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Bob Lawless
University of Illinois
I'm a college professor with 3 kids.
Recent Activity
Every month I see stories about the bankruptcy rate moving up and down. The truth is that the U.S. bankruptcy filing rate has remained flat over about the past four years. The table to the right shows the total number... Continue reading
Posted Nov 14, 2019 at Credit Slips
The inimitable John Lynch emailed to let me know that the call for papers is open for the 2020 Boulder Conference on Consumer Financial Decision Making, to be held from May 17-19, 2020. Much more information, including how to submit... Continue reading
Posted Nov 14, 2019 at Credit Slips
Keith, who said the trustee got paid? More seriously, I think you're right. There needs to be a reference in section 326(b) to section 1183. Until then, do you think a confirmed plan that authorized payment would be enough? I guess it remains to be seen whether there are many nonstanding trustees appointed in these cases. And, I am not aware of any redline yet for the new law.
Is there a drafting error in the Small Business Reorganization Act? The other day I posted my estimate that 42% of chapter 11's would qualify, but my sharp-eyed colleague, Ralph Brubaker, noticed something wonky (in all senses of the word)... Continue reading
Posted Sep 17, 2019 at Credit Slips
The Small Business Reorganization Act of 2019 adds a new subchapter V to chapter 11 for small businesses. The new subchapter gives small businesses the option of choosing a more streamlined -- and hence cheaper and quicker -- procedure than... Continue reading
Posted Sep 14, 2019 at Credit Slips
On Tuesday, the United States Court of Appeals for the Fifth Circuit released an opinion that, if anything, makes it even more difficult to discharge student loans in bankruptcy. Writing for a three-judge panel in a case called In re... Continue reading
Posted Aug 2, 2019 at Credit Slips
In response to a question, yes, we are assuming that the animal is exempt for Bankr. Code § 522(f). Many states do exempt animals, and there is always the wild-card exemptions (which most courts seem to say "count" for purposes of § 522(f)).
Toggle Commented Mar 4, 2019 on Pug Repossession at Credit Slips
If you missed it, Thursday's New York Times had a story about a debt collector who seized the family's dog over unpaid bills. The pet, a purebred pug, was sold for the equivalent of $800 on eBay which apparently meant... Continue reading
Posted Mar 3, 2019 at Credit Slips
Nate, yes, we are thinking along the same lines.Courts seem to have been distracted by the core/noncore distinction perhaps because "core" sounds like "important." We make the point about the petition being the case itself in the amicus brief. And, rarely has the word "formulaic" been a more apt description of a line of case law.
I am not sure that will work, Bradley. Rejection of an executory contract is deemed to be a prepetition breach of the contract, see § 365(g), not a nullification of the contract. A party's breach of a contract does not excuse any contractual obligation that party has to arbitrate.
Now that the major work of the ABI Commission on Consumer Bankruptcy is done, I seem to have this thing called "time" again. One of the topics that I have been wanting to post about is arbitration in bankruptcy. If... Continue reading
Posted Feb 18, 2019 at Credit Slips
For the past two years, the American Bankruptcy Institute's Commission on Consumer Bankruptcy has been hard at work. As the Commission's reporter, I am very happy to say that the work is nearly finished. All of the drafting is completed,... Continue reading
Posted Feb 18, 2019 at Credit Slips
Isn't this a variant on the "golden share" issue (i.e., whether a corporate structure can give a shareholder a blocking position to prevent a bankruptcy filing)? I suppose the golden share blocks the bankruptcy filing altogether and this law just requires notice. Here is an academic question in two senses of the term. What would happen if PG&E simply ignored the requirement? SB 901 is not a condition to a bankruptcy filing. Presumably there might be some enforcement under state law, but if the costs of notice were too high, couldn't they just file?
Toggle Commented Jan 14, 2019 on Is SB 901 Constitutional? at Credit Slips
If we are both saying that the bankruptcy court should allow a credit bid by the second only after the second bids the amount of the first in cash, then we are in agreement. The bankruptcy court should mimic the result that would occur in a state court foreclosure auction. The phrase "for cause" in 363(k) is there exactly to allow the court by order to set out these sorts of rules. And, surely, these are "free and clear" sales.
Toggle Commented Jan 14, 2019 on Credit Bidding and Sears at Credit Slips
Adam, the first paragraph misstates credit bidding. A creditor can credit bid at an auction for its lien. If the auction occurs under the second's lien, then the second can credit bid but would take subject to the first like any other buyer. If the first does not want that result, the first can foreclose and force the auction under its lien. If the auction occurs under a foreclosure of both the first and the second, then the auction procedure should require the second to bid the value of the first in cash before it can credit bid on its second. I suppose a court could screw it up like it can screw up any other issue, but if done correctly, the second credit bids only after paying off the first. Talking about "setting the value of the collateral" is a misnomer. It is really setting the amount of the deficiency or, in bankruptcy, the unsecured claim. Yes, if the deficiency/unsecured claim is uncollectible, then the secured creditor might as well bid the full amount of the debt. I don't see how this is a problem. It gives the secured creditor exactly what it bargained for -- the asset if the debtor does not pay. Other claimants to the enterprise no longer have access to the asset, but that is a (much larger) beef with secured lending, not credit bidding.
Toggle Commented Jan 14, 2019 on Credit Bidding and Sears at Credit Slips
You write, "ESL should only be able to credit bid against its collateral and then only in the amount of its collateral." I agree on the former but not the latter. The concept of credit bidding does not prohibit bidding above the "value" of the collateral. Indeed, the whole idea of the auction is that we are setting the value of the collateral (and hence the deficiency). Craig is right that the second has to put up cash to take out the first and then it can credit bid. In your example, the second has to put up $80 in cash and then it can credit its debt of $30. I also agree with Vince that the issues are not unique to second liens. The issue is what you suggested -- can ESL credit bid in an auction of assets that has collateral and non-collateral.
Toggle Commented Jan 14, 2019 on Credit Bidding and Sears at Credit Slips
Interesting stuff, Mitu. Please excuse a somewhat tangential question purely out of curiosity as a secured credit nerd. Are there many examples of judgment creditors on a sovereign bond grabbing assets?
Toggle Commented Dec 18, 2018 on Venezuelan Bonds: The Game is Afoot at Credit Slips
One of my favorite conferences is the Conference on Consumer Financial Decision Making held every summer in Boulder, Colorado, and I am not the only one who feels that way. Next year's conference will occur from May 19-21, 2019. Professor... Continue reading
Posted Nov 21, 2018 at Credit Slips
The New York Times, the Associated Press, The Hill, and many other media outlets are reporting that former Credit Slips blogger Katie Porter has won her election for California's 45th Congressional District. Anyone who knows Katie's work knows that she... Continue reading
Posted Nov 15, 2018 at Credit Slips
The Supreme Court granted cert today in the bankruptcy case of Mission Product Holdings v. Tempnology, LLC. It sounds like another one of those cases only bankruptcy nerds can love, but it has potentially broad implications. On its face, it... Continue reading
Posted Oct 26, 2018 at Credit Slips
Excellent post. Could the rule simply say the state AGs cannot enforce it? I would think not given the language of the statute, but I wonder about your thoughts. Even putting such an arguably unenforceable restriction in the rule might be enough to discourage state AGs as they would have to win on two points: (1) the restriction is unenforceable and (2) the facts in the case indicate an abusive practice.
Toggle Commented Oct 17, 2018 on CFPB "Abusive" Rulemaking? at Credit Slips
A few years ago and not knowing that Adam was working on these materials, I had independently come to the conclusion that the law school curriculum needed a consumer finance course. My reasons were practical. This is a set of laws that many attorneys will encounter and increasingly so. It is a course that helps students prepare for the practice of law and in a wide variety of practice settings. I was thrilled to discover that Adam had a set of materials. Commercial law types comfortable with the problem method (like me) will find the book's approach familiar. I have not taught it as a more traditional lecture course, but I can see where it would work well for that format as well. There is a comprehensive teacher's manual available as well. The course seems to have been well received here at Illinois. A happy side effect was that my students last year seemed to feel like that they also had learned a lot of information that would help them in their personal lives.
It is with great sadness that the news reached my desk of the passing of Professor Ian Fletcher of University College London. Ian was a leading international insolvency expert, well known to all of us at Credit Slips, and we... Continue reading
Posted Jul 25, 2018 at Credit Slips
Today is the twelfth anniversary of the Credit Slips launch date. I always like to mark the date because it is hard to believe that it has been that long. When we started, Barack Obama was a senator, and Elizabeth... Continue reading
Posted Jul 18, 2018 at Credit Slips
People innately measure their well-being by reference to others. Right now, eTrade has a series of ads exploiting exactly this sentiment -- invest with us to be richer than your friends and neighbors. I would hypothesize this heuristic or a related heuristic spills over into debt relief. We have an innate need to make sure someone is not getting something they don't deserve, not getting ahead of us. In country after country, the story of the undeserving debtor always resonates when it comes to debates about bankruptcy reform. And, to pick up Anon's point, the intensity of the heuristic almost certainly varies across cultures. If my hypothesis is correct, the Type I/Type II error debate and similar debates do not engage the heuristic. These points tell people how they should intellectualize the issue, but they don't address how people actually internalize issues like debt relief. Not surprisingly, my advice is to do the empirical project. What are attitudes about debt relief? How do these attitudes relate to well-known heuristics on wealth and social status? How do these attitudes vary across cultures?