The Supreme Court, in its May 17, 2004 decision in Tennessee Student Assistance Corporation v. Hood, __ U.S. ___ (2004), declined to reach the issue of whether the Bankruptcy Clause in Article I of the Constitution grants authority to Congress to abrogate state sovereign immunity from private suits. Instead, in a 7-2 decision, the Court ruled that a proceeding to determine whether an otherwise nondischargeable student loan can be discharged because of an undue hardship on the debtor is not a "suit" against the state for purposes of the Eleventh Amendment. The Court's decision, written by Chief Justice Rehnquist, turned on the in rem nature of the proceeding and reasoned that the bankruptcy court did not need jurisdiction over the state where it had jurisdiction over the debtor and her property.
- May 27, 2004Jeff J. Friedman
It is well-settled that "property of the estate" is broadly defined under section 541 of the Bankruptcy Code as including all legal and equitable interests of a debtor. Therefore, the breadth of property of the estate includes a debtor's indirect, residual or reversionary interest in the return of funds. It is also equally acknowledged that, in general, a letter of credit (LC) is an independent obligation of the issuing bank and, under the "independence principle," is not necessarily property of the estate. From time to time, these two concepts -- broad estate interest in property versus the treatment of a LC -- clash in bankruptcy. In these instances, some courts will look at "substance" and not "form" to determine whether the debtor's residual interest in an LC is property of its estate.
May 27, 2004Adam C. Rogoff, Steven M. Herman and Deborah PiazzaCase management in large and complex Chapter 11 bankruptcies has never been easy. Successfully navigating the morass of filing requirements and deadlines contained in the Bankruptcy Code, its accompanying procedural rules and various local court rules can be challenging. When added to the remaining issues that routinely need to be addressed during the course of a case -- among many others, claims resolution, development of a business plan and plan of reorganization, analysis of executory contracts and investigation of potential litigation claims -- the array of activities that must be carefully coordinated can be daunting.
May 27, 2004Paul D. LeakeMost of the debtors involved in our restructuring work are corporations. On occasion, however, we find ourselves working on a matter involving a bankrupt partnership. Partnerships in bankruptcy raise a host of tax issues that differ from the issues we deal with in our typical corporate debtor work. In this article, we first discuss some basic elements of partnership taxation, and then review some of the tax issues unique to partnerships in bankruptcy.
May 27, 2004Steven J. Joffe and Jerome M. SchwartzmanA sometimes confusing area of corporate litigation concerns whether a claim asserted by a stockholder in a lawsuit against a corporation's officers and directors is a "derivative" claim brought on behalf of the corporation, or a "direct" claim brought by the stockholder on his or her own behalf rather than the corporation's. The distinction is important, as the proper characterization of a stockholder claim can have a significant impact on the parties and how the lawsuit proceeds, in some instances determining whether it proceeds at all. In a new opinion, Tooley v. Donaldson, Lufkin & Jenrette, Inc., the Delaware Supreme Court has cleared up some of the confusion, holding that a claim is derivative whenever the corporation has suffered the alleged harm and will be the beneficiary of the relief granted by the court.
May 26, 2004Joe ClickDespite its clever name, the recently enacted CAN-SPAM Act does not in fact prohibit "spam." What the law does do is regulate "commercial e-mail," which is defined broadly. Accordingly, the legal department of every business that uses e-mail should be advising its employees to take immediate steps to comply with the Act, as violations carry stiff penalties.
May 26, 2004Michael F. ConsedineA recent industry survey reported that nearly half of large companies currently don't have policies about when to keep and when to destroy their electronic records and those that do usually don't enforce them. If your company is one of these businesses, it is risking huge legal problems if someone in your company destroys an e-mail or information on backup tapes that relates to any existing or future litigation ' because your company may wind up being hit with sanctions for spoliation.
May 26, 2004Whitney AdamsSave everything!" That's the new corporate mantra in response to tougher regulatory requirements and the growing importance of electronic data discovery in litigation. But is "Save Everything!" the right response? CEOs and CFOs may think they'll sleep better knowing that every bit and byte is being saved ' but wait until the bills come in! That'll be an eye-opener!
May 26, 2004Thomas BarnettRecent rulings of importance to you and your practice.
May 25, 2004ALM Staff | Law Journal Newsletters |A review of the literature dealing with allegations of sexual abuse within the context of divorce and custody litigation, and the prevalence of false allegations in these cases.
May 25, 2004Lawrence Jay Braunstein