Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Supreme Court Denies Priority Status for Unpaid Workers' Compensation Premiums
In a recent decision, the U.S. Supreme Court clarified an issue important to workers' compensation insurers and held that pre-petition unpaid workers' compensation premiums are not entitled to priority status under the Bankruptcy Code. Howard Delivery Service, Inc., et. al. v. Zurich American Insurance Co., 126 S. Ct. 2105 (2006). This decision forecloses any disagreement among the Circuit Courts that unpaid workers' compensation premiums are entitled to priority status in a bankruptcy proceeding. In light of Howard, such claims are now considered merely general unsecured claims. Had the Supreme Court afforded priority status to such claims, they would have been paid prior to the claims of general unsecured creditors. Generally, priority expense claims receive a significant, if not 100% distribution, as opposed to general unsecured claims, which, in many circumstances, receive only pennies on the dollar. In a decision delivered by Justice Ruth Bader Ginsberg, joined by five other justices (Chief Justice John Roberts, Jr. and Justices John Paul Stevens, Antonin Scalia, Clarence Thomas, and Stephen Breyer), the Supreme Court's ruling not only brings consistency to this issue, but also provides opportunities for workers' compensation insurers to avoid forfeiture of payment of their premiums by financially troubled insureds.
In Howard, Zurich issued various workers' compensation policies to Howard Delivery Services, Inc., a freight trucking business. In 2002, Howard filed for Chapter 11 bankruptcy protection, while still owing Zurich approximately $400,000 in unpaid workers' compensation premiums. Zurich sought priority status for its claim, asserting that the unpaid premiums qualified as 'contributions to an employee benefit plan,' which would be entitled to priority status under '507(a)(5) of the Bankruptcy Code. The Bankruptcy Code provides a schedule of how claims will be paid in a bankruptcy proceeding. Generally, with certain exceptions, holders of secured claims will be paid first and in full to the extent of the value of their underlying collateral. A claim may be secured by either real or personal property, or both. Following secured claims, a debtor's estate will pay administrative claims. Administrative claims are claims incurred by a debtor subsequent to the filing of the petition in which the debtor received some benefit from the post-petition rendering of either goods or services. Usually, administrative claims are paid in full as well.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Beach Boys Songs Written Decades Ago Triggered Current Quarrel With Lawyers
There's current litigation in the ongoing Beach Boys litigation saga. A lawsuit filed in 2019 against Nevada residents Mike Love and his wife Jacquelyne in the U.S. District Court for the District of Nevada that alleges inaccurate payment by the Loves under the retainer agreement and seeks $84.5 million in damages.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Transfer Tax Implications on Real Property Leases
The real property transfer tax does not apply to all leases, and understanding the tax rules of the applicable jurisdiction can allow parties to plan ahead to avoid unnecessary tax liability.