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All six bankruptcy courts to confront the question have held that debts of corporate debtors in Subchapter V of chapter 11 cannot be nondischargeable under Section 523(a) in nonconsensual plans, according to a special analysis in today’s Rochelle’s Daily Wire.. The Ninth Circuit Bankruptcy Appellate Panel has joined the horde by affirming Bankruptcy Judge Noah G. Hillen of Boise, Idaho, in holding that debts can be nondischargeable in Subchapter V only when the debtor is an individual. The bankruptcy judges and the BAP are aligned against the Fourth Circuit, which held that corporate debtors in Subchapter V may not discharge debts “of the kind” specified in Section 523(a). Cantwell-Cleary Co. v. Cleary Packaging LLC (In re Cleary Packaging LLC), 36 F.4th 509 (4th Cir. June 7, 2022). Bankruptcy Judge Craig A. Gargotta of San Antonio disagreed with Cleary and held that “corporate debtors proceeding under Subchapter V cannot be made defendants in § 523 dischargeability actions.” Avion Funding LLC v. GFS Industries LLC (In re GFS Industries LLC), 647 B.R. 337, 344 (Bankr. W.D. Tex. Nov. 10, 2022). The Fifth Circuit accepted a direct appeal in GFS in April. Briefing should be completed before September.

President Biden on Friday announced new actions to offer student loan borrowers some forgiveness, reintroducing his forgiveness plan grounded in the Higher Education Act (HEA), The Hill reported. Using the HEA to provide student debt relief has been pushed by student loan advocates and top Democrats for years. Under the HEA, advocates argue it allows the education secretary to “compromise, waive or release” student loans. This path will require a public comment and notice period before it could go into effect. “We need to find a new way, and we’re moving as fast as we can,” he said in Friday afternoon remarks at the White House. The administration had tied the student debt relief plan — struck down by the Supreme Court — to the national emergency established during the COVID-19 public health crisis, citing the Higher Education Relief Opportunities for Students (HEROES) Act. Chief Justice John Roberts wrote in the court’s majority opinion, issued Friday morning, that the HEROES Act does not grant the authority. Biden did not offer further details about who would qualify or how much debt relief borrowers would receive under his new plan to use the HEA, but he said Education Secretary Miguel Cardona has taken steps to initiate the rulemaking process.

The Supreme Court on Friday said that President Biden does not have authority for his roughly $400 billion to forgive student loan debt, the Washington Post reported. The vote was 6 to 3 along ideological lines, with Chief Justice John G. Roberts Jr. writing for the court’s dominant conservatives. Biden contended his administration had the authority to forgive student loan debt under the Higher Education Relief Opportunities for Students Act of 2003. The law allows the education secretary to waive or modify loan provisions in response to a national emergency, such as the coronavirus pandemic. The conservative majority disagreed. “The Secretary asserts that the HEROES Act grants him the authority to cancel $430 billion of student loan principal. It does not,” Roberts wrote. “We hold today that the Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up.” https://www.washingtonpost.com/politics/2023/06/30/supreme-court-decisi…

To read the Court's full opinions, please click below:

- Biden v. Nebraska

- Dept. of Education v. Brown

Advocates of student debt relief want President Joe Biden to use a 1965 law to cancel student debt if the Supreme Court overturns his loan forgiveness program, Bloomberg News reported. Biden’s current plan — to forgive as much as $20,000 in federal loans for certain borrowers making less than $125,000 per year, $250,000 for households — is based on his authority in the 2003 Heroes Act. A Supreme Court ruling invalidating the loan forgiveness program looks likely as the court issues some its most momentous decisions this week. Astra Taylor, a co-founder of the Debt Collective — a 50,000-member group — points to provisions in the Higher Education Act from almost six decades ago that Biden could use instead to forgive student debt. But this alternative strategy advocates are coalescing around would be time-consuming and could easily delay any relief until after the 2024 election, Jed Shugerman, a law professor at Fordham University, said. The Higher Education Act requires a lengthy rule-making process that could take about a year and then after that litigation by opponents would likely drag things out longer, he said.