ABI Blog Exchange

A Refresher On Executory Contract Rejection Under § 365 (In re Dandurand)

By:  Donald L. Swanson It is helpful, every now and then, to receive a refresher on basic bankruptcy laws. We have such a refresher—on executory contract rejection under § 365—in this recent opinion: In re Dandurand, Case No. 24-40401, South Dakota Bankruptcy Court (decided May 23, 2025; Doc. 192). Facts Debtor is the sole owner... Continue Reading →

4th Cir.: In re Bestwall LLC- Solvent Debtor in Allowed in Bankruptcy

4th Cir.: In re Bestwall LLC- Solvent Debtor in Allowed in Bankruptcy Ed Boltz Wed, 08/13/2025 - 15:28 Summary: In this published decision, the Fourth Circuit affirmed the bankruptcy court’s denial of a motion to dismiss the Chapter 11 case of Bestwall LLC—a corporate entity created by Georgia-Pacific in a divisional merger (the so-called “ Texas Two-Step”) to isolate and manage its asbestos liabilities. The Official Committee of Asbestos Claimants argued that federal courts lacked constitutional subject-matter jurisdiction because Bestwall was solvent and thus not “bankrupt” within the meaning of the Bankruptcy Clause. Writing for the majority, Judge Quattlebaum held that petitions filed under the Bankruptcy Code—even by solvent debtors—arise under federal law and are therefore within the constitutional and statutory jurisdiction of the federal courts. The panel emphasized that insolvency is not a jurisdictional requirement, even if it may be relevant at other procedural junctures, such as plan confirmation or bad faith dismissal. The court also rejected the idea that “financial distress” must exist for jurisdiction to lie, noting that the Bankruptcy Code itself does not define or require such a threshold. Commentary: Although Bestwall emerges from the asbestos litigation arena and involves corporate restructuring strategies unlikely to affect most consumer debtors directly, its implications for bankruptcy access are far-reaching. The decision affirms what consumer practitioners have long understood: insolvency is not a prerequisite to seeking relief under the Bankruptcy Code. Indeed, consumer debtors are routinely “solvent” when filing Chapter 13—especially those with significant home equity (amplified by rising property values) or retirement savings fully protected by exemptions. Similarly, Chapter 7 debtors may also be solvent on paper but lack liquidity to satisfy ongoing obligations or address litigation. Courts, trustees, and creditors typically deal with such circumstances through the best-interest-of-creditors test, the means test, or §707(b) motions—not by questioning the court’s jurisdiction. Unfortunately, the Bestwall majority missed an opportunity to contextualize Chapter 11 practice within the broader statutory framework of the Bankruptcy Code, including Chapters 7 and 13. This myopic focus on corporate and historical interpretations of the Bankruptcy Clause—as if bankruptcy were an exclusively commercial or eighteenth-century device—ignores the Code’s unified structure and the lived reality of consumer practice. Recognizing that balance-sheet solvency does not equate to financial feasibility, especially in the face of foreclosure, garnishment, or litigation, would have grounded the Fourth Circuit’s reasoning in the modern and practical operation of bankruptcy law. Just as corporate reorganizations like Bestwall’s may serve non-insolvency purposes (e.g., global claim resolution), so too do consumer cases often serve goals like saving a home, repaying taxes, or halting collection abuse. Courts evaluating corporate bankruptcy eligibility—particularly in the context of strategic filings like the Texas Two-Step—would benefit from comparing those cases to the standardized, transparent, and judicially accepted treatment of technically solvent consumer debtors in Chapter 13. Had the Fourth Circuit acknowledged this broader perspective, it could have offered a more complete constitutional and statutory analysis, and perhaps tempered concerns about “abuse” of bankruptcy protections by reminding critics that bankruptcy is not—and never has been—limited to the destitute. It is a tool of orderly debt resolution, whether the debtor is a Fortune 500 offshoot or a wage earner with two kids and a mortgage. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_bestwall.pdf (282.94 KB) Category 4th Circuit Court of Appeals

Law Review: Garrido, José and Kilborn, Jason J. and Rosha, Anjum, Personal Insolvency and Data Collection Systems. IMF Working Paper No. 2025/124

Law Review: Garrido, José and Kilborn, Jason J. and Rosha, Anjum, Personal Insolvency and Data Collection Systems. IMF Working Paper No. 2025/124 Ed Boltz Tue, 08/12/2025 - 16:48 Available at: https://ssrn.com/abstract=5344990 Executive Summary: This paper examines the crucial role of data collection in personal insolvency regimes, highlighting its importance for effective policy making, legislative reforms, and economic analysis. As personal insolvency laws have evolved to address the complexities of modern credit-based economies, the need for comprehensive, systematic data collection has become increasingly apparent. Personal insolvency laws offer several critical benefits across different stakeholders. For creditors, these laws maximize value and preserve inter-creditor equity through collective action processes. Debtors benefit from the relief provided and the opportunity for a "fresh start" or "second chance" through debt discharge. The broader economy and society gain from limiting the negative systemic effects of unregulated distressed debt, encouraging responsible lending practices, and fostering entrepreneurship. Data collection serves two primary functions in personal insolvency: measuring the effectiveness and efficiency of the personal insolvency regime and gathering information for analysis and development of social policies. Robust data collection allows for informed decision making and evidence-based policy reforms. It enables the identification of trends and patterns in personal insolvency, ensures fairness and equity in the application of insolvency laws, facilitates research and analysis of consumer behavior and economic trends, and enables international comparisons and benchmarking. When designing a data collection system, several key considerations must be taken into account. These include defining clear objectives aligned with the goals of the personal insolvency regime, ensuring data privacy and protection of sensitive personal information, standardizing data elements and formats for consistency and ease of analysis, minimizing the burden on respondents while collecting necessary information, and integrating data collection into existing insolvency processes and forms. Effective implementation of a data collection system involves assigning responsibility to a relevant authority, such as a national statistics agency, insolvency regulator, or the courts. It requires designing user-friendly data collection forms with clear instructions, conducting pilot tests to identify and address potential challenges, implementing robust data security measures, providing training for staff involved in data collection and analysis, and regularly reviewing and updating the data collection process. The paper recommends collecting data on various aspects of the personal insolvency system. This includes system efficiency metrics such as the number of applications, rejection rates, reasons for rejection, processing times, and costs. Procedural outcomes, including discharge rates, reasons for denial of discharge, and plan completion rates, should also be tracked. Debtor demographics like age, gender, education, occupation, and geographic location provide valuable insights. Financial information, including types of creditors, debt composition, asset values, and income levels, is crucial for understanding the nature of personal insolvency cases. Additionally, institutional performance metrics for courts and insolvency practitioners should be collected to assess the efficiency of the system's administration. In conclusion, implementing comprehensive data collection systems for personal insolvency is essential for assessing the effectiveness of personal insolvency laws in achieving their objectives. These systems provide valuable insights into broader economic and social trends, enable evidence-based policy decisions and legislative reforms, and enhance transparency and accountability in the personal insolvency system. While data collection requires investment in resources and infrastructure, the cost of not developing these systems is far higher. Countries should prioritize the assessment and improvement of their personal insolvency data collection mechanisms to ensure their insolvency regimes remain responsive, effective, and fair in the face of evolving economic challenges. By doing so, they can create a solid foundation for understanding and addressing the complex phenomenon of personal insolvency, ultimately contributing to more robust and equitable financial systems. Commentary: In this IMF working paper, José Garrido, Jason Kilborn, and Anjum Rosha highlight what U.S. consumer bankruptcy attorneys have long sensed but lacked the infrastructure to definitively prove: the powerful insights, legislative ammunition, and litigation support that comprehensive demographic and procedural data could provide if the U.S. bankruptcy system were equipped with a well-structured data collection framework. Advantages Demographic Visibility for Policy Reform: As the authors note, “legislating in the dark is a disadvantage” in the age of big data. A data system that meaningfully tracks racial, gender, geographic, and income differences could reveal systemic inequities—such as those highlighted by Professors Argyle, Foohey, Lawless, and Thorne—but without relying solely on expensive academic studies and statistical inferences. Disadvantages and Limitations Privacy and Stigma Risks: The paper rightly acknowledges that personal insolvency data implicates deep privacy concerns. In the U.S., where public PACER access already makes debtors vulnerable to reputational harm, enhanced data collection must be carefully anonymized and aggregated—or risk reinforcing creditor discrimination and social stigma. Potential Misuse by Creditors: While designed to help debtors, such a system could be weaponized by creditors (or credit bureaus) to deny lending to individuals from zip codes with higher discharge rates or average plan failures. Attorneys should remain wary of data systems that operate without strong debtor-side advocacy. Administrative and Technological Burden: Implementing this kind of data collection—especially across 94 bankruptcy districts with wildly different practices—would require significant investment, training, and standardization. Without Congressional action or substantial funding, such reforms could become another unfunded mandate borne by already-stretched bankruptcy clerks and practitioners. A Caution and a Call To paraphrase Professor Kilborn’s prior work: we cannot fix what we refuse to measure. Just as North Carolina has learned from its (often under-analyzed) high volume of pro se filings and rural Chapter 13 cases, the U.S. as a whole needs a robust data regime that tracks not just filings and discharges, but who is filing—and who is not. Consumer attorneys should push for a demographic overlay to bankruptcy statistics—something more akin to the data available in student loans, healthcare, and criminal justice. Not to pathologize debtors, but to understand them—and build a better, fairer system in response. For further reading: “Argyle et al., Race and Bankruptcy” (2023) “Foohey, Lawless, Thorne & Porter, Life in the Sweatbox” (2018) “Kilborn, Behavioral Economics, Overindebtedness & Comparative Consumer Bankruptcy: Searching for Causes and Evaluating Solutions” (2010) With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document personal_insolvency_and_data_collection_systems.pdf (2.88 MB) Category Law Reviews & Studies

The Italian Court Confirms that the Principle of Competitiveness in Buyer Selection During Negotiated Business Crisis Settlements cannot be Dispensed with

The negotiated settlement procedure introduced by the Italian Code of Business Crisis and Insolvency (“CCII”), is a tool designed to facilitate the recovery of financially distressed companies through consensual, out-of-court solutions. Under Article 22(1)(d) of CCII, an entrepreneur may request the Court’s authorization to transfer its business (or one or more of its branches), in...... Continue Reading

Over-Use Of Caucus Format In Mediation Is A Bad Thing? (A Study)

By: Donald L Swanson A study [fn. 1] of mediations in small claims cases reaches this conclusion: Findings Specific findings supporting such conclusion include the following.[Fn. 2] In a small claims mediation, a greater percentage of time spent in caucus: Explanations Explanations about such findings, from the study’s authors, include the following: Conclusion Mediations that utilize... Continue Reading →

Law Review: Paine, Fiona and Schoar, Antoinette and Thesmar, David, Attitudes to Debt: The Role of Moral Values (July 25, 2025)

Law Review: Paine, Fiona and Schoar, Antoinette and Thesmar, David, Attitudes to Debt: The Role of Moral Values (July 25, 2025) Ed Boltz Mon, 08/11/2025 - 18:36 Available at: https://ssrn.com/abstract=5367017 Abstract: This paper tests how people’s moral values influence their views of debt contracts. We ask participants to make decisions about debt contracts in different hypothetical situations (vignettes). We separately measure their moral values using the Moral Foundations Questionnaire (Graham et al., 2009). We have three main sets of findings. First, differences in moral values strongly explain the cross-section of participants’ debt decisions. Participants with more conservative values show more support for credit score-based loan pricing, stricter forms of collateral, and tougher bankruptcy resolution. Second, when we randomly change the economic costs and benefits of debt within our vignettes, we find that participants change their answers in the direction predicted by economic theory. Third, participants’ beliefs of the functioning of the credit market strongly correlate with their moral values. Participants with conservative values are more likely to believe that strict enforcement and risk-based loan pricing provide incentives and are economically efficient. More liberal participants believe that insurance against unlucky shocks are important. Consistent with moral values being distinct from Bayesian beliefs, financial literacy does not attenuate moral values in shaping beliefs about what is economically efficient. Commentary: While the Bankruptcy Code is a federal (and ostensibly) neutral law, the emotional and moral terrain of debt is anything but. In their illuminating paper, Attitudes to Debt: The Role of Moral Values, Paine, Schoar, and Thesmar provide empirical backing to what many consumer bankruptcy attorneys witness daily: that a client’s willingness—or refusal—to file for bankruptcy is not purely a matter of finances or legal strategy, but a reflection of their deep-seated moral values. Layered atop this moral framework is another force—more corrosive and more hidden: shame. And as the recent study by Gladstone et al., Financial Shame Spirals: How Shame Intensifies Financial Hardship, highlights, shame is not just an effect of financial distress—it is a cause and accelerator of it. Together, these studies provide a powerful framework for attorneys seeking to guide clients through the emotional gauntlet of insolvency and also to engage meaningfully with public policy. Key Findings: Morals and Markets Paine et al. surveyed over 1,700 participants and found that: Moral values predict debt attitudes more strongly than political affiliation or financial literacy. Conservatives (respondents scoring higher on authority, sanctity, and loyalty) were more punitive toward defaulting borrowers. Liberals (respondents scoring higher on fairness and care) supported more lenient debt relief. Efficiency arguments (e.g., higher credit costs from leniency) were less persuasive than personal stories. Responses shifted more significantly when a debtor’s narrative was introduced. Moral values shaped beliefs about how the credit system works, with conservatives viewing borrowers as responsible agents and liberals attributing financial distress more to systemic factors or bad luck. What emerges is a tale of *two moral economies*: one that values accountability through consequence and one that favors compassion and second chances. And both can be hostile to bankruptcy—just for different reasons. The Shame Spiral But even when a client intellectually understands the mechanics and morality of bankruptcy, they may still resist filing because of shame. Gladstone et al. demonstrate that: Shame creates a downward cycle—individuals who feel ashamed of their financial problems are less likely to seek help and more likely to engage in harmful coping strategies (e.g., taking out payday loans, ignoring bills, withdrawing socially). Unlike guilt, shame is about the self, not the act. A guilty client may say, “I made mistakes with money.” A shamed client believes, “I am bad with money.” This shame inhibits action, especially filing bankruptcy, which many clients see as a public admission of failure. Thus, even clients whose moral intuitions align with forgiveness may remain trapped in shame. This can make bankruptcy seem less like a legal remedy and more like a moral confession—or worse, a scarlet letter. How Attorneys Can Use These Insights Reframing the Narrative: Attorneys must help clients reframe bankruptcy as a tool for restoration, not a mark of disgrace. For clients with conservative leanings, this might mean emphasizing how bankruptcy allows them to return to being providers, taxpayers, and participants in the community. For liberal clients, focusing on systemic inequities and the justice of a fresh start may be more effective. Both can be reminded: bankruptcy is not about escaping obligation—it is about confronting it *honestly and effectively*. It is the opposite of hiding. Recognizing and Interrupting Shame Spirals: Front-line staff and attorneys should be trained to listen for signs of shame: missed appointments, reluctance to provide documents, emotional withdrawal. These are not just logistical obstacles; they are symptoms of a deeper emotional burden. Normalize bankruptcy in your materials and in your voice. Tell clients how many others have filed—and gone on to thrive. Crafting Client-Facing Materials: Website FAQs, intake scripts, and mailers should be sensitive to shame. Avoid language like “are you failing to pay your debts?” in favor of “are debt payments making it harder to care for your family?” Speak to the outcomes, not the blame. Political and Legislative Implications: For those engaging with policymakers and legislators, these findings offer a roadmap to shift the conversation around bankruptcy law: Moral arguments work: For conservatives, frame reforms as reinforcing personal responsibility *through structured second chances*. For liberals, emphasize the dignity of those burdened by systemic financial hardship. Stories matter more than spreadsheets: Humanize the policy debate with narratives—not just statistics—especially about veterans, elderly debtors, or families with medical bankruptcies. Combat financial shame through visibility: Encourage media coverage and public statements that present bankruptcy not as failure, but as financial recovery. Organizations like NACBA can use these findings to better shape amicus briefs, advocacy campaigns, and outreach to both sides of the political aisle. Conclusion: Consumer bankruptcy attorneys have long operated not just as legal advisors, but as therapists, pastors, and sometimes confessors. These two studies— Attitudes to Debt and Financial Shame Spirals—offer a framework to understand why clients come to us burdened not only by debt, but by moral conflict and emotional injury. By navigating these internal landscapes with empathy and strategy, we can help our clients not only discharge debt but reclaim dignity. And by bringing this understanding to legislators and the public, we can move toward a bankruptcy system—and a broader financial culture—that is not just legally sound, but morally wise. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document attitudes_to_debt_the_role_of_moral_values.pdf (1.2 MB) Category Law Reviews & Studies

Law Review (Book): Debt's Grip-Risk and Consumer Bankruptcy by Pamela Foohey, Robert M. Lawless, Deborah Thorne

Law Review (Book): Debt's Grip-Risk and Consumer Bankruptcy by Pamela Foohey, Robert M. Lawless, Deborah Thorne Ed Boltz Sun, 08/10/2025 - 18:48 Available at: https://www.ucpress.edu/books/debts-grip/hardcover Summary: In their new book Debt’s Grip, Pamela Foohey, Robert Lawless, and Deborah Thorne expand on years of empirical research into bankruptcy by combining statistical data with personal narratives from debtors themselves. Drawing from the Consumer Bankruptcy Project, they dismantle stereotypes of bankruptcy filers as careless spenders or “deadbeats,” instead documenting that most bankruptcies arise from crises—job loss, medical emergencies, divorce, predatory lending, and systemic inequities. The authors present both macro-level trends and individual debtor stories to show how structural forces—stagnant wages, rising costs of living, racial wealth gaps, inadequate health insurance—drive households into financial collapse. They also examine how bankruptcy law, while providing some relief, is often inadequate: Chapter 13 plans fail at high rates, exemptions are limited and inconsistent, and non-dischargeable debts like student loans trap people even after filing. The work is part scholarly analysis, part humanizing narrative, aiming to influence policymakers, practitioners, and the public’s understanding of debt and bankruptcy. Commentary: For consumer bankruptcy attorneys, Debt’s Grip is both validation and a challenge. Validation, because it confirms what our clients’ stories have told us for years: that bankruptcy is less about personal irresponsibility than about the crushing weight of structural and unforeseen disasters. And a challenge, because it underscores that while we can help navigate the Code to buy relief, the larger systems producing this need—health care, housing, wages, credit regulation—require legislative and societal reform. This book should be in the hands of anyone shaping bankruptcy policy. It directly rebuts the same narratives that underpin proposals to restrict the automatic stay, reduce the discharge, or make Chapter 13 more burdensome. By pairing the numbers with names, it forces the conversation out of the sterile realm of “means tests” and “liquidation analyses” and back into the lives at stake. In other words, Debt’s Grip reminds us why we do this work—and why the fight for a fairer system is far from over. As disclosure is always key to bankruptcy, it is worth noting that I was fortunate to be provided an advance copy of the manuscript by its authors (which is why I'm actually a little late in posting about this very important book) and was honored to contribute a blurb for the back cover. "Transforming cold statistics into heartbreaking stories of the people who file for bankruptcy, Debt's Grip is an important corrective to the many falsehoods which portray debtors as mere deadbeats, showing that those who seek bankruptcy protection–inadequate as it may be–have been left without alternatives by catastrophes and systemic societal failures." My additional apologies to the authors for having shared my copy of the book with others, depriving them of some royalties. With proper attribution, please share this post. Blog comments Category Book Reviews

Weekly News – August 8

Venue fight in SDTX, Ardagh Rx gets done, Serta creditor on creditor violence continues, Saks LME recounted, and much, much more…  Creditor Corner Your weekly curated content from the Creditor…

Bankr. M.D.N.C.- Grissom v. Fay Servicing- Denial of Motion to Seal Settlement Agreement

Bankr. M.D.N.C.- Grissom v. Fay Servicing- Denial of Motion to Seal Settlement Agreement Ed Boltz Fri, 08/08/2025 - 17:48 Summary: In this adversary proceeding, the debtor-plaintiff, Havanna Jane Grissom, brought claims against mortgage servicer Fay Servicing, LLC for alleged RESPA violations, automatic stay violations, and an NC UDTPA claim (later dismissed). After litigating through the early part of 2025, the parties reached a settlement under which Fay agreed to pay Ms. Grissom $16,000 in exchange for a full release of all claims relating to the servicing of her mortgage. The settlement also included a mutual agreement to bear their own legal costs and a strict confidentiality provision barring public discussion of the case and settlement terms. The parties jointly requested that the Bankruptcy Court seal the settlement agreement to protect “private financial information” and avoid “negative publicity.” Judge Kahn denied the motion to seal, ruling that neither concern rose to the level necessary to override the presumption of public access under 11 U.S.C. § 107(a). The court emphasized that none of the statutory exceptions—such as trade secrets or scandalous content—applied, and that mere reputational harm or standard confidentiality terms were not compelling grounds for secrecy. Commentary: Judge Kahn’s denial of the sealing request is a pointed reaffirmation of the public’s right to know what happens in bankruptcy courts. While parties may agree to confidentiality between themselves, they cannot cloak court-sanctioned settlements in secrecy without meeting the high bar set by § 107(b) and Local Rule 9018-1. “ Damage to reputation” and generic privacy concerns do not cut it—especially when the case involves alleged misconduct in servicing a residential mortgage under bankruptcy protection. (If Fay Servicing didn't want to damage its reputation, perhaps it should either have successfully defended itself or have done a better job as a mortgage servicer.) And let’s not kid ourselves: if a mortgage servicer wants to sweep its misdeeds under the rug, it can’t expect the court to hold the broom for free. As this case makes plain, “Silence is golden... so give some gold for our silence.” Fay paid $16,000 for the settlement, but wanted the public record to pretend it never happened. That bargain won't fly in bankruptcy court—at least not without showing real justification. Consumer attorneys should be wary of confidentiality clauses that presume sealing. If the creditor wants that kind of secrecy, demand a premium for it—both in settlement dollars and in a clause that shifts legal fees for the motion to seal (especially when it’s doomed to fail). Full and honest disclosure is essential to the functioning of the bankruptcy system, and as Judge Kahn notes, when you ask for Rule 9019 approval, you ask for the court’s public imprimatur. No secrecy without scrutiny. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document grissom_v._fay_servicing-_order_denying_motion_to_seal.pdf (422.37 KB) Document grissom_settlement_agreement.pdf (562.03 KB) Category Middle District

Personal Guarantees: When a “Formality” Becomes a $20 Million Reality

While it’s not common for a lender to require an individual guaranty in order to extend commercial credit to an operating business[1], when such a requirement arises, the individual providing a guaranty should not take such a requirement lightly. If the guaranty is structured as a full recourse guaranty, it will create an obligation whereby... Continue Reading

A Plan’s Temporary Injunction Is Permissible, Despite Purdue Pharma (In re Miracle Restaurant)

By: Donald L Swanson Debtor’s Subchapter V Plan provides for: Creditor objects to the temporary injunction, insisting on its right to sue on the pre-petition guarantees. The Bankruptcy Court approves the temporary injunction and confirms the Plan, over Creditor’s objection, in In re Miracle Restaurant Group, LLC, Case No. 24-11158, Eastern Louisiana Bankruptcy Court (decided May... Continue Reading →

Law Review: Feigel, Analy- Equity and Clarity: The Impact of Tyler v. Hennepin County on Property Taxation and Homeowners’ Rights

Law Review: Feigel, Analy- Equity and Clarity: The Impact of Tyler v. Hennepin County on Property Taxation and Homeowners’ Rights Ed Boltz Wed, 08/06/2025 - 16:58 Available at: https://larc.cardozo.yu.edu/clr/vol46/iss4/7 Abstract: This Note explores the implications of the U.S. Supreme Court's ruling in Tyler v. Hennepin County, which significantly impacts property taxation and foreclosure laws. The Court ruled that property owners are entitled to surplus proceeds following a tax foreclosure, setting a new precedent by deeming it unconstitutional for governments to retain surplus proceeds without just compensation. Tyler clarified property rights under the Fifth Amendment, affirming that owners have a constitutional right to the surplus value of their foreclosed properties, even if local statutes do not explicitly allow it. Further, this Note also addresses unresolved issues following Tyler's ruling, including how the ruling affects the privatization of tax lien sales and whether just compensation should be based on fair market value or surplus proceeds. Moreover, it highlights that private third parties purchasing tax liens may now be held accountable under the Takings Clause, adding a layer of complexity to foreclosure procedures. Ultimately, Tyler reshapes the landscape of property tax foreclosures, ensuring stronger protections for homeowners while raising questions about the future of related legal practices. Commentary: The 2023 SCOTUS decision in Tyler v. Hennepin County, which unanimously held that the government may not retain the surplus proceeds from a tax foreclosure without violating the Takings Clause, has sparked a broader reassessment of how courts treat homeowners’ residual equity. As analyzed in Equity and Clarity: The Impact of Tyler v. Hennepin County, this decision could ripple beyond property tax liens—and may even extend into mortgage foreclosures, particularly when conducted by or on behalf of government-sponsored or government-backed entities. Could Tyler Extend to Government-Backed Mortgage Foreclosures? That’s where things get especially interesting for bankruptcy and foreclosure practitioners- Foreclosures by private lenders have long been considered beyond the reach of the Takings Clause because they are deemed private contractual remedies. But when the mortgage is held or guaranteed by the USDA, the Department of Veterans Affairs (VA), Fannie Mae, or Freddie Mac—entities with close ties to the federal government—a different analysis may apply. This Note flags the possibility that third-party actors who are “willful participants in joint activity” with the government may themselves be liable under the Takings Clause. Indeed, the Note specifically explores whether private actors who purchase tax liens and foreclose may be deemed “state actors” under 42 U.S.C. § 1983. That logic could apply to mortgage foreclosures by GSEs (government-sponsored enterprises). Fannie and Freddie operate under federal conservatorship, hold federal charters, and often use nonjudicial foreclosure statutes. The USDA and VA are even more directly federal. If these entities foreclose and retain surplus value—or permit servicers to bid low and return nothing to the homeowner—it is conceivable that *Tyler* provides a basis for a Takings Clause challenge. Whether such surplus even exists after fees, insurance, and servicing costs is a factual question. But when there is a “credit bid” far below the property’s fair market value, as is common in nonjudicial foreclosure sales, Tyler raises the constitutional stakes, particularly when the lienholder purchases the property and quickly resells it for a substantially greater amount. In North Carolina and most other states, surplus proceeds from a deed of trust foreclosure must be distributed pursuant to N.C. Gen. Stat. § 45-21.31. That means homeowners—and their bankruptcy estates—retain a right to any remaining equity, and trustees must monitor foreclosure actions closely to ensure that surplus funds are captured. The local form plans in all three districts place obligations on secured creditors to file a deficiency claim, but have no explicit duty to notify the trustee, debtor or others of any surplus. But when government-backed entities foreclose outside of bankruptcy, and no meaningful effort is made to return surplus value—or when title transfers occur via streamlined administrative foreclosure—it may be time to argue that Tyler controls. With proper attribution, please share this post. @cardozo.review; linkedin.com/in/analy-feigel-994201a4 Blog comments Attachment Document equity_and_clarity.pdf (3.09 MB) Category Law Reviews & Studies

The Genius Act and the Law of Unintended Consequences: Are Stablecoin Issuers Going to Be Boxed Out of Bankruptcy? (US)

On July 18, 2025, President Trump signed into law the Guiding and Establishing National Innovation for U.S. Stablecoins Act, otherwise known as the GENIUS Act. The purpose of the GENIUS Act is to establish a comprehensive regulatory framework for stablecoins in the United States. However, the GENIUS Act also makes several important changes to the...... Continue Reading

11th Circuit – Damages for False Imprisonment are Nondischargeable as Willful and Malicious Injury

In Watson v. Bradsher and Ali, 2025 WL 2205853 (11th Cir. August 4, 2025), the Debtor met Plaintiffs at a bar and invited one of them to go home with him. She sternly rejected his advances and moved with her friend to another part of the bar. Debtor tried to pay his tab and could… Continue Reading

Take Control of Your Story: Executive Reputation Management When It Matters Most

The professional landscape is shifting—rapidly, unpredictably, and across every industry.   Even the most accomplished senior executives, or C-suite leaders, can suddenly find themselves on the receiving end of a layoff. In fact, research shows that nearly 50% of American workers will be laid off at least once during their career. And the higher up […] The post Take Control of Your Story: Executive Reputation Management When It Matters Most appeared first on Bob Gold & Associates.

Sberbank CZ – the biggest Czech Bank Insolvency Case

Background Sberbank CZ was an indirect subsidiary of the Russian state-owned bank Sberbank. In 2020, it was the 10th largest Czech bank by assets and had a total of 95,000 individuals and 11,000 companies on its client list. Its rapid fall into insolvency and subsequent bankruptcy is described in more detail below. After the start...... Continue Reading

Judicial Abuse Of The Bankruptcy Code (In re 2 Monkey Trading)

By: Donald L Swanson Nobody likes bankruptcy. That’s a truism—and it’s true even though bankruptcy serves an essential role in our market-based and credit-based economy, in which the risk of failure is a constant companion for every business endeavor. But when the dislike of bankruptcy finds its way into judicial rulings in improper ways—especially in appellate... Continue Reading →

Fourth Circuit Affirms Discharge of Debt in Martin v. Parker, Clarifies Embezzlement Standard under Section 523(a)(4)

Bankr. M.D.N.C. : New Local Form Chapter 13 Plan

Bankr. M.D.N.C. : New Local Form Chapter 13 Plan Ed Boltz Mon, 08/04/2025 - 18:56 Summary of Revised Chapter 13 Plan in the Middle District of North Carolina (Effective October 1, 2025) Incorporates Protections from In re Klemkowski and Advances Mortgage Servicer Accountability Effective October 1, 2025, the United States Bankruptcy Court for the Middle District of North Carolina has adopted a revised Chapter 13 plan form. While many of the changes are clarifying or stylistic, the most important addition reflects an increasingly debtor-protective trend in mortgage servicing oversight. Key Substantive Revisions ✅ Online Account Access Requirement (New in Section 8.3(d)) “The Holder shall continue to send the Debtor the same monthly account statements that it sends to its non-bankruptcy customers and allow the Debtor online access to the Debtor’s account(s)... and neither sending such statements nor providing information through online access will be deemed a violation of the automatic stay.” This provision, newly added in the 2025 revision, squarely adopts Judge Harner’s reasoning in In re Klemkowski, 635 B.R. 201 (Bankr. D. Md. 2024), where the court found that servicers’ refusal to provide account information during bankruptcy impairs debtors’ ability to monitor compliance and exposes them to post-discharge collection risks. Codifying this in the plan ensures that debtors can check balances, confirm payment applications, and identify errors in real time—critical tools for avoiding post-discharge “surprise defaults.” ✅ Removal of “If Current” Column in Sections 4.1(b) and 4.2(b) In response to comments during the public notice period (June 3 – July 3, 2025), the Court deleted the “If Current” column from the mortgage and real estate sections. This minor, but meaningful change clarifies that debtors must specify who is making mortgage payments—Trustee or debtor—regardless of whether the loan is current or in arrears. The old column often led to confusion and conflicting interpretations at confirmation. ✅ Other Minor Cleanups The redlined version also corrects internal references and language for clarity: The notice section adds clearer guidance for both debtors and creditors; Formatting and consistency improvements (e.g., checkboxes and punctuation) throughout. Commentary By incorporating Klemkowski into its local plan, the Middle District of North Carolina has taken a firm and necessary step toward protecting debtors from post-discharge mortgage surprises—particularly the “gotcha” tactics some servicers use to tack on phantom fees or restart collections. With the revised plan now explicitly requiring both monthly statements and online account access, the burden shifts to servicers to demonstrate transparency, not to debtors to guess their balance. Consumer bankruptcy attorneys in the MDNC should be mindful of this new enforcement framework—and prepared to invoke it, both during and after the plan term, whenever a servicer steps out of line. Lawyers representing mortgage servicers will need to push their clients to comply (some already have), since while providing this access will NOT be deemed a violation of the automatic stay, failure to provide this access will open those mortgage servicers to actions for contempt of the confirmation order. Acknowledgments This improved plan form reflects the collaborative work of a dedicated group of professionals across the local bankruptcy bar and system. Special thanks go to: J.P. Cournoyer, Bankruptcy Administrator, for his leadership and attention to compliance with national and local policy; Brandi Richardson and Jody Troxler, Chapter 13 Trustees, for their practical insight into plan feasibility and administration; Julie Young, Deputy Clerk of Court, for shepherding this through the notice and comment process; and Pamela Keenan, creditor’s counsel, for ensuring balanced input from the mortgage servicing side Commentary: With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document mdnc_chapter_13_plan_october_2025.pdf (538.08 KB) Category Middle District

Weekly News – August 1

Venue fight in SDTX, Ardagh Rx gets done, Serta creditor on creditor violence continues, Saks LME recounted, and much, much more…  Creditor Corner Your weekly curated content from the Creditor…