Davis Wright Tremaine LLP; Portland, Ore.
Just when you think you’ve finally learned Uniform Commercial Code (UCC) Article 9, the Uniform Law Commission (ULC) proposes changes. The ULC and the American Law Institute (ALI) promulgated Revised Article 9 (RA9) in 1998, and it was enacted by all states by 2001. From 2001-08, RA9 seemed to work fairly well, but some practitioners and judges nevertheless found ambiguities.
To set the record straight, the ULC and ALI formed an Article 9 Review Committee, which spent one year reviewing Article 9. First presented for draft consideration in July 2009, it was adopted on July 15, 2010. The present goal is to get legislatures [1] to consider the new Article 9 in 2011 and for changes to be officially effective in each state on July 1, 2013. This article provides a roadmap through the changes to the new Article 9 (2013 RA9).
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Maddin, Hauser, Wartell, Roth & Heller PC; Southfield, Mich.
What happens when a chapter 7 trustee brings an action to avoid a prepetition transfer of garnished funds as preference and tries to recover such transfer not only from the judgment creditor but also its attorney? Here’s an example. George Washington retains Law Firm to prosecute John Adams for an injury that Washington suffered on Adams’ property. Law Firm, not surprisingly, agrees to take the case on a contingent-fee basis. Washington is awarded damages and is very happy with Law Firm, which was able to recover X amount of the awarded damages from Adams. The state court distributes one-third of the total award (plus costs) to Law Firm, pursuant to its contingent-fee arrangement with Washington, and the remaining amount to Washington. After the trial, but before X amount is distributed, Adams tells Law Firm that he is going to file for bankruptcy and, therefore, the total recovery, including the one-third contingent fee, will have to be returned as an avoidable preferential transfer pursuant to the Bankruptcy Code, but Law Firm refuses to return its contingent fee. A few weeks after Law Firm is paid, Adams files for bankruptcy relief and the chapter 7 trustee files a complaint against Washington (as the initial transferee) and Law Firm (as the immediate transferee) for recovery of avoidable preferential transfer. Although this issue has not been specifically addressed by many courts, it is clear from a reading of the Code that law firms face potential liability under 111 U.S.C. §§ 547 and 550.
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ABI Rolls Out Next-Generation Electronic Bankruptcy Code & Federal Rules Product
The ABI has created the first personalized electronic Bankruptcy Code & Rules (http://law.abi.org) website, complete with bookmarks and annotations for law practitioners. True to the tagline, "All The Good Parts Marked," members can not only search for a specific provision of the Bankruptcy Code and related Rules, but this unique new website also provides links to relevant case law thanks to our site partner, LexisNexis. The site is also personalized, allowing users to bookmark sections and add personal notes and comments for any Code section, Rule or case. To get started, visit http://law.abi.org and click "Create An Account." Once a username and password are established, the website can be accessed from anywhere, including a mobile device. Learn more at http://law.abi.org.
