord and to protect the little people, but has been turned on its head as a tool to protect secured lenders. Rochelle described claims trading as a casino that "does not serve a legitimate economic function." In response to a question, he said that claims traders are in a "very dicy ethical situation." He said that they have studied real hard and can accurately gauge the value of a claim but will pay only a small fraction of that amount to the original creditor. He also said that claims trading gives creditors an easy out of a case and causes them to lower underwriting standards. He recommended that claims buyers only be allowed to vote what they had paid to purchase claims so that they would not have a disproportionate impact on the outcome of cases. Mr. Rochelle added that the secured lender's group has become "a wild place with competing agendas" because of claims trading He said that all they are interested in is the dividend and not reorganization, which he said "brings the reorganization system into disrepute," a result that he described as "not cool."  Commissioner James Markus asked Greendyke and Rochelle if there were conflicts in their testimony with regard to the need to choose between classes of creditors or preserve value. Judge Greendyke stated that "there is nothing wrong with section 363 sales" and that just because "there are less opportunities for unsecured creditors does not mean that there should be a tax imposed on secured creditors." Mr. Rochelle said that he would "put down his torch and pitchfork for a moment" and acknowledged that the Bankruptcy Code is the tail of the dog while the dog itself is the financial system. He said that the huge growth in neo-lenders and non-bank lenders "makes the banks we grew up with look like sweet, good-natured Sunday School teachers." He admitted that "you can't change that in the Code" but that "we don't have to lay back and enjoy it." He said that there should be some disincentive to the lender who grabs onto everything. He added thatThe common law grows in response to problems. This is a problem. The shy and retiring Mr. Rochelle added:The real question in my mind is why the federal government should be subsidizing the liquidation efforts of one group of people. He further stated that the justification for section 363 sales is preserving jobs and that we are seeing far fewer jobs preserved. Stern and the Allocation of Jurisdiction Veteran Supreme Court litigator Eric Brunstad stated that "our current jurisdictional system is broken." He recommended amending the definition of core proceeding to move counterclaims to claims and fraudulent transfers to the non-core category. He said that "there is a very small category of things that need to be moved from the core bucket to the non-core bucket." He also recommended a statutory process for consent which would be similar to what is used in the U.S. Magistrate Judge system. In response to a question, he said that he proposed express written consent because he wanted to take the most conservative position. Finally, he recommended that the Code's jurisdictional scheme be construed to avoid conflicts with the U.S. Constitution and that Bankruptcy Judges be specifically authorized to submit proposed findings and conclusions in any case in which they could not enter a final judgment. Brunstad also emphasized the need to get as much of the case as possible in front of the bankruptcy judge and encouraged the practice of District Judges re-referring matters to the Bankruptcy Court. He also said that one problem with the Supreme Court's approach to Article III jurisprudence is that it relies on the traditional model of the judge as a neutral adjudicator while the bankruptcy court is "the quintessential problem solving court." Commission Reporter Prof. Michelle Harner asked whether the judge in a problem-solving court is placed in a mediator/negotiator role. In response, Brunstad stated that you don't have to use that particular label, but that it is the "reality of large chapter 11 cases." He urged the Commission to "be up front and recognize it."

Sometimes, the most challenging questions for a bankruptcy lawyer come up well after  the case is filed. New assets are disclosed Values are greater than expected Income falls Illness intervenes Catastrophic debts arise For whatever reason, your initial choice of chapter is now problematic. That’s when you have to understand which way to go, now.  You need to understand conversion. Webinar on Conversion Join me online to explore the practical and the procedural issues when you convert a bankruptcy case from one chapter to another. We’ll look at it from both directions:  7 to 13 and  13 to 7. We’ll pin down which of the initial deadlines and bar dates are unchanged, and which ones reset. Then, there’s the issue of what property comes in to the case under the new chapter. And how do you get paid for representation in the converted case. Practicalities The webinar will be live December 4th, at noon Pacific Standard Time.  The presentation will run about an hour and I’ll stay on line to answer questions afterward. If your calendar doesn’t permit joining us live, the audio recording will be available for download. California lawyers can get MCLE credit;  practitioners from other states can get the presentation outline for use in getting credit where you practice. The cost is $77 and you can sign up online. Join me for a conversation on conversion. Image courtesy of Flickr and Thepicturedrome.