N.C. Ct. of Appeals: CL Howard Investments v. Wilmington Savings Fund- Mortgage Modification does not Alter Seniority of Liens Ed Boltz Wed, 02/19/2025 - 15:38 Summary: The North Carolina Court of Appeals reversed the trial court’s order granting summary judgment in favor of CL Howard Investments I, LLC and denying Wilmington Savings Fund Society’s motion for judgment on the pleadings. The case involved a dispute over lien seniority between a first Deed of Trust held by Wilmington and the second deed of trust held by CL Howard on a property following a loan modification. The debtor initially had two deeds of trust: a senior deed for $52,850 and a junior deed for $22,650, both recorded on January 18, 1999. In 2014, after the maturity date, the senior lender modified the loan, extending its maturity to 2033 and recapitalizing the unpaid balance. The junior deed of trust was later foreclosed in 2021, and CL Howard purchased the property, arguing that the loan modification extinguished the senior deed’s priority. The trial court ruled in favor of CL Howard, determining that the loan modification, recorded after the junior deed’s initial filing, effectively extinguished the senior lien, making the junior deed the priority lienholder.  According to trial court,  by failing to obtain a subordination agreement from CL Howard,  Wilmington Savings Fund lost its senior status. The Court of Appeals disagreed, holding that the loan modification merely extended the terms of the senior deed of trust and did not extinguish its priority. The court found that North Carolina law, statutory provisions, and legal precedent support the continued priority of the senior lien, even after a loan modification, unless the modification materially prejudices junior lienholders—which was not the case here. Because the trial court incorrectly enjoined foreclosure of the senior deed and extinguished its priority, the Court of Appeals reversed the decision and remanded the case for further proceedings consistent with its opinion. Commentary: A contrary holding would have provided second mortgage holders with a near total ability to block any mortgage modification,  which can be difficult enough to obtain.  That's what makes the most surprising aspect of this case being that Wilmington Savings fund actually granted  the homeowner  a mortgage modification in the first place,  as it seems utterly incapable or unwilling to agree to those. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document cl_howard_v_wilmington_savings.pdf (142 KB) Category NC Business Court

Many clients have contacted our law firm asking how to sell a business subject to an SBA EIDL loan. There are two scenarios. In the first, the sales proceeds are sufficient to pay off the SBA loan (the easier scenario). In this case, one is required to contact the SBA and obtain prior approval, pursuant to SBA loan documents. In the second scenario, the sales proceeds are not sufficient to pay off the SBA loan (the more difficult and complex scenario), resulting in a shortfall ("Shortfall"). With respect to the Shortfall scenario, the Borrower/Seller must do the following: 1. Provide the SBA with information about the proposed sale (prior to closing), 2. Submit the required SBA documents for the sale to the SBA, 3. Send the SBA the proposed Sales Agreement, 4. Provide the SBA with a business valuation or appraisal of the business being sold, 5. Provide the SBA with financial statements for the business being sold, and 6. Provide the SBA with a proposal for handling the loan shortfall (an Offer in Compromise, payment by the Guarantor, Loan assumption by the Buyer, etc.).The proposed Sales Agreement should include a contingency clause stating that the sale is subject to SBA approval. Obtaining SBA approval can take months and may require negotiations with the SBA.Clients or their advisors having questions about the sale of a business subject to an SBA loan should contact Jim Shenwick, Esq.Jim Shenwick, Esq  917 363 3391  [email protected] Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt!

Law Review: Seymour, Jonathan- Bankruptcy in Conflict Ed Boltz Tue, 02/18/2025 - 15:42 Available at: https://ablj.org/bankruptcy-in-conflict-vol-98-issue-3-pdf/ Abstract: In a continuation of his criticism of the claim of bankruptcy exceptionalism, in his symposium article Bankruptcy in Conflict, Professor Jonathan Seymour discusses three potential consequences to so-called bankruptcy specialization. Utilizing artwork from the New Yorker’s View of the World, he examines how the self-characterization as specialists can result in bankruptcy lawyers’ viewing ordinary legal issues through the proverbial camera-lens of bankruptcy. Seymour next applies recent Supreme Court trends away from deference to specialized courts or agencies to utilize their knowledge to fill gaps in governing law in support of his argument that we must move from a telephoto to panoramic lens. Finally, with these concepts in mind, he considers how these two principals are seen in recent Supreme Court decisions resolving conflicts between statutes, specifically the need for the removal of the filter on a lens that severely limits consideration of policy considerations. At its core, Seymour highlights a need for bankruptcy specialists to reconsider their lens selection and reframe their view on the world away from exceptionalism and towards resolving bankruptcy contests using ordinary (and not extraordinary) tools of statutory interpretation. Commentary: This article  betrays its prejudice through the  general omission of "corporate"  as a preceding descriptive adjective.  Whether in statements  that "only a handful of ... judges sit on the courts that handle the bulk of the largest corporate  (omitted in the original) cases that set the trends of practice"  or that "the needs of corporate   (omitted in the original)  bankruptcy often do 'win' when faced  with actual of perceived conflict with norm, objectives or even substantive rules from outside the world of corporate   (omitted in the original)  bankruptcy",  the assumption that corporate bankruptcy is the real bankruptcy whereas the word "consumer"  is only mentioned four times,  briefly in passing,  despite the vastly greater number of bankruptcy cases being consumer case rather than the infrequent corporate ones. This persistent academic bias may come from the greater  prestige assigned to corporate cases,  including from tenure committees. Related is  the fact that corporate attorneys,  with hourly rates  reaching astronomical heights in excess of $2,500 an hour in those trend setting districts,  are able to generously donate both to law schools and other organizations,  while consumer  bankruptcy lawyers are pilloried for making a pittance in comparison. This leads  to missed opportunities,  including in the present article to discuss how in the Supreme Court's  Midland Funding, LLC v. Johnson decision,  bankruptcy rules  "won"  over the Fair Debt Collections Practices Act.  Related as this is to Prof.  Pamela Foohey's article (in the same issue), The Periphery of Bankruptcy Law: The Importance of Non-Bankruptcy Issues in Consumer Bankruptcy,  it would both have been a nice bit of cross-promotion byt the American Bankruptcy Law Journal,  but would have also allowed insight into how even Supreme Court Justices  inexplicably  deferred to the bankruptcy expertise of Chapter 13 trustees by holding that the FDCPA did not apply "where a knowledgeable trustee is available" to protect against illegal Proofs of Claim. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document bankruptcy_in_conflict.pdf (357.79 KB) Category Law Reviews & Studies

4th Cir.: Espin v. Citibank- Arbitration Required Despite SCRA Ed Boltz Tue, 02/18/2025 - 15:39 Summary: The Fourth Circuit Court of Appeals reversed a district court decision that denied Citibank’s motion to compel arbitration in a class action lawsuit brought by military service members. The plaintiffs alleged Citibank violated the Servicemembers Civil Relief Act (SCRA) by charging standard civilian interest rates on credit card balances accrued during active duty once they left the military. Citibank argued that the plaintiffs had agreed to arbitrate disputes on an individual basis under their credit card agreements. The district court ruled that the SCRA’s provision allowing service members to participate in class actions “notwithstanding any previous agreement to the contrary” precluded enforcement of the arbitration agreements. The Fourth Circuit disagreed, holding that the SCRA does not explicitly override arbitration under the Federal Arbitration Act (FAA) and that arbitration must be enforced unless Congress clearly states otherwise. The court noted that Congress knows how to override arbitration, as seen in the Military Lending Act (MLA), which expressly prohibits arbitration for certain financial agreements. The court remanded the case with instructions to compel arbitration for all claims except those brought under the MLA. It also directed the district court to determine whether the MLA applies, as it only began covering credit card accounts in 2017, and Citibank argued that the plaintiffs’ accounts predated that change. The ruling reinforces the FAA’s strong presumption in favor of arbitration unless a federal statute explicitly prohibits it. Commentary: When even military service members are prohibited from class action and compelled to impractical arbitration, which is intended to preclude systemic change,  it starts to become clear  the extent of control held by the financial services industry. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document espin_v._citibank.pdf (164.14 KB) Category 4th Circuit Court of Appeals

Law Review: Foohey, Pamela- The Periphery of Bankruptcy Law: The Importance of Non-Bankruptcy Issues in Consumer Bankruptcy Ed Boltz Tue, 02/18/2025 - 01:45 Available at:   https://ablj.org/the-periphery-of-bankruptcy-law-the-importance-of-non-bankruptcy-issues-in-consumer-bankruptcy-vol-98-issue-3-pdf/ Abstract: One in eleven Americans have filed bankruptcy at some point during their lives. Based on the number of consumer bankruptcy cases initiated during the past several decades, about one million individuals will file every year. This makes bankruptcy courts the leading federal courts with which people have contact. Embedded in people’s cases are a host of legal issues that do not directly implicate bankruptcy law, such as the interpretation of states’ exemptions laws and Article 9 of the Uniform Commercial Code, the avoidance of liens, and defenses to contract claims. Consumer bankruptcy law, via its process, is intertwined with the broader development of laws and the larger United States legal system. In raising these legal issues, people may want to explain the broader circumstances surrounding the claims, their need to file bankruptcy, or why they are asking for particular relief. Procedurally, bankruptcy courts can offer people an occasion to speak about their financial journeys. Debtors similarly may want to tell their stories to bankruptcy attorneys, and attorneys likely will be called upon to counsel people about if and how to pose legal issues and background stories during their cases. By highlighting the range of non-bankruptcy law issues that may be raised in consumer bankruptcy cases, this Essay affirms that bankruptcy can continue to offer effective solutions for people’s financial legal problems that they may not have the resources to handle elsewhere. It also contends that a valuable role of bankruptcy attorneys, trustees, and judges is to identify and consider these non-bankruptcy law issues, as well as people’s potential desire to have a voice, and that doing so should be woven into the expected structure of a consumer bankruptcy proceeding. Indeed, this will enhance litigants’ and the public’s perception of the bankruptcy system. Overall, this Essay draws out how the broader values of the United States legal system can be supported by the consumer bankruptcy system.  Commentary: This article is an excellent counter to those,  whether  judges,  creditors,  or even consumer debtor's attorneys,  who decry and bemoan the inclusion of "alphabet soup laws",  as they disparagingly call the protections  and rights consumers have in statutes including FDCPA,  FCRA,  TILA,  UCC,  UDTPA, etc.,  into the bankruptcy courts. A missing piece,  however,  in this article is a recognition that the idea from Prof.  William C. Whitford  in his paper The Ideal of Individualized Justice: Consumer Bankruptcy as Consumer Protection, and Consumer Protection as Consumer Bankruptcy  "that bankruptcy courts may be the best available venue for some people to air their claims about lenders’ actions regarding consumer debts that they think violated federal and state consumer protection laws"  was evangelized  and put into practice by groups like NACBA and in particular by O. Max Gardner,  with his Bankruptcy Litigation Model. This article highlights as an example of consumer protection in bankruptcy how in Scharrer v. First National Bank of Omaha,  the Chapter 7 used ECOA  to obtain a judgment against First National Bank of Omaha  for its illegal actions in the amount of $15,000,  but with all of those funds either being paid to the Trustee or other creditors.    While pointing out that perhaps the debtor might have brought this action "prebankruptcy in  ... state court"  and recovered some of those funds for himself,  the article fails to recognize that in a Chapter 13 case,  the debtor would have retained control of this cause of action and potentially the recovery as well.  That advantage might not, however,  fit the academic narrative that is often hostile to Chapter 13. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document periphery_of_bankruptcy.pdf (270.49 KB) Category Law Reviews & Studies

Callie Glade, File Clerk Callie is the newest member of our team, She just started with us in January 2025. Callie is a virtual assistant, an AI. She takes over one of the most important jobs in any law firm. She’s our file clerk. When you send in the required papers, she puts them in your file, where Vanessa and I can see them at any time. Callie comes to us through an artificial intelligence program called Glade.AI. She’ll keep in touch with you to make sure we have the papers we need to have to do what we are planning to do. Callie doesn’t know anything about bankruptcy. But she is really, really good at keeping files. Vanessa Hill, Paralegal Vanessa Hill is my bankruptcy paralegal.  She’s been with me for twenty-five years. Vanessa’s job is to keep your case–and me–on track. If you have a question or problem, you can contact her at [email protected]. Or call her direct line: 703-962-1043. When you fill in your Be Happy form and send Callie all the required documents, Vanessa will set up another meeting for you and I to talk again.  She schedules all my appointments during your case–and for anything that might come up after. Here are their pictures: Vanessa Hill, bankruptcy paralegal and Callie Glade, AI file clerk. Callie Glade, virtual assistant and file clerk Vanessa Hill, bankruptcy paralegal The post Meet Vanessa, my paralegal, and Callie, my Virtual Assistant appeared first on Robert Weed Bankruptcy Attorney.

Callie Glade, File Clerk Callie is the newest member of our team, She just started with us in January 2025. Callie is a virtual assistant, an AI. She takes over one of the most important jobs in any law firm. She’s our file clerk. When you send in the required papers, she puts them in your file, where Vanessa and I can see them at any time. Callie comes to us through an artificial intelligence program called Glade.AI. She’ll keep in touch with you to make sure we have the papers we need to have to do what we are planning to do. Callie doesn’t know anything about bankruptcy. But she is really, really good at keeping files. Vanessa Hill, Paralegal Vanessa Hill is my bankruptcy paralegal.  She’s been with me for twenty-five years. Vanessa’s job is to keep your case–and me–on track. If you have a question or problem, you can contact her at [email protected]. Or call her direct line: 703-962-1043. When you fill in your Be Happy form and send Callie all the required documents, Vanessa will set up another meeting for you and I to talk again.  She schedules all my appointments during your case–and for anything that might come up after. Here are their pictures: Vanessa Hill, bankruptcy paralegal and Callie Glade, AI file clerk. Callie Glade, virtual assistant and file clerk Vanessa Hill, bankruptcy paralegal The post Meet Vanessa, my paralegal, and Callie, my Virtual Assistant appeared first on Robert Weed Bankruptcy Attorney.

Law Review: Bruce, Kara J. and Odinet, Christopher K. and Tosato, Andrea, Bankrupt Crypto Organizations (January 27, 2025). Texas A&M University School of Law Legal Studies Research Paper Forthcoming, SMU Dedman School of Law Legal Studies Research Pap... Ed Boltz Fri, 02/14/2025 - 02:07 Available at: https://ssrn.com/abstract=5115277 Abstract: This Article provides the first comprehensive analysis of the intersection between decentralized autonomous organizations (DA Os) and American bankruptcy law. DA Os are blockchain-based entities that enable individuals to pursue common goals using decentralized decision-making and automated governance. Since their recent emergence, DA Os have proliferated dramatically—with over 20,000 organizations managing over $20 billion in assets and engaging in activities ranging from investment management to real estate and even attempting to purchase historic copies of the U.S. Constitution. Yet like any other organization, DA Os can fail, creating an urgent need to understand what happens when unstoppable code meets immovable bankruptcy law. Our investigation unfolds along three interconnected lines of inquiry. First, we observe DA Os through a novel analytical prism, moving beyond conventional technological and organizational taxonomies to uncover their insolvency-relevant attributes. Second, drawing on these findings and the 2024 bankruptcy filing of HectorDAO, we posit that the core ideals of DA Os—decentralization, automation, rejection of intermediaries, and resistance to state law—fundamentally conflict with court-supervised insolvency proceedings, forcing these organizations to either compromise their ethos or forgo voluntary bankruptcy protection. Third, recognizing this tension, we theorize a “decentralized autonomous bankruptcy” framework for DA Os. This thought experiment, which we call BrokeDAO, reveals the potential for blockchain technology to create innovative solutions for debt resolution. Yet, it also exposes the inherent limitations of attempting to replicate the comprehensive protections of bankruptcy purely through private ordering. Studying the interface between DA Os and bankruptcy law yields substantial contributions to both fields. While the literature on digital assets remains overwhelmingly focused on regulatory questions, our research offers essential private law insights that will prove crucial during inevitable future market downturns. Moreover, viewing bankruptcy law through the lens of DA Os underscores the singularity of bankruptcy’s centralized and compulsory framework and its inescapable relevance in the crypto ecosystem. Commentary: You can't go wrong as an academic writing about crypto and bankruptcy,  but it certainly would be helpful for regular practitioners for there to be more about cryptocurrency in consumer bankruptcy cases. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document bankrupt_crypto_organizations.pdf (789.43 KB) Category Law Reviews & Studies

The National Law Review reports that the Subchapter V debt limit will increase to $3,424,000 on April 1, 2025. Currently, the Subchapter V debt limit is $3,024,725. The full article can be found at: https://natlawreview.com/article/bankruptcy-dollar-amounts-set-rise-significantly-april-1-2025  Clients or their advisors with questions about Subchapter V Bankruptcy should contact Jim Shenwick, Esq. Jim Shenwick, Esq. [email protected] click the link to schedule a telephone call with me: https://calendly.com/james-shenwick/15minWe help individuals and businesses with excessive debt!

Law Review: Hampson, Christopher, The Spirit of Jubilee (January 17, 2025). University of Florida Levin College of Law Research Paper Forthcoming Ed Boltz Wed, 02/12/2025 - 17:12 Available at:   https://ssrn.com/abstract=5100907 Abstract: The Jubilee texts of the Hebrew Bible call for debts to be forgiven and enslaved persons freed every seven years and for farmland to be restored to families every fifty years.  Tightly interwoven into the legal, narrative, and prophetic vision of the text, the Jubilee tradition offers an inspiring and dramatic vision of socio economic justice for multiple religious traditions. Yet the American legal tradition, which purports to draw on its religious heritage for inspiration and moral authority, has not fully drawn on the Jubilee tradition for a contemporary vision of equality and justice.  This Essay seeks to rekindle that conversation.  I pull together the Jubilee tradition from various texts in the Hebrew Bible and argue that the Jubilee represents a distinct and fundamental narrative in the text.  I conclude that a jubilee goes far beyond debt forgiveness alone: a jubilee is a generational reset of the private property most central to economic creativity, in order to ensure equitable opportunity for every community.  I then show how the Jubilee texts have inspired and encouraged American socioeconomic justice movements from independence to abolitionism to forgiveness of debt.  Indeed, the only word in the American legal tradition big enough to capture the spirit of Jubilee is reconstruction.  Finally, I argue that while the Jubilee ideal of forgiveness of debt and restoration of land cannot be implemented literally in modern economies, the spirit of Jubilee calls for broad, sweeping reforms to ensure equal opportunity in contemporary economic life. Commentary: For those of us in the bankruptcy profession that have found support, inspiration and comfort in the Biblical Jubilee as one of the bases for the Bankruptcy Code (even after the arguably satanic BAPCPA  changed the seven year period for release from debts to eight),   Prof.  Hampson's paper is a humbling clarion call  that "[u]nlike bankruptcy ... a debt jubilee is not specific to a particular debtor; it is a sweeping remission of debts across society." With proper attribution,  please share this post.  Blog comments Attachment Document the_spirit_of_jubilee.pdf (433.97 KB) Category Law Reviews & Studies