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| vol 19, num 2 | July 2021 |
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| Creditors, Beware: Asserting Stale Bankruptcy Claims May Have Repercussions |
| In a recent decision from the U.S. Bankruptcy Court for the District of Nevada, three proofs of claim filed on behalf of LVNV Funding, LLC — a creditor assignee in the chapter 13 bankruptcy case commenced by Antonia Andrade-Garcia — were disallowed because the statute of limitations on the underlying claims had long ago expired. While such a result in and of itself is not noteworthy, what is noteworthy was the Nevada Bankruptcy Court’s decision to grant the debtor’s request for attorney’s fees and expenses incurred in successfully prosecuting objections to LVNV’s claims. In so doing, the Nevada Bankruptcy Court distinguished the
U.S. Supreme Court’s decision in Midland Funding LLC v. Johnson and relied on a state law fee-shifting statute to award attorney’s fees to the prevailing party.
Since fee-shifting statutes differ from state to state, it is unclear how useful this decision will be to debtors in other jurisdictions across the country. What is clear, however, is that the Nevada Bankruptcy Court in this chapter 13 case was obviously troubled by a creditor asserting a patently unenforceable claim against a debtor, and believed there needed to be some ramifications for such unabashed conduct. Whether other bankruptcy courts will follow suit remains to be seen.
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| Keeping the Faith: Recent Dismissals for Bad Faith |
| Several bankruptcy courts have recently reaffirmed the good faith requirement in all chapter 11 bankruptcy cases. Most notably, the chapter 11 petitions of both the National Rifle Association (NRA) and Stream TV Networks, Inc. were recently dismissed pursuant to 11 U.S.C. § 1112(b) after the courts found that the petitions were filed in bad faith.
In the case of the NRA, the U.S. Bankruptcy Court for the Northern District of Texas dismissed the chapter 11 case in an order filed on May 11, 2021. The Texas Bankruptcy Court specifically concluded that the NRA had filed the petition in an attempt to avoid a New York state regulatory scheme and gain an unfair litigation advantage.
The NRA, a 150-year-old charitable nonprofit corporation chartered under the laws of New York, was the subject of a nearly 15-month investigation by the New York Attorney General (NYAG) into the organization’s operations and internal affairs. Following the investigation, on August 6, 2020, the NYAG filed a complaint in a New York state court. The complaint, naming both the NRA and certain individual officers as defendants, alleged, among other things, a breach of fiduciary duties, exploitation of the organization for individuals’ financial gain, violation of internal bylaws and the concealment of relevant financial information. The NYAG most notably requested the dissolution of the NRA. |
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| ABI's "Industry Viewpoints" |
| Want to learn more about the different industries that bankruptcy affects?
ABI’s got you covered! Check out our “Industry Viewpoints” video series, featuring ABI Editor-at-Large Bill Rochelle discussing various industries with prominent bankruptcy professionals. The first four conversations have been previously posted on our social media platforms (Facebook, Twitter, LinkedIn and YouTube).
Make sure to check out Bill’s most recent conversation with Scott A. Wolfson of Wolfson Bolton PLLC (Troy, Mich.) on the auto industry.
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| Previous guests of “#IndustryViewpoints” have included:
Be sure to view the ABI YouTube Channel and follow ABI on social media (twitter.abi.org, facebook.abi.org or linked.abi.org) to be notified of upcoming episodes!
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| Ethics and Professional Compensation Committee Leadership for 2021 |
| The Ethics and Professional Compensation Committee is proud to announce our new leaders for 2021!
You can also visit the committee's homepage for more newsletter articles, relevant recordings and other committee information.
The committee is always eager to welcome new volunteers. Please contact any member of our leadership team to find out how you can get involved.
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Victoria A. Guilfoyle
Special Projects Leader
Blank Rome LLP
Wilmington, Del. |
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