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Bob Lawless
University of Illinois
I'm a college professor with 3 kids.
Recent Activity
That is a good point. The FJC database captures the checkbox on the petition, which only asks about bankruptcies in the last eight years so using that datapoint does tend toward an overcount. In the Consumer Bankruptcy Project data, however, one-sixth of the filers who check the box are disclosing a bankruptcy that was more than eight years old and presumably are picked up as a repeat filer in the FJC data. (The FJC database does not have the date of the prior bankruptcy.) More significantly, there are ways my estimate undercounts. Based on recent data, people live an average of 32 years after their bankruptcy, but that number was almost certainly several years higher in the 1990s and 2000s when bankruptcy filers were younger on average. That interacts with a slightly increasing life expectancy in difficult ways to compute. Also, there has been a slight downward trend in joint filings, meaning today's joint filing rate is probably lower than it was historically. Putting all that together is why I took my 11.1% computation and said "about 10%" is a good estimate. We are not going to do better than a ballpark estimate using these figures. What surprised me is that estimate is magnitudes higher than I would expect many people would guess.
The past few days I had been wondering exactly how many persons in the U.S. have filed bankruptcy. By that, I don't mean how many filed last week, last month, or last year. Rather, how many persons walking around the... Continue reading
Posted Jun 22, 2020 at Credit Slips
Prediction: you will begin to see stories about an explosion of chapter 11 filings in May 2020. Well, that is not much of a prediction because I already have seen two. Chapter 11 filings did not explode in May. A... Continue reading
Posted Jun 3, 2020 at Credit Slips
(Updated and corrected, 5/22). An earlier post noted that bankruptcy filings were down substantially over 50% the first two weeks of April. As the American Bankruptcy Institute reported, bankruptcy filings declined by 46% over the entire month and on a... Continue reading
Posted May 21, 2020 at Credit Slips
Support seems to keep building even more for changes to where large corporate debtors can file chapter 11. The latest is a letter from "163 sitting, recalled, or retired United States Bankruptcy Judges." From the letter: The venue selection options... Continue reading
Posted May 5, 2020 at Credit Slips
With the Covid-19 pandemic, there has been a lot of talk about a coming surge of consumer bankruptcy filings. In the very short-term, however, bankruptcy filing numbers are down. According to data from Epiq Systems, daily bankruptcy filings declined 18.4%... Continue reading
Posted Apr 16, 2020 at Credit Slips
The Business Law Section of the American Bar Association has posted a model standstill/tolling agreement drafted by Jonathan Lipson and Norm Powell. Business relationships will undoubtedly strain as the crisis means more parties are not able to fulfill their side... Continue reading
Posted Apr 15, 2020 at Credit Slips
Professor Ted Janger of Brooklyn Law School sent me a proposal for a small change to the Bankruptcy Code that might significantly help small businesses affected by the COVID-19 pandemic. His idea merits consideration. In Ted’s words: Obviously, it is... Continue reading
Posted Mar 15, 2020 at Credit Slips
Welcome to occasional guest blogger, David Lander, currently a professor of practice at Saint Louis University School of Law. In addition to his current and past academic postings, David has practiced consumer bankruptcy law with legal services organizations as well... Continue reading
Posted Dec 16, 2019 at Credit Slips
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