vol 18, num 2 | June 2020
Young & New Members
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How the German Tax Authorities Help with the Restructuring of Companies: Practical Experience with Tax Exemption of Restructuring Profits
Dr. Stephan Degen
Dr. Stephan Degen
Heuking Kühn Lüer Wojtek
Munich, Germany
Companies in crisis are facing major challenges. Not only do they have to negotiate with stakeholders about their restructuring contributions and restructuring loans, they also have to make what are often difficult decisions on a wide range of legal issues. Essential components of any restructuring concept are the restructuring contributions of stakeholders, which often consist of waivers of claims by existing creditors. Whether made within or without insolvency proceedings, waivers of claims often result in considerable tax liability for the company to be restructured, which can be a real obstacle to restructuring.
Student Loan Dischargeability: Recent Developments
Alexander E. Porter
Alexander E. Porter
Krieg DeVault LLP
Dischargeability of student loans is a “hot button” issue in both the bankruptcy world and mainstream media. In fact, last September another colleague wrote about the history of student loan dischargeability, and the current obstacles borrowers face. Since that article, the U.S. Bankruptcy Court for the Southern District of New York issued a controversial decision that discharged a debtor’s student loan debt of $221,385.49. Meanwhile, the 2020 presidential election race is underway, and candidates, including President Trump, are offering their own solutions to the issue of student loan dischargeability. Also, the outbreak of the coronavirus pandemic and its economic effects have resulted in increased pressure on policymakers to provide immediate relief to student loan borrowers. Needless to say, there are many developments on this front, and this article touches upon them.
Eighth Circuit Examines “Retirement Fund” Exemption in Divorce Context
Jessica Uhlenkamp
Jessica Uhlenkamp
Heidman Law Firm, PLLC
Sioux City, Iowa
Most bankruptcy professionals know that “retirement funds” are generally exempt assets under § 522(d)(12) or 522(b)(3)(C). However, those funds must meet very precise requirements to meet this qualification. Specifically, the funds must be “retirement funds,” and they must be held in an account that is exempt from taxation under certain sections of the Internal Revenue Code.

Defining “Retirement Funds” Under the Bankruptcy Code
In 2014, the Supreme Court defined “retirement funds” in the bankruptcy context. The Clark case dealt with IRAs that were inherited, rather than earned.

Committee Webinar: “Preference Update: SBRA’s Due Diligence Requirement"
abiLIVE webinar series
On April 8, the Young and New Members Committee hosted a webinar on the Small Business Reorganization Act’s new due diligence requirement for preference actions. Timothy McKeon (Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC; Boston) moderated the webinar, which featured Bankruptcy Judge Jerrold N. Poslusny (D. N.J.; Camden), Bethany J. Rubis (ASK LLP; Saint Paul, Minn.) and Shane G. Ramsey (Nelson Mullins Riley & Scarborough, LLP; Nashville, Tenn.).

The Small Business Reorganization Act of 2019 (SBRA) was signed into law on Aug. 23, 2019, and went into effect on Feb. 19, 2020. The SBRA includes changes affecting how and where preference actions may be brought. An amendment to § 547 requires that a trustee (or debtor-in-possession) consider a defendant’s defenses before bringing an action. This amendment, which is applicable in all bankruptcy cases (not just those under subchapter V or small business debtor cases), requires the plaintiff to engage in reasonable due diligence regarding a defendant’s affirmative defenses before initiating a preference action.

Prior to the SBRA, “reasonable due diligence” did not appear in the Bankruptcy Code. The standard of “reasonable diligence” has been used in cases addressing disputes hinging on whether a creditor should have received notice in a bankruptcy case. See, e.g., Mennonite Bd. of Missions v. Adams, 462 U.S. 791 (1983) (a creditor's identity is “reasonably ascertainable” if that creditor can be identified through “reasonably diligent efforts”); In re Ritchie Risk-Linked Strategies Trading (Ireland) Ltd., 471 B.R. 331, 339–40 (Bankr. S.D.N.Y. 2012) (“Reasonable diligence does not necessitate impracticable and extended searches … in the name of due process. Instead, reasonable diligence involves a search focusing on the debtor’s own books and records.”).

The panel also discussed the potential implications for Federal Rule of Bankruptcy Procedure 9011 and the new requirement. In particular, the panel looked to In re Excello Press Inc., 967 F.2d 1109 (7th Cir. 1992), and Berger Indus. v. Artmark Prods. Corp. (In re Berger Indus.), 298 B.R. 37 (Bankr. E.D.N.Y. 2003), for guidance. The Young and New Members Committee thanks the panelists for their time and efforts in preparing and presenting this webinar.

The replay of the webinar is available in the CLE Center. Check it out!

Announcing ABI’s COVID-19 Resources Page!
COVID-19/Coronavirus Bankruptcy Industry News
Check out our brand-new COVID-19 Resources Page! Developed for both bankruptcy professionals and the public alike, the page houses links to essential information and analysis regarding the financial distress being inflicted by the COVID-19 pandemic. The site features exclusive ABI content on the crisis, recommended member analysis, industry sector news, charts and more.
COVID-19 Resources
SBRA E-book Added to Young and New Member Bundle

COVID-19/Coronavirus Bankruptcy Industry NewsSBRA: A Guide to Subchapter V of the U.S. Bankruptcy Code is a free ebook written by Hon. Paul W. Bonapfel, a longtime bankruptcy judge from the Northern District of Georgia. The book covers all aspects of the new Subchapter V — created by the Small Business Restructuring Act of 2019 — and will be an invaluable resource to any practitioner handling small business bankruptcies. It has also been added to ABI's popular Young & New Member Bundle. Download your copy today or get it free when you purchase the bundle!

Download Your Copy
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Young & New Members Committee Leadership for 2020
The Young & New Members Committee is proud to announce our new leaders for 2020!

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.

Brendan Gage photo
Brendan Gage

Paul Hastings LLP
Tara J. Schellhorn photo
Tara J. Schellhorn

Riker, Danzig, Scherer, Hyland & Perretti LLP
Morristown, N.J.
Joseph M. Esmont photo
Joseph M. Esmont
Communications Manager

Cleveland, Ohio
David R. Doyle photo
David R. Doyle
Education Director

Fox Rothschild LLP
Lombard, Ill.
Christina Sanfelippo photo
Christina Sanfelippo
Education Director

Fox Rothschild LLP
Gabrielle G. Palmer photo
Gabrielle G. Palmer
Membership Relations Director

Onsager | Fletcher | Johnson
John Thompson Baxter photo
John Thompson Baxter
Newsletter Editor

Nelson Mullins Riley & Scarborough, LLP
Nashville, Tenn.
Bodie B. Colwell photo
Bodie B. Colwell
Newsletter Editor

Preti Flaherty
Portland, Maine
John Richard O'Connor photo
John Richard O'Connor
Special Projects Leader

Sugar Felsenthal Grais & Helsinger LLP
Christian A. Pereyda photo
Christian A. Pereyda
Special Projects Leader

Maynard, Cooper & Gale, P.C.
Birmingham, Ala.
Central States Virtual Bankruptcy Workshop
40 Under Forty
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