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Asset protection is an important issue for individuals that are defendants in litigation or in financial distress. Parties that are contemplating bankruptcy ponder how to protect their assets from their creditors. Asset protection and pre-bankruptcy planning occurs when a party contemplating filing for bankruptcy converts non-exempt assets into exempt assets. An exempt asset is an asset that is protected by either a state or federal exemption statute that excludes particular assets from being subject to execution by a bankruptcy trustee or creditor. An exempt asset is not available for distribution to a debtor’s creditors, and the particular asset is retained by the debtor. This article examines asset protection and pre-bankruptcy planning and its impact on a debtor’s discharge through Bankruptcy Code §727(a)(2)(A). Courts, pursuant to Bankruptcy Code §727(a)(2)(A), have denied debtors discharges when there were factual findings that a debtor’s pre-bankruptcy planning constituted a transfer of a debtor’s assets within one year of the filing of the debtor’s Chapter 7 case with the intent to hinder, delay, or defraud his or her creditors. E.g., Norwest Bank Nebraska, N.A. v. Tveten, 848 F.2d 871 (8th Cir. 1988).
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Seventh Circuit Applies Safe Harbor to Private Securities Transaction
By Michael L. Cook
“… [T]he term ‘securities contract’ as used in [Bankruptcy Code] §546(e) unambiguously includes contracts involving privately held securities,” The Seventh Circuit held in Petr v. BMO Harris Bank, N.A.
By Lawrence J. Kotler and Elisa Hyder
In Lafferty v. Off-Spec Solutions, the U.S. Bankruptcy Appellate Panel of the Ninth Circuit held that the discharge exceptions under Section 523(a) do not apply to corporate debtors under Subchapter V of Chapter 11 of the Bankruptcy Code.
Merchant Cash Advances Could Be More Trouble Than They’re Worth
By Joseph Pack and Jessey Krehl
As small-business owners have continued to struggle in an uncertain economy, a growing number have begun the dangerous practice of relying on merchant cash advances — essentially seeking financial shelter in a lion’s den.
Biotech Industry Bankruptcy Case Update: ‘Zymergen’ and ‘Humanigen’
By Edward E. Neiger, Marianna Udem and Joo Hee Park
This Bankruptcy Case Update focuses on the recent biotech industry bankruptcy cases of Zymergen and Humanigen.