The tide is turning against corporate Sub V debtors. Two bankruptcy judges now side with two circuits in holding that debts of corporate debtors can be nondischargeable.
After Purdue, two bankruptcy judges now say that preliminary injunctions protecting nondebtors are permissible to foster successful chapter 11 reorganizations.
Chicago Bankruptcy Judge David Cleary followed a decision by then-district Judge David Hamilton and “respectfully” disagreed with decisions by two predecessors on the same bankruptcy bench.
Within the next year, four circuits will have ruled on a split where some lower courts pay chapter 13 trustees and others don’t when dismissal precedes confirmation.
Chicago’s Judge Cleary didn’t compel arbitration of an affirmative counterclaim by the debtor against the creditor that would be determined in the course of passing on the allowance of the creditor’s proof of claim.
