| ID |
Name |
Group |
Other |
Code
Sec |
Cross
Ref |
Problem Referenced |
Proposed Solutions |
| NBRC-0016 |
Lyle J. Barnes |
Practitioner |
|
362(b)(11) |
|
Section 362(b)(11), which was designed to protect
unsuspecting financial institutions which are involved in receiving and
presenting checks in the collection process, was not intended to cover
creditors who run a busines on post-dated checks. The payee on a check
should have no greater rights than any other unsecured creditor and
should not be permitted to circumvent the automatic stay and seek
payment outside of bankruptcy. |
The law should be changed in order to bring into the
fold a new type of creditor, the Post-dated Check Creditor. |
| NBRC-0042 |
David J. Bardin |
Attorney; Arent, Fox, Kintner, Plotkin & Kahn. DC
counsel for Cult Awareness Network. |
Testified at Open Forum at July Meeting. |
362(a) |
|
Should the stay under Ch. 11 automatically or at
least presumptively extend to officers and directors of non-profit
debtor corporations as individuals when sued jointly with the debtor If
so, should the law distinguish between volunteer and paid
individuals |
No solution suggested. Volunteered time to the
Commission. |
| NBRC-0199 |
Heidi Heitkamp, on behalf of the Natl. Assoc. of
Attys. General, Bankruptcy & Taxation Working Group |
Chair of Bankruptcy & Taxation Working Group of
Natl. Assoc. of Attorneys General; Attorney General of ND |
|
362 |
105 |
"Strongly supports" the positions set forth in the
letter dated 12/12/96 by J. Christopher Kohn, Director, United States
Department of Justice, Civil Division, Commercial Litigation Branch,
regarding the bankruptcy court's injunctive powers. The author states
that the Bankruptcy Code fails to prevent defendants who file bankruptcy
from using the automatic stay to shield themselves from state
enforcement of police and regulatory powers. She acknowledges that
collection of purely monetary judgments, even those entered in police
and regulatory actions, should be deferred to the normal bankruptcy
process. However, the exercise of state police and regulatory power
often requires the state to act against items such as licenses or
permits that may be property of the estate, and in cases such as civil
or criminal forfeitures, that the state seize assets where the goods
have been manufactured in violation of the law. In these instances, the
Code should clearly prohibit the defendant from using the automatic stay
as a defense to state enforcement. |
Section 362 should be clarified to prevent defendants
who file bankruptcy from using the automatic stay as a defense to state
police and regulatory enforcement that occurring outside the normal
bankruptcy process. Additionally, § 105 should be limited and
clarified with regard to police and regulatory actions so that
defendants cannot use this section as a "back-door way" for overruling
the exemption from the automatic stay. The author concludes that "it
would be a very rare situation where it would be appropriate to exempt a
debtor from the operation of laws applicable to other
parties." |
| NBRC-0207 |
J. Christopher Kohn |
Director, Commercial Litigation Branch
(DOJ) |
|
362 |
|
This nine-page memorandum is a follow-up to the
government Round Table discussions in Santa Fe and San Diego. Those
discussions focused in part on clarifying the automatic stay to enable
police and regulatory actions to impact estate property. The Code's
automatic stay provisions currently treats police and regulatory actions
in two exceptions, §§ 362(b)(4) and (b)(5). The principle
behind these exceptions is that bankruptcy should not prevent police and
regulatory actions and judgment enforcement so long as government is not
enforcing monetary judgments. This intent can be frustrated by the
Code's failure to exempt police and regulatory actions from §
362(a)(3), which stays acts to seize or control state property, and from
§ 362(a)(6), which stays acts to seize claims. Working Group
Proposal #7, which was intended to address these concerns by adding
language to § 362(b)(4) enabling governments to exercise control
over estate property, is too limited and technically flawed. |
Section 362(a)(3) should be added to the police power
provisions excepted by §§ 362(b)(4) and (b)(5). |
| NBRC-0207 |
J. Christopher Kohn |
Director, Commercial Litigation Branch
(DOJ) |
|
362 |
105 |
This nine-page memorandum is a follow-up to the
government Round Table discussions in Santa Fe and San Diego. Those
discussions focused in part on limiting overly expansive notions of a
bankruptcy court's injunctive power, especially with regard to police
and regulatory activities. In response to the NBRC's request, the author
provides case citations that illustrate the Branch's concerns relating
to overly expansive use of a bankruptcy court injunctive power. Viewed
as a whole, the Branch believes that these cases demonstrate several
points: (1) the cases are neither limited in number nor aberrational in
character; (2) governmental actions are often enjoined even where the
action is conceded to be exempt under the police and regulatory
exception; (3) the court decisions generally focus on the perceived
"harm" to the estate or its chances of reorganization without
identification of a substantive right held by the debtor which the
injunction, in theory, should protect; and (4) unless expressly limited,
debtors will continue to challenege, on a case-by-case basis, whether a
given police or regulatory law is really "necessary," and courts,
viewing the issue through the lens of the debtor's reorganization
effort, will often decide that it is not. |
Commercial Litigation Division proposes two
amendments to § 105 to address these concerns: "(e) In issuing an
injunction, the court shall apply the standards and procedures
applicable to a district court under nonbankruptcy law, except to the
extent procedures are modified by the Federal Rules of Bankruptcy
Procedure. (2) A police or regulatory act of a governmental unit that is
not stayed or proscribed by a specific provision of this title may be
enjoined only to the extent authorized by nonbankruptcy
law." |
| NBRC-0311 |
Samuel L. Bufford |
Bankruptcy Judge (C.D. Cal.) |
|
362(b)(4) |
|
The proposed amendment to § 362(b)(4) presents
two problems: (1) The proposed revision would substantially magnify the
problem that arises when a government agency invokes this provision to
terminate a license or to destroy debtor's property without a court
hearing, namely that the burden of going to court for relief is shifted
from the creditor to the debtor and that notice to other affected
creditors is eliminated; (2) If the government unit is part of state
government, the proposed amendment would allow the government unit to
use the Eleventh Amendment to avoid a bankruptcy court's jurisdiction,
and the court would be powerless to control prejudice to other creditors
resulting from the government's appropriation of property belonging to
the estate. |
Author opposes the proposed amendment to §
362(b)(4), and recommends that where government action would have a
substantial impact on the value of a debtor's business, the automatic
stay should apply. Affected creditors should be given notice, and the
court should have an opportunity to balance the interests of all parties
before permitting the government to take action that destroys
substantial value belonging to the estate. |
| NBRC-0318 |
Paul Mignini, Jr., Mary E. Wysocki and Charles M.
Tatelbaum |
President-National Association of Credit Management
("NACM"), Chair-NACM Government Affairs Committee, and NACM Legislative
and Bankruptcy Counsel, respectively |
|
362(h) |
|
NACM sought the input of all NACM members with
respect to proposed changes to the bankruptcy laws. The NACM Government
Affairs Committee, without discussing the rationales for their
suggestions, prepared the proposals below. |
NACM's Government Affairs Committee concludes that
§ 362(h) should be amended to: substitute the word "person" for
"individual." |
| NBRC-0324 |
Richard H. Walker |
General Counsel, U.S. Securities and Exchange
Commission |
|
362, 1109 |
|
In this submission representing the preliminary views
from SEC staff, the author states that: (1) the SEC has a strong
interest in ensuring that the bankruptcy courts are not used as a "haven
for wrongdoers" in subversion of congressional intent; (2) scare
enforcement resources should not be diverted into unnecessary or
duplicative litigation in bankruptcy court; and (3) the SEC also has an
interest pursuant to § 1109(a) as a party-in-interest, in
protecting the interest of public investors who hold securities in
companies involved in the bankruptcy system, ensuring adequate
disclosure of reorganization plans that provide for the issuance of
unregistered securities, and preventing the misuse of the Bankruptcy
Code's exemption from Securities Act Registration. |
In furtherance of these interests and in order to
assure that the automatic stay is not used to hinder legitimate SEC
efforts, the author proposes that the Bankruptcy Code be amended to: (1)
Clarify the scope of the governmental police or regulatory exception in
§§ 362(b)(4) and (5); (2) Clarify the standard for enjoining
acts within the police/regulatory exception; (3) Clarify grounds for
lifing the stay. The author also urges the NBRC to schedule a meeting
devoted solely to governmental concerns because the interaction of the
Bankruptcy Code and governmental activities raises unique
issues. |
| NBRC-0324 |
Richard H. Walker |
General Counsel, U.S. Securities and Exchange
Commission |
|
362, 1109 |
|
In this submission representing the preliminary views
from SEC staff, the author states that: (1) the SEC has a strong
interest in ensuring that the bankruptcy courts are not used as a "haven
for wrongdoers" in subversion of congressional intent; (2) scare
enforcement resources should not be diverted into unnecessary or
duplicative litigation in bankruptcy court; and (3) the SEC also has an
interest pursuant to § 1109(a) as a party-in-interest, in
protecting the interest of public investors who hold securities in
companies involved in the bankruptcy system, ensuring adequate
disclosure of reorganization plans that provide for the issuance of
unregistered securities, and preventing the misuse of the Bankruptcy
Code's exemption from Securities Act Registration. |
In furtherance of these interests, the author
recommends that the NBRC study whether individuals should be eligible to
file under chapter 11, and if so, whether eligibility standards should
be promulgated for them He also recommends that the NBRC study whether
it is time to adopt eligibility standards for corporate chapter
11's. |
| NBRC-0369 |
Sybil Niden Goldrich |
Author of article in the Fresno Bee |
|
|
|
The author tells of her personal history with
defective Dow Corning breast implants, and states that Dow Corning has
used chapter 11 to avoid indefinitely paying money owed to women for
damaging their health. She adds that Dow Corning has used the bankruptcy
to post some of its highest earning quarters ever. |
Bankruptcy Code should be amended to prevent
companies from using the Code to "put its own survival ahead of ethical
considerations." |
| NBRC-0396 |
Heidi Heitkamp |
National Association of Attorneys General ("NAAG");
Attorney General, North Dakota; Chair of the NAAG Bankruptcy and
Taxation Working Group |
|
362 |
105 |
NAAG strongly supports the positions expressed by the
Department of Justice with respect to proposed changes to §§
362 and 105. Collection of purely monetary judgments should be deferred
to the normal bankruptcy process. However, on many occasions, the proper
exercise of the state's police and regulatory powers means that it must
act against items such as licenses or permits that may be property of
the esate, or that it must seize assets in situations where goods have
been manufactured in violation of the law. |
Bankruptcy Code must be clarified to protect the
legitimate exercise of state police and regulatory powers from
imposition of the automatic stay. |
| NBRC-0551 |
Chris Greer |
Deputy Assistant Secretary, Office of Mulltifamily
Housing Programs, U.S. Department of Housing and Urban
Development |
Statement of Chris Greer submitted on behalf of
HUD. |
|
|
Representatives from HUD participated in the
discussions of the Small Business Working Group during the January
meeting in Washington, D.C. They were invited to submit a formal
statement to the Commission describing their recommendations for changes
in the bankruptcy code, to which this letter is a response. "In the case
of insured loans, FHA insures mortgages made by private lending
institutions to finance the construction of multifamily housing by
private developers. Nearly all of the multifamily properties are held by
single asset partnerships. Most were organized as tax shelters which by
now have tax bases near or at zero. If the owner defaults, FHA pays the
private lender for its claim and takes over the mortgage. In order to
protect the property, the residents, and the government's financial
interest, HUD often must act quickly to foreclose. In response, however,
owners often file for bankruptcy, automatically staying the
foreclosure." |
"...HUD urges the Commission to recommend changes in
the bankruptcy code to exempt HUD from stays against foreclosure on both
FHA insured loans and direct loans for multifamily housing and health
care facilities so that the Department can better fulfill its
mission." |
| NBRC-0636 |
Donald F. Harris |
Attorney, Legal Services Bureau, Taxation and Revenue
Department, State of New Mexico |
|
362(a)(3) |
|
Section 362(a)(3) forbids a creditor from "exercising
control over property of the estate" in violation of the automatic stay.
Does this mean that a creditor holding property legally seized
pre-petition is in violation of the automatic stay if the property is
not immediately returned to the debtor or trustee Author cites In re
Knaus, which says yes, and In re Young, which says no. Author's
experience suggests that the Knaus solution, although perhaps legally
correct, is illogical and unwieldy, and that in practice, the courts
adopt a wait-and-see attitude more akin to Young. |
"Please read In re Young, 193 B.R. 620 (Bankr. D.C.
1996) and consider whether the Commission should address this
issue." |
| NBRC-0637 |
Armand J. Kornfeld |
Attorney |
|
362(b) (12) & (13) |
|
11 U.S.C. § 362(b) (12) and (13) grant the
government relief from the automatic stay to pursue and complete
foreclosures under Preferred Ship Mortgages against a vessel. The
automatic relief from stay provision makes it virtually impossible for a
vessel owner to reorganize over the govenment's objections. The 90-day
trigger date arises prior to the exclusivity periods, ina normal Chapter
11 case, for even the filing of a Disclosure Statement and Plan, much
less the 180 days available to a debtor to confirm a Plan within the
exclusivity period. |
"The purpose of this letter is to request that the
Commission review this issue and, at the very least, consider extending
the trigger date for relief from stay being granted to the government to
a period beyond the existing exclusivity periods." |
| NBRC-0662 |
Chris Quinn-Brintnall |
Sr. Deputy Prosecuting Attorney, Pierce County,
Washington |
|
362(b)(4) |
105 |
Bankruptcy courts should not be able to stay
government enforcement of public safety requirements when the public is
being put at risk merely to protect financial interests. |
Modify the automatic stay provisions and authority of
the bankruptcy court to eliminate interference with government
enforcement of public safety provisions. |
| NBRC-0689 |
Harvey R. Miller & Paul M. Basta |
Attorneys, Weil, Gotshal & Manges LLP |
|
|
|
This is a Memorandum by the authors to Professor
Elizabeth Warren on the "Enforceabiltiy of prepetition Waivers of the
Authomatic Stay" which she forwarded to the Chapter 11 Working Group as
background material. |
|
| NBRC-0746 |
Benjamin Sweet |
Owner, Sweet Properties |
|
|
|
Author feels he was "victimized" by the automatic
stay provision when a commercial tenant of his merged with another firm
and moved out while owing rent, then filed banktuptcy. "It took over 6
months to get the bankruptcy court to release [the premesis] back to me
- most of the time in which the premises was vacant!" |
"...I request that NBRC recommends to Congress that
the current Bankruptcy Code be changed to exempt rental agreements from
the automatic stay provision." |
| NBRC-0897 |
Samuel L. Bufford |
United States Bankruptcy Judge, Central District of
California |
|
|
|
Author writes to address the issue of in rem relief
from stay orders. He wrote an opinion which authorizes a court to grant
a relief from stay order that binds subsequent transferees of the real
property at issue, by authorizing the recordation of the order in the
real estate recording office. |
"It does not apear that further legislation is needed
to make this pricedure effective. I think that the present statute is
adequate for the purpose." |
| NBRC-1066 |
Thomas B. Donovan |
Bankruptcy Judge, Central District of
California |
|
362 |
|
Author is forwarding a proposal for dealing with the
in rem issue in relief from stay matters. |
"Congress should authorize the courts to control the
number of times a debtor can obtain the automatic stay involving the
same property by an appropriate amendment to the Bankruptcy Code. Such
an amendment would permit the courts to issue orders granting relief
from the automatic stay that bind a specific property and any party
claiming an interest in that property as well as prevent that asset from
becoming property of the bankruptcy estate." |
| NBRC-1133 |
William J. Burnett |
Attorney, Saul, Ewing, Remick & Saul |
Article: "Prepetition Waivers of the Automatic Stay:
Automatic Enforcement Equals Automatic Trouble", in Journal of
Bankruptcy Law and Practice, Vol. 5, No. 3, March/April
1996. |
362(a) |
|
Author submits a copy of a law review article which
he wrote. |
Author suggests that pre-petition waivers of the
automatic stay should not be enforced. |
