The Third Circuit Court of Appeals issues a reminder to debtors’ counsel that they can protect themselves with beneficial (boilerplate) terms in a Chapter 11 Plan. In In re SC SJ Holdings, LLC, 2024 WL 1328233 (3rd. Cir. March 28, 2024), the Debtor was the owner of a hotel that was operated by Accor Management US, Inc. pursuant to a Hotel Management Agreement (“HMA”). After COVID related problems servicing its debt, Debtor consulted Law Firm for advice. Law Firm advised Debtor it should file a Chapter 11 petition and terminate the HMA with Accor, and it could emerge from the case in 100 days ..read more

… at least in Judge Sigler’s Court in the Northern District of Georgia. Primary Investments Group, Inc. v. RA Custom Design Inc., 2024 WL 607716, Adv. Proc. No. 23-05193-sms (February 13, 2024). The holding is consistent with most courts that have ruled on the issue, with the exception of the Fourth Circuit Court of Appeals in In re Cleary Packaging, LLC, 36 F.4th 509 (4th Cir. 2022). This Court agrees with fellow bankruptcy courts and the Ninth Circuit Bankruptcy Appellate Panel that § 1192 does not make § 523(a) exceptions to discharge applicable to corporate entities. While the Court appr ..read more

It seems like violations of the discharge injunction get much less publicity than violations of the automatic stay.  Perhaps that is because by the time a discharge is entered the creditor has received the message.  When there is a violation the Eleventh Circuit has a good body of law on the issue and I happen to have a stack of these opinions due to a pending case. When a Bankruptcy petition is filed it operates as a stay of virtually all efforts to collect a debt from a debtor or obtain possession or control over property of a debtor. A party may violate the stay even without the ..read more

The Honorable Walter Homer Drake, Jr. November 21, 1932 – December 9, 2022. Retired United States Bankruptcy Judge Walter Homer Drake, Jr., 90, passed away Friday, December 9, 2022 at his home in Newnan. He was born November 21, 1932 in Colquitt, Georgia to the late Walter Homer Drake and Mary Lois Cowart Drake. In addition to his parents, he was preceded in death by his beloved wife, Ruth Bridges Drake, and brother, Dr. Henry C. Drake.Judge Drake moved to Newnan when he was eight years old when his father became the Superintendent of Schools. He was the Valedictorian of the 1950 graduating cl ..read more

If you have a business, you have no doubt received advertisements for “merchant cash advances,” “merchant loans” or “merchant financing,” whether or not those specific terms are used.  If in doubt, just do a search for those terms and you will get a couple pages of sponsored ads (but be warned the big brother of the internet will flood you with ads after that).  Based on cases I have now, and calls I have received, business has picked up considerably for those lenders post-covid.  Although you might be tempted by the relatively easy cash promised as soon as the next business day ..read more

In a case of first impression in the Eleventh Circuit, the Circuit Panel addressed the dischargeability of debts incurred by a produce buyer who is acting as a trustee under the Perishable Agricultural Commodities Act (“PACA”).  In re Forrest, 2022 WL 3908803 (11th Cir. August 31, 2022)(click here for .pdf).   The court concluded that debts incurred by a produce buyer acting as a PACA trustee are not excepted from discharge pursuant to 11 U.S.C. §523(a)(4), which excepts debts “for fraud or defalcation while acting in a fiduciary capacity…” The basic, undisputed facts are: The ..read more

The Governors Gun Club of Kennesaw  filed a Chapter 11 case in the Northern District of Georgia on August 17, 2022. Case No. 22-20787-jrs. The reason for the filing, as stated in pleadings filed with the Court – Like so many other small businesses, the Debtor suffered a series of setbacks at the hands of the pandemic. Debtor is a membership based business that offers its members a luxury experience for indoor shooting facilities, including an indoor shooting range, professional firearms training, concerts, and a situational training simulator. Debtor also offers packages for corporate an ..read more

In Auriga Polymers, Inc. v. PMCM2, LLC, as Liquidating Trustee, No. 20-14647, 2022 WL 2800195 (11th Cir. July 17, 2022) (click here for .pdf) the creditor, Auriga, received transfers of more than $2.2 million in the 90 days before the Debtor, Beaulieu Group, LLC, filed its Bankruptcy case on July 16, 2017.  During the 90 day preference period, Auriga had also delivered to the Debtor over $3.523 million of goods, with at least $694,502.00 of the goods delivered within 20 days of the Petition Date. Auriga filed two claims in the case: 1) a general unsecured claim in the amount of $3.596 mil ..read more

In the case of In re Ruff, 2022 B.R. 1638964, Ch. 7 Case No. 20-68855-pwb (Bankr. N.D.Ga. March 31, 2022) (click here for .pdf) the issue was whether the educational loans owed by the Debtor were “consumer” debts as defined by 11 U.S.C. §101(8) of the Bankruptcy Code, and incorporated into 11 U.S.C. §707(b).  If the student loan debt is a “consumer debt” the Debtor would not qualify for Chapter 7 as her consumer debt would be more than her non-consumer/business debt.  The United States Trustee opposed the Debtor’s position that the debt was not a consumer debt, and moved for dismissa ..read more

Once again, a Bankruptcy case leads to a key opinion in Georgia real estate law and, as often the case, the Chapter 7 Trustee prevails.  In In re Lindstrom, 2022 WL 1041192 (11th Cir. April 7, 2022) (click here for .pdf) the issue was the validity of a security deed, the interpretation of the Georgia “Remedial Statute” and the definition of “subscribing witness.” The basic, undisputed facts are: When [Debtor] Virginia Lindstrom needed to put up collateral for a $174,500 loan from LoanDepot.com, LLC, she executed a security deed for a piece of property in Lawrenceville, Georgia. As part o ..read more