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Definition of “Partner” in Bankruptcy Reorganization Plan Controls Subordination of Claims, Not Definitions under State Law

Dec 7

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By: Jason L. Gould
St. John’s Law Student
American Bankruptcy Institute Law Review Staff

The Seventh Circuit, in In re Altheimer & Gray,[1] held that the meaning of “partner” in a bankruptcy proceeding would be determined in accordance with the terms of the plan of reorganization, not state partnership law.[2] Altheimer & Gray filed for bankruptcy in 2003.[3] According to his contract, Mark Berens was a “Non-Unit Partner,”[4] meaning he possessed no interest in the firm’s profit-share and held no voting power, unlike the “Unit Partners.”[5] Altheimer & Gray’s reorganization plan subordinated the claims of both “Non-Unit Partners” and “Unit Partners” to those of its other creditors.[6] Berens argued that he was not a partner under the statutory definition of Illinois’ Uniform Partnership Act, and therefore, should not have his $300,000 claim subordinated.[7] Without looking to state law, the court relied on 11 U.S.C. § 1141(a), which states, “the provisions of a confirmed plan bind the debtor [and any other such entity under the plan] . . . whether or not the claim . . . is impaired under the plan.”[8]

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Do Hybrid Claims Qualify for Section 503(b)(9) Administrative Expense Treatment?

Aug 29

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By: Brendan Gage
St. John’s Law Student
American Bankruptcy Institute Law Review Staff
 
Courts are increasingly divided over whether so-called “hybrid” claims – those involving both goods and services transactions – can qualify as an administrative expense under section 503(b)(9) and, if so, to what extent. Claims characterized as administrative expenses are paid off first whereas claims that fail to meet section 503(b)(9)’s requirements will be deemed unsecured claims which are paid at a lower priority level and rarely in full.[1] A product of BAPCA, section 503(b)(9)[2] creates a specific type of administrative expense claim for “the value of any goods received by the debtor within 20 days before the date of commencement of a case under this title in which the goods have been sold to the debtor in the ordinary course of such debtor’s business.”[3] Yet despite this seemingly straightforward language, courts battle over whether goods transactions within hybrid claims can be allocated as individual section 503(b)(9) expenses or whether hybrid claims should be considered indivisible and analyzed wholesale for qualification under section 503(b)(9).[4]
 

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Claims of creditors in the bankruptcy must be taken seriously

Oct 27

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Proof of the claim:

Filing bankruptcy does not mean that the Court will listen only to the debtor. The judge will allow donors and their demands. These statements are called “proof of claims” Approval of the proof of claim: If you’re in the middle of the process of filing for bankruptcy, the presentation of creditor’s claims of evidence, the judge asked the defendant if the evidence who claims to oppose. Now, if the applicant is not responsible for the failure of this investigation, under the rules of the Court on personal bankruptcy, you itsest & # xE4; An-evident that the failure of the applicant has nothing against ‘evidence väittä & # xE4;. This means that it would accept the evidence of claims and the applicant must, if possible, what is owed to the creditor or the creditor during the bankruptcy process. Priority affect this failure. This is also to have a major impact on protected and non-dischargeable debt. Approval of the consequences of Claims Proof: Suppose that during the bankruptcy process, applications support a child. This argument can greatly increase the amount you need. Now, if you do not dispute the fact that during the bankruptcy, you do not get a second chance to oppose. Since we do not have any objection to be allowed to you and you have to pay this, if possible, during the bankruptcy. This situation could be repeated with respect to taxes, student loans and other secured loans. It could therefore be required to service after the filing of bankruptcy. Challenged the statements of evidence: At the end of these problems must be examined in detail the arguments of creditors in bankruptcy. If you find errors, you should immediately take the subject of bankruptcy court. You should take the failure of a lawyer or a bankruptcy attorney to describe it.

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