In the well-known children’s story book written by P.D. Eastman and edited by beloved Dr. Seuss, a baby bird embarks on a quest to find his mother, asking a hen, a dog, and a kitten, among others, the famous question, “Are you my mother?”   If Dr. Seuss had penned the recently-decided case of Thielman v. MF Global Holdings, Ltd. (In re MF Global Holdings Ltd.), he might have called it, “Are You My Employer?” and its plot would have centered around the WARN Act plaintiffs’ efforts to convince the court that the MF Global enterprise, collectively, was the plaintiffs’ mother ahem employer. Just as the baby bird in Are You My Mother was faced with a journey before he could meet his mother, so too did the plaintiffs in MF Global Holdings embark on a journey of sorts—meeting the bankruptcy court and then the Southern District of New York along the way —before finding out that maybe in, some instances, it’s not necessary to know exactly who your mother, ahem employer, is. 
Background

(posted 5 hours 14 min ago)

A federal district court in New Mexico has issued a decision finding that the U.S.  Department of the Interior’s regulations permitting the Secretary of the Interior to adopt Class III gaming procedures for a tribe lacking a Tribal-State Compact are invalid and violate the Indian Gaming Regulatory Act, 25 U.S.C. §§ 2701 et. seq. (“IGRA”).  If upheld, the decision in New Mexico v. Dept. of Interior could be expected to shift the balance of power to the states in the negotiation of new compacts and renewed compacts.  The decision also may result in pressure on the Department of the Interior to exercise its role as trustee for tribes and sue states that fail to negotiate compacts in good faith.

(posted 6 hours 45 min ago)

I have found this to be true over and over again.  Maybe it’s just my line of work.
Grump Cat
Part of my regular practice is being called in by the transactional lawyers (paper pushers) as they paper up a new loan or re-fi.  My job in those situations is to give my thoughts on what will happen should the worst occur (eg, default, receivership, bankruptcy, lawsuit, etc.) and how to minimize the risks to the lender.
Often times, identifying potential fraudulent transfer exposure on the front end is of concern when the lender creates some type of relationship with a non-borrower affiliate or insider of the borrower. The usual situation is a guarantor, but other situations exist such as payment from a non-borrower affiliate.  A recent 5th Circuit case discusses such a situation.
The Background – Skip this if you are Familiar with Fraudulent Transfers
There are a few types of “fraudulent transfers” under both federal and state law.  Generally speaking, however, a fraudulent transfer occurs in two ways:

Tough Times for Lenders
(posted 9 hours 12 min ago)
The new Apple Watch is pictured during an Apple event at the Flint Center for the Performing Arts in Cupertino, Calif., in this file picture taken Sept. 9, 2014.
Stephen Lam

GT Advanced Technologies has signed a pact with Apple Inc. for an “amicable parting of the ways,” Luc Despins, attorney for the bankrupt supplier to the technology giant, said Tuesday in the U.S. Bankruptcy Court in New Hampshire. The Wall Street Journal has the Daily Bankruptcy Review article here.
(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)

WSJ.com: Bankruptcy Beat
(posted 9 hours 38 min ago)

CNN reports that the average student loan debt in the United States at the end of last year was nearly $30,000. In New York the numbers are almost as bad; the average is just over $25,000.  Between 2008 and 2012, student loan debt rose a shocking six percent per year. Seventy percent of college seniors nationwide graduate with student loan debt, and 20 percent of that debt is owed to high-cost private lenders.  So it makes sense that young people are drowning and looking for a life-line to escape from their sea of debt. Licensed attorneys can sometimes help.  Unfortunately though, at least some non-attorneys who are claiming to throw out a life preserver are actually sharks.
The New York Times reports that the student loan debt settlement industry is filled with such sharks.  These companies offer to help borrowers lower their monthly payments for a large up-front fee.  Traditionally this tactic was used to go after desperate borrowers with credit card and mortgage debt, but young people with crushing student debt provide a new set of victims for these companies.  This is particularly true since over half of recent graduates are unemployed or have low-paying jobs that do not even require the expensive college degree the young person is trying to pay off.

(posted 11 hours 17 min ago)

soldier shield mediawikiIncorporate to protect yourself from the debts of your  business, shriek the ads.
That’s the theory of incorporation:  create a separate legal entity in the form of the corporation.
Let that entity incur debt and expose itself to other risks.  If it fails, the personal holdings of the owners of the corporation are safe.
But, in the real world, most big ticket debts that a corporation might incur require the guarantee of the owner.
So if both corporation and owner are liable for the business debts, what has incorporation gained you?
You’ll be surprised.
Incorporate to protect the business
But, consider the same move, incorporation,  for the opposite reason.

Incorporate to protect the business from the owner’s debts.

A sole proprietor and his business are one and the same in the law.
When the proprietor has a tax problem or there’s a judgment outstanding against him, all of the business cash and assets are exposed to that debt.
The business bank account can be levied for the owner’s back child support or a judgment against the owner for unpaid magazine subscriptions.

(posted 19 hours 59 min ago)

It seems that just about every month or so a lender or a towing company is withholding the debtor’s vehicle despite the fact that a chapter 13 bankruptcy case had been filed. Most lenders are now up to speed on the Thompson case which governs cases in the state of Illinois with regard to repossessed+ Read More
The post Towing Company Cannot Withhold Debtor’s Auto In Chapter 13 Bankruptcy appeared first on David M. Siegel.

(posted 1 day 2 hours ago)

A reaffirmation agreement is an agreement by a debtor and a creditor about how to treat a particular debt that would otherwise be discharged in the debtor’s bankruptcy. Usually, the debt is secured by collateral that the creditor could repossess or foreclose on. In the reaffirmation agreement, the debtor agrees to pay some or all of debt, usually, according to schedule. In exchange, the creditor agrees not to repossess or foreclose on collateral that secures the debt, as long as the debtor makes the agreed-upon payments. A valid reaffirmation agreement puts the debtor under a legal obligation to pay back the entire amount agreed upon, even if this is more than the value of the collateral that the debtor is keeping. So if the debtor defaults in the payments required under the reaffirmation agreement, the creditor can repossess or foreclose, and then seek a personal judgment against the debtor if the sale of the collateral does not satisfy the debt.

(posted 1 day 2 hours ago)

Undo Button.jpg
I recently met a client who first learned that she had been sued when she received a post card in the mail from the court indicating that a default judgment had been entered against her.  Frequently I meet clients who first learn of a judgment when their paychecks or bank accounts become garnished.  “How can they garnish me when I never had a chance to go to court!” is the common complaint.
Over 90% of all collection lawsuits result in a default judgment.  Most folks just figure they owe the debt and chose not to contest the lawsuit, even if the amounts are wrong.  However, a big reason for default judgments is that the defendant moved and the lawsuit summons was served at an old address.  So, when the Sheriff cannot serve the lawsuit because the has defendant moved the Sheriff will typically file a report with the court that says “attempted to deliver, defendant not found at this address, unable to deliver summons.”  The Sheriff typically does not report that the defendant has moved to another address, he just reports that the defendant could not be served.
The Problem of Alternate Service: 

(posted 1 day 2 hours ago)

Texas entrepreneur Samuel Wyly has filed for bankruptcy on Sunday, stating he does not own the assets to pay roughly $400 million in penalties for an overseas fraud scheme.
According to the Chapter 11 petition, Wyly stated he had assets and debt between $100 million and $500 million. He attributed his debt to the “massive costs of investigations and then litigation” by the Securities and Exchange Commission.
“While the debtor has substantial assets, he does not have the ability to pay the full amount of all asserted claims at the present time,” according to the filing.
A New York judge ruled last month that Wyly, 80, and the estate of his late brother, Charles, must forfeit up $187.7 million plus interest. In May, a civil jury found they were involved in a 13-year fraud scheme in which they used offshore trusts and subsidiaries to conceal stock sales.
It is believed the Wylys accrued upwards of $550 million in untaxed earnings through their system, which lasted over a decade.
The SEC is listed as Wyly’s second greatest creditor, with a claim of $198.1 million, according to court documents. Wyly listed the Internal Revenue Service as his biggest creditor, with disputed debts “unknown.”
Depending on how interest is calculated, the total payment owed by Wyly and his late brother’s estate will fall between $300 million and $400 million.

Total Bankruptcy
(posted 1 day 4 hours ago)