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Court Holds That Deposits Would Be Hypothetical
A bankruptcy trustee may recover for the bankruptcy estate so-called “preferential transfers” – certain payments made by the debtor within 90 days before the commencement of a bankruptcy case. To prevail, the trustee must show (among other things) that the creditor received a greater amount as a result of the transfer in question than such creditor would have received in a hypothetical liquidation under Chapter 7, had the challenged transfer not occurred.
This test, set out in Section 547(b)(5) of the Bankruptcy Code, is referred to as the “greater amount” test. In Schoenmann v. Bank of the West (In re Tenderloin Health), 849 F.3d 1231 (9th Cir. 2017), the U.S. Court of Appeals for the Ninth Circuit considered whether a bankruptcy court may account for hypothetical preference actions within a hypothetical Chapter 7 liquidation when determining whether a debt payment made by a debtor to its secured lender meets the “greater amount” test, such that it could be avoided by the trustee. Answering in the affirmative, the court held that bankruptcy courts may permissibly engage in such “hypotheticals within hypotheticals” so long as the inquiry is factually warranted and is supported by appropriate evidence, and provided further that the hypothetical action would not contravene any other provision of the Bankruptcy Code.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs
A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.
Coverage Issues Stemming from Dry Cleaner Contamination Suits
In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.