Bankruptcy Reform Update

2005 will be remembered as the year of bankruptcy reform. After more than 5 years of congress & senate bickering, President George W. Bush gave his backing on April 20 to the Bankruptcy Abuse and Consumer Protection Act of 2005. Part of the legislation was a brand new section of the Bankruptcy Code - chapter 15 - to govern cross-border bankruptcy cases. The May/June 2005 edition of the Business Restructuring Review contains a comprehensive analysis of chapter 15 and significant provisions in the new law applying to business debtors. For more information please see www.jonesday.com

Bankruptcy Changes in 2005

There were many significant rulings were issued by the nation's bankruptcy and appellate courts in 2005. A pair of them originated from the Seventh Circuit Court of Appeals in connection with the chapter 11 case of United Airlines. In the first decision, the Seventh Circuit held that section 1110 of the Bankruptcy Code, which governs a chapter 11 debtor's continued use of leased or financed aircraft, must be strictly enforced to require surrender of the aircraft if the debtor fails to comply with the dictates of the statute. We recommend legal counsel from a bankruptcy lawyer in your state. How to Refinance a Mortgage after a Bankruptcy.

Bankruptcy courts in New York and California became the first courts to recognize the bankruptcy or insolvency proceedings of foreign business debtors under new chapter 15 of the Bankruptcy Code near the end of 2005. On December 7, 2005, Judge Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York issued an order recognizing the U.K insolvency proceedings of the U.K. branch of French insurer La Mutuelle Du Mans Assurances IARD as a "foreign main proceeding" under chapter 15. The U.S. Bankruptcy Court for the Central District of California also recognized a foreign main proceeding under chapter 15 on December 7, 2005. The debtor is TriGem Computer Inc. of South Korea. These decisions are discussed in an article appearing elsewhere in this edition of the Business Restructuring Review.

The U.S. Supreme Court issued a single decision in bankruptcy in 2005. In Rousey v. Jacoway, the High Court ruled that an individual retirement account under which a debtor has the right to receive payments without penalty beginning at the age of 59-and-a-half may be exempted from a debtor's bankruptcy estate under section 522(d)(10)(E) of the Bankruptcy Code.

 

 
 

 

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