Small Business

Benchnotes May 2025

May 2025

Is It in the Name? A Sub V Trustee’s Pursuit of Avoidance Actions

May 2025

Opt-Out Plan Confirmed with Impaired Creditors Almost Unanimous in Support

In the Spirit Airlines reorganization, no creditors with an economic interest had opposed confirmation of a plan with opt-out releases for nondebtors.

Student Loans for a Professional Degree Weren’t Business Debts to Qualify for Sub V

The Ninth Circuit didn’t completely close the door to a finding in another case that student loans for a professional degree could be business debts making the debtor eligible for Subchapter V of chapter 11.

Purdue Doesn’t Preclude Injunctions from Protecting Nondebtors for the Life of a Plan

New York’s Judge John Mastando saw no reason a Subchapter V plan couldn’t enjoin lawsuits against nondebtors for the life of a five-year plan.

Trustees Come in All Shapes and Sizes

Judge Oldshue Splits with Two Circuits: No Nondischargeability for Sub V Corporations

The bankruptcy judge in Pensacola, Fla., is giving the Eleventh Circuit an opening to split with the Fourth and Fifth Circuits.

Forbearance Agreement Wasn’t an Enforceable Waiver of the Automatic Stay

Bankruptcy Judge Laura Grandy (politely) faulted other federal courts for failing to follow the Illinois mortgage statute and decisions by the Illinois Supreme Court.

Nondischargeability in Sub V Only Applies When It’s a Nonconsensual, Cramdown Plan

A creditor must control a class before its debt can become nondischargeable in Subchapter V.

Although Exempt, Social Security Benefits Must Be Reported in Subchapter V

While neither Social Security benefits nor post-petition income are estate property in Subchapter V, they must be included in an individual’s monthly operating reports, Bankruptcy Judge Jacobvitz says.