Bankr. E.D.N.C.: In re Billy Haddock & Son Farms- Approval of Settlement Ed Boltz Mon, 04/15/2024 - 17:55 Summary: The United States Bankruptcy Court, Eastern District of North Carolina, considered a Motion to Approve Compromise where defendants Brian  and June Haddock agreed to pay $25,000 to the Trustee in satisfaction of all claims held against them by the bankruptcy estate. Nutrien Ag Solutions, Inc. opposed the motion. The court held a hearing to consider the reasonableness of the proposed settlement. Overruling the objection, the court analyzed the case under  the following factors:  Complexity of the matter;  Likely expense of trial and collection;  Estimated time or duration of trial;   Possible difficulties of collection;  The amount of the objecting parties' claim; and Deference  to a trustee's business judgment. See Protective Comm. for Indep. S'holders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968) and  In re Health Diagnostic Lab'y, Inc., 588 B.R. 154, 168 (Bankr. E.D. Va. 2018).  Given the financial circumstances of the defendants and the potential difficulties in collecting a larger judgment,  the court found that the proposed settlement was reasonable,  but given that Nutrien Ag Solutions'  claim accounted for 77% of all claims,  the  court stayed a final decision  pending the resolution of an objection to its claim. Commentary: While it may seem that this opinion,  which delays its own finality pending the resolution of the objection to Nutien Ag Solutions's claim this summer,  puts the cart before the horse and is something of an advisory opinion (which may be perfectly permissible from bankruptcy courts in the 4th Circuit following Kiviti v Bhatt),  this may in reality have been a judicial thumb on the scale to encourage settlement of that claims objection. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_billy_haddock_and_son_farms_a_nc_general_partnership_debtor_john_c_bircher_iii_trustee_billy_h.pdf (144.3 KB) Category Eastern District

 How to Compromise an SBA Defaulted Loan that has been transferred to Treasury Offset Program (TOP)   In a prior blog post we discussed “How to Recall Defaulted SBA Loan from Treasury Offset Program TOP” which blog post can be found at https://shenwick.blogspot.com/2024/04/how-to-recall-defaulted-sba-loan-from.html If you have a defaulted SBA loan that has been transferred to the Treasury Offset Program (TOP) and you are unable to recall the loan from TOP to the SBA, your options are: 1. Do nothing, 2. Close the business, 3. Negotiate a Compromise with TOP, or 4. File for bankruptcy and halt the TOP offset with the automatic stay provided by Section 362 of the Bankruptcy Code. In this blog post we will discuss how to Compromise an SBA Defaulted Loan that has been transferred to TOP. Please note that the forms required to be submitted to TOP to Compromise the claim are different from the offer in compromise forms submitted to the SBA for an offer in compromise. Documents Required: 1  Provide a letter on your letterhead explaining the reasons for the default on the SBA loan, why it should be reduced or compromised, the original amount of the defaulted SBA loan, the proposed amount to compromise the defaulted SBA loan, the source of funds for this settlement, and a detailed explanation of the financial hardship involved for you or your business. 2  A Financial Statement for Business or Individual (which can be obtained online from TOP, Department of Treasury Compromise Forms) must be completed and submitted. 3   Submit the last 2 years of the Business or Individual tax returns. 4   The proposed payment should be a lump sum payment. 5   Submit 2 Months of  bank statements for the individual or the business & 6   Submit 2 utility bills for for the individual or the business. Then  call TOP at 800-676-5737 to determine who the documents should be faxed or emailed to.  Please note that compromising a claim with TOP is difficult to do! For those clients or advisors who would like to discuss compromising their  SBA Defaulted Loan (that has been transferred to TOP)  with Jim Shenwick, Esq. please call Jim Shenwick, Esq  at 917 363 3391 or email him at  [email protected] Or please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15min We held individuals & businesses with too much debt!---How to Recall Defaulted SBA Loan from Treasury Offset Program TOP https://shenwick.blogspot.com/2024/04/how-to-recall-defaulted-sba-loan-from.htmlTreasury Offset Program (TOP) and SBA EIDL Loanshttps://shenwick.blogspot.com/2024/04/treasury-offset-program-top-and-sba.htmlU.S. Seeks to Collect on Up to $20 Billion in Delinquent Covid Loanshttps://shenwick.blogspot.com/2024/03/us-seeks-to-collect-on-up-to-20-billion.htmlSBA EIDL Loan Charge Offshttps://shenwick.blogspot.com/2024/02/sba-eidl-loan-charge-offs.htmlSBA EIDL LOANS & CIVIL & CRIMINAL PENALTIES & BANKRUPTCY FILING Shttps://shenwick.blogspot.com/2024/01/sba-eidl-loans-civil-criminal-penalties.htmlDefaulted SBA EIDL Loans: In Reversal, U.S. to Heighten Efforts to Collect Billions in Unpaid Covid Loanshttps://shenwick.blogspot.com/2023/12/defaulted-sba-eidl-loans-in-reversal-us.htmlSBA EIDL Loan Defaults and the Statute of Limitations 12-24-2023https://shenwick.blogspot.com/2023/12/sba-eidl-loan-defaults-and-statute-of.htmlSBA EIDL Penalties if an SBA EIDL Loan is Not Repaidhttps://shenwick.blogspot.com/2023/12/sba-eidl-penalties-if-sba-eidl-loan-is.htmlMisuse or Misapply SBA EIDL Loan Proceeds and Chapter 7 Bankruptcy Filingshttps://shenwick.blogspot.com/2023/08/misuse-or-misapply-sba-eidl-loan.htmlSBA EIDL HARDSHIP PROGRA Mhttps://shenwick.blogspot.com/2023/07/sba-eidl-hardship-program.htmlDefaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue Codehttps://shenwick.blogspot.com/2023/07/defaulted-sba-eidl-loans-limited.htmlOffers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary!https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.htmlEIDL LOAN WORKOUTS AND BANKRUPTCY    https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.htmlEIDL Loan Default Questions & Answers https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.htmlEIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMIS Ehttps://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.htmlEIDL Defaulted Loanshttps://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.htmlNew Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan"https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.htmlEIDL LOANS and SBA OFFER IN COMPROMISE PROGRA Mhttps://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.htmlPPP & EIDL Fraudhttps://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.htmlBetter to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loanshttps://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html  

The initial meeting with a prospective bankruptcy client is the most important work I do as a bankruptcy lawyer. It’s also the hardest. The results of that meeting lay the groundwork for the entirety of the case. The challenge is establishing rapport with an utter stranger, who’s in distress, and persuading them to spill all […] The post Why listening is a bankruptcy lawyer’s superpower appeared first on Bankruptcy Mastery.

4th Cir.: Harrell v. DeLuca- Summary Judgment regarding Fraud Ed Boltz Mon, 04/15/2024 - 08:59 Summary: The Harrells alleged that DeLuca made false representations about the property and sued for fraudulent inducement, constructive fraud, breach of contract, and violations of the Virginia Consumer Protection Act. The district court granted summary judgment favoring DeLuca on the fraud claims related to certain misrepresentations, but found in favor of the Harrells on a breach-of-contract claim related to uncompleted work specified in the Construction Agreement. The Fourth Circuit found the district court's grant of summary judgment on the fraud claims inappropriate, highlighting that there was a genuine dispute of material fact regarding the materiality of the misrepresentations. The appellate court vacated and remanded the summary judgment on these claims. The appellate court also addressed the Harrells' claim for constructive fraud based on DeLuca's alleged misrepresentation about obtaining necessary permits. It determined that the district court improperly applied the source-of-duty rule without clearly establishing whether DeLuca's statements were about current facts or future promises. Consequently, this part of the summary judgment was also vacated and remanded for further proceedings. Lastly, the appellate court agreed with the Harrells that the district court did not make clear findings on whether DeLuca breached the Sales Contract, which was important because this contract contained a provision for recovering attorney's fees, unlike the Construction Agreement. The court remanded this issue for explicit findings. To read a copy of the transcript, please see: Blog comments Attachment Document harrell_v._deluca.pdf (191.65 KB) Category 4th Circuit Court of Appeals

E.D.N.C.: In re Sugar- Dismissal with Prejudice for Willful Violation of Local Rules Ed Boltz Thu, 04/11/2024 - 15:56 Summary:   This district court reviewed the dismissal of Ms.  Sugar's  Chapter 13 bankruptcy case, based on Sugar's sale of her property without seeking permission from the bankruptcy court, in violation of Local Bankruptcy Rule 4002-1(g)(4), and further  barring her from filing future petitions. Sugar filed  Chapter 13 bankruptcy and her plan allowed her homestead exemption of $32,348.81, valued at $150,000. Subsequently, the bankruptcy administrator filed a motion for a status conference upon learning that Sugar was in the process of selling her property without court approval, with the Bankruptcy Court finding that Sugar intentionally violated Local Bankruptcy Rule 4002-1(g)(4) by selling her property without prior court approval. This rule prohibits the sale of non-exempt property valued over $10,000 without court and trustee approval. On appeal, Sugar argued that her property had been claimed as exempt from the bankruptcy estate, that Local Bankruptcy Rule 4002-1(g)(4) exceeded the bankruptcy court’s rulemaking authority, and that the dismissal was improper. The District Court held that the property did indeed form and remain part of the bankruptcy estate subject to the Bankruptcy Code, Local Rules, and the confirmed plan's terms. It ruled that the Local Bankruptcy Rule 4002-1(g)(4) was procedural and consistent with the Bankruptcy Code, and thus valid. The court also found no basis for Sugar's argument that she had an objectively reasonable basis for selling the property without court approval, and it rejected the claim that no harm was done by her actions. Commentary: This decision by the district court does not appear to have been appealed further to the Fourth Circuit Court of Appeals.  Whatever the merits of the underlying issues regarding vesting,  post-petition appreciation, etc.,  this case,  with the record showing rather flagrant disregard by the debtor,  is certainly not the best vehicle to advance those arguments. Procedurally,  perhaps a better argument in this case (whether at the bankruptcy court  or on appeal at the district court)  is whether this bar from refiling is truly a dismissal under 11  U.S.C.  §1307  or more accurately denial of discharge under 11 U.S.C.   §1328 (akin to 11 U.S.C. 727), as this  (or any?) bar to refiling a bankruptcy under any Chapter has the effect of prohibiting the discharge.  The latter process would have,  pursuant to Rule 7001(4),  required an Adversary Proceeding with its heightened due process protections,  perhaps not changing the outcome. The bankruptcy court order sanctioning the debtor's attorney is still on appeal and pending decision, 5:23-cv-00411-FL,  where hopefully he has independent counsel. To read a copy of the transcript, please see: Blog comments Attachment Document 130125029780.pdf (128.39 KB) Category Eastern District

E.D.N.C.: In re Fanning- Local Rules regarding Incurring Debt In Chapter 13/ Denial of Direct Appeal Ed Boltz Thu, 04/11/2024 - 15:41 Summary: The Fannings  sought direct appeal to the 4th Circuit of the bankruptcy court's denial of their motion for authorization to incur debt to purchase a home,  which also sought to abrogate local bankruptcy rules  requiring such  authorization. The district court declined to certify the case for direct appeal, determining that the issues raised did not meet the standard required for such certification. The court found that the bankruptcy court's orders did not involve questions of law without controlling decisions or matters of public importance, nor did they require resolution of conflicting decisions. Additionally, the court did not find that an immediate appeal would materially advance the progress of the case. The court also noted that related appeals were pending, and maintaining the appeal in the district court would conserve judicial resources. Regarding the appeal of the bankruptcy court's order denying the motion to abrogate, the district court affirmed the bankruptcy court's decision. It found that the local bankruptcy rules in question were procedural rather than substantive and did not abridge the appellants' rights or violate the Constitution's uniformity requirement.  Commentary: In a case that sought direct appeal to the 4th Circuit,  it is odd that no "normal"  appeal to the 4th Circuit has been sought,  particularly as this is a persistent issue being raised by the attorney and this is a comparatively clean case,  lacking the problematic facts in others. Also,  for what it's worth,  Judge Flanagan's opinion has a typo on page 4,  misspelling Logan in its citation  "Crosiner v. Locan et al., Nos. 5:20-cv-654, 20-cv-656 (E.D.N.C. Feb. 9, 2022)". To read a copy of the transcript, please see: Blog comments Attachment Document 130125030064.pdf (108.38 KB) Category Eastern District

    How to Recall Defaulted SBA Loan from Treasury Offset Program TOP Many clients who have defaulted on an outstanding SBA EIDL loan have contacted us regarding how to “Recall” their loan from the U.S. Treasury Department Treasury Offset Program (“TOP”) back to the Small Business Administration (SBA) to avoid the 30% TOP penalty and to void setoff of Government payments to defaulted borrowers.First, we note that recall is  difficult to do!Advice and/or  steps on how to recall a defaulted SBA loan or what to do if a defaulted SBA loan cannot be recalled are provided below. 1. Improper Transfer.  If you did not receive the Official 60-Day Notice from the SBA, that your SBA loan was in default and  would be transferred to TOP for offset, use this error as a reason for recall and contact both TOP and SBA and argue that the loan was transferred to TOP in  error and without proper procedure. 2. Hardship Grounds. Documenting a hardship making it impossible for further payment of the SBA EIDL loan such as disability, a disaster or the closing or bankruptcy of a business if Government payments are offset (not paid) to the SBA loan borrower. 3. Intent to Cure Default.  If the borrower pays off delinquent amounts and late fees and intends to stay current on future payments, SBA may be willing to call the loan back to give another chance.4. Loan Payoff. Payoff the amount of the outstanding SBA loan balance to stop the offset. 5. Loan Compromise/Offer in Compromise. Contact the SBA or TOP and request a compromise involving negotiating a lump sum reduced payment or a reduced payment over a short period of time (Installment Payment)  for less than the full amount owed. The reduced amount to be paid  is based on “facts & circumstances” of the case, will require many forms to be completed and submitted to TOP and SBA, will require negotiations with Government officials and is at the discretion of the Government.  For those readers wishing more information on offer in compromise please seeEIDL loans and bankruptcy, which can be found at http://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html and  a post on defaulted EIDL loans and the SBA Offer in Compromise program.  That post can be found at http://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html6. File for Bankruptcy. When the borrower files for bankruptcy, section 362 of the Bankruptcy Code provides for an automatic stay, which stops the Offset and the business depending on the Bankruptcy filed can attempt to reorganize or liquidate.  For information or guidance on Recall please 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 held individuals & businesses with too much debt!----To review Jim Shenwick’s other SBA EIDL Posts go to: Treasury Offset Program (TOP) and SBA EIDL Loanshttps://shenwick.blogspot.com/2024/04/treasury-offset-program-top-and-sba.html U.S. Seeks to Collect on Up to $20 Billion in Delinquent Covid Loanshttps://shenwick.blogspot.com/2024/03/us-seeks-to-collect-on-up-to-20-billion.html SBA EIDL Loan Charge Offshttps://shenwick.blogspot.com/2024/02/sba-eidl-loan-charge-offs.html SBA EIDL LOANS & CIVIL & CRIMINAL PENALTIES & BANKRUPTCY FILING Shttps://shenwick.blogspot.com/2024/01/sba-eidl-loans-civil-criminal-penalties.html Defaulted SBA EIDL Loans: In Reversal, U.S. to Heighten Efforts to Collect Billions in Unpaid Covid Loanshttps://shenwick.blogspot.com/2023/12/defaulted-sba-eidl-loans-in-reversal-us.html SBA EIDL Loan Defaults and the Statute of Limitations 12-24-2023https://shenwick.blogspot.com/2023/12/sba-eidl-loan-defaults-and-statute-of.html SBA EIDL Penalties if an SBA EIDL Loan is Not Repaidhttps://shenwick.blogspot.com/2023/12/sba-eidl-penalties-if-sba-eidl-loan-is.html Misuse or Misapply SBA EIDL Loan Proceeds and Chapter 7 Bankruptcy Filingshttps://shenwick.blogspot.com/2023/08/misuse-or-misapply-sba-eidl-loan.html SBA EIDL HARDSHIP PROGRA Mhttps://shenwick.blogspot.com/2023/07/sba-eidl-hardship-program.html Defaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue Codehttps://shenwick.blogspot.com/2023/07/defaulted-sba-eidl-loans-limited.html Offers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary!https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.html EIDL LOAN WORKOUTS AND BANKRUPTCY    https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html EIDL Loan Default Questions & Answers https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.html EIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMIS Ehttps://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.html EIDL Defaulted Loanshttps://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.html New Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan"https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.html EIDL LOANS and SBA OFFER IN COMPROMISE PROGRA Mhttps://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html PPP & EIDL Fraudhttps://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.html Better to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loanshttps://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html 

Treasury Offset Program (TOP) and SBA EIDL LoansMany clients have contacted our office to report that their delinquent SBA EIDL loans have been transferred to the Treasury Offset Program (TOP), and a 30% penalty has been added to their loan balance.The purpose of this Blog post is to discuss the Treasury Offset Program (TOP).   The Treasury Offset Program (TOP)  is operated by the Department of the Treasury’s Bureau of the Fiscal Service and it is a federal agency that was created to help the Government collect debts from individuals and businesses that owe money to the Government. When a debt owed to the Government is past due, TOP assists in collecting the debt by withholding funds due from the Government to the delinquent borrower. This process is known as "offsetting the payment" or "administrative offset."Examples of offset include the government withholding a tax refund due to a taxpayer who owes money to the government, garnishing 15% of a taxpayer's Social Security payment, or not paying money owed to a government vendor who defaulted on an SBA loan.When a defaulted SBA loan is transferred from the SBA to TOP, a 30% penalty is added to the loan balance and TOP will notify credit reporting agencies of the referral. A borrower may try and have the Defaulted SBA loan “recalled” from TOP to the SBA, but in our experience that is hard to doWhat are a borrower's options when a loan has been referred to TOP?They can pay the full amount owed (including the 30% penalty). They can submit an Offer in Compromise to TOP They can file for Bankruptcy to stay TOP’s collection efforts and discharge the loan balance orDo nothingThe basis for filing an offer in compromise is Federal Regulation 31 CFR § 902.2 - Bases for compromise. That regulation provides that (a) Agencies may compromise a debt if the Government cannot collect the full amount because:  (1) The debtor is unable to pay the full amount in a reasonable time, as verified through credit reports or other financial information; (2) The Government is unable to collect the debt in full within a reasonable time by enforced collection proceedings; (3) The cost of collecting the debt does not justify the enforced collection of the full amount; or (4) There is significant doubt concerning the Government's ability to prove its case in court.Factors that will be considered in accepting an offer in compromise are Ability to Pay: TOP assesses the taxpayer's income, expenses, asset equity, and overall financial situation to determine their ability to pay the full amount owed.Income and Expense Analysis: A detailed analysis of the taxpayer's income sources, monthly living expenses, and discretionary spending is conducted to evaluate their financial circumstances.Asset Equity: TOP reviews the taxpayer's equity in assets, such as real estate, vehicles, investments, and other valuable items, as potential sources of payment.Future Income Potential: The borrowers earning potential are taken into account to estimate their ability to pay the debt in the future.History: The borrower's  attempts to pay or resolve the debt, are evaluated.Special Circumstances: Exceptional circumstances or other hardships, may be considered when evaluating an OIC.Collectibility: TOP reviews the likelihood of collecting the full amount owed.Tax Administration: An OIC may be accepted if it would promote future compliance or resolving economic hardship.Client’s or advisors who have defaulted SBA loans that have been transferred to TOP 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 held individuals & businesses with too much debt!

Make your mortgage payment in Chapter 13 It’s easy to lose track of your mortgage payments in Chapter 13.  They don’t call you if you miss a payment.  It seems like nothing happens. But if you slip back to three or four payments behind, they go to the judge and ask permission to foreclose you.  Even if you scramble to catch up, they tack on legal fees that you have to pay. And if the the mortgage company will let you stay two or three payments behind, the bankrutpcy court won’t.  You’ll get to the end of your Chapter 13 plan, and the judge then throws out your case.      The post Make your mortgage payment in Chapter 13 appeared first on Robert Weed Bankruptcy Attorney.

Make your mortgage payment in Chapter 13 It’s easy to lose track of your mortgage payments in Chapter 13.  They don’t call you if you miss a payment.  It seems like nothing happens. But if you slip back to three or four payments behind, they go to the judge and ask permission to foreclose you.  Even if you scramble to catch up, they tack on legal fees that you have to pay. And if the the mortgage company will let you stay two or three payments behind, the bankrutpcy court won’t.  You’ll get to the end of your Chapter 13 plan, and the judge then throws out your case.      The post Make your mortgage payment in Chapter 13 appeared first on Robert Weed Bankruptcy Attorney.