In prior client alerts, we have explained to non-lawyers the dual nature of our judicial system as both courts of law and equity.1 The origin of this duality dates back to chancery courts in the middle ages where the church presided over certain matters. In some states, the distinction is still preserved while, for the most part, the two concepts of "law" and "equity" are merged into a unitary court system in the federal and state [...]
The introduction in 2020 of subchapter V for small business chapter 11 cases was the biggest structural reform in business bankruptcies since the enactment of the Bankruptcy Code in 1978. Subchapter V was enacted in 2019 as part of the Small Business Reorganization Act and became effective in February 2020. It was originally limited to cases with $2,725,625 or less in debt, but when Congress passed the CARES Act in 2020 in response to the [...]
1. AUTOMATIC STAY 1.1 Covered Activities 1.1.a Taggart v. Lorenzen standard applies to stay violation in a corporate case. The debtor sold assets prepetition. After the petition date, the buyer demanded payment of certain working capital adjustments provided under the purchase agreement. The automatic stay prohibits any act to collect or recover a prepetition claim. Section 362(k) allows an individual debtor to recover damages for willful violation of the stay. Under Sixth Circuit law, it does not protect [...]