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A Texas judge yesterday ruled that many lenders need not comply with a Consumer Financial Protection Bureau (CFPB) mandate to gather demographic data on small business borrowers while the U.S. Supreme Court weighs the agency's funding, Reuters reported. The Texas Bankers Association (TBA), American Bankers Association (ABA) and a small Texas bank sued in April, saying that the CFPB had no authority to issue the rule because an appeals court found the regulator's funding structure unlawful. U.S. District Court Judge Randy Crane in McAllen, Texas, granted a preliminary injunction blocking the CFPB from enforcing the rule against members of both groups and McAllen-based Rio Bank. The groups and the bank issued a joint statement saying that they are pleased with the ruling, but "remain committed to our larger case" against the rule. Judge Crane blocked the rule pending a ruling by the U.S. Supreme Court on the CFPB's funding structure. The justices are scheduled to hear the case in the fall.

U.S. small business confidence climbed to a seven-month high in June as pessimism about the economic outlook diminished sharply and sales expectations improved, but a still-tight labor market continued to drive concerns about inflation, according to a survey released yesterday, Reuters reported. The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rose 1.6 points to 91 last month, the greatest month-to-month improvement since August 2022. That improved optimism appeared to be helping firm up small businesses' investment plans and expectations for price increases: One-in-four firms plan near-term capital spending, up from a three-year low earlier in the spring, and nearly a third reported intentions to raise prices — a seven-month peak.

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.