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Bankruptcy Law

Puerto Rico v. Franklin California Tax-Free Trust - Post-Argument SCOTUScast

SCOTUScast 3-28-16 featuring David Skeel
David Skeel March 28, 2016

On March 22, 2016, the Supreme Court heard oral argument in Puerto Rico v. Franklin California Tax-Free Trust (consolidated with its companion case, Acosta-Febo v. Franklin California Tax-Free Trust).

Concerned that its public utilities were on the verge of insolvency but could not obtain Chapter 9 bankruptcy relief under federal law, the Commonwealth of Puerto Rico attempted to circumvent this obstacle by passing its own municipal bankruptcy law. This law, the Puerto Rico Public Corporation Debt Enforcement and Recovery Act expressly provides different protections for creditors than those in federal Chapter 9. 

Investors who collectively hold nearly two billion dollars in bonds issued by one of Puerto Rico’s public utilities worried that it might seek relief under the new Puerto Rico law and sued in federal court, challenging the law’s validity and seeking injunctive relief. The district court enjoined the enforcement of the new law and the U.S. Court of Appeals for the First Circuit affirmed.  Puerto Rico sought certiorari.

The question before the Supreme Court is whether Chapter 9 of the federal Bankruptcy Code, although it does not apply to Puerto Rico, nevertheless preempts the Puerto Rico statute creating a mechanism for the Commonwealth’s public utilities to restructure their debts. Justice Alito is recused from this case.

To discuss the case, we have David Skeel, who is the S. Samuel Arsht Professor of Corporate Law at the University of Pennsylvania Law School, and who submitted an amicus brief in support of the Commonwealth of Puerto Rico.

Husky International Electronics, Inc. v. Ritz - Post-Argument SCOTUScast

SCOTUScast 3-7-16 featuring Zvi Rosen
Zvi Rosen March 07, 2016

On March 1, 2016, the Supreme Court heard oral argument in Husky International Electronics, Inc. v. Ritz.  Between 2003 and 2007 Husky International Electronics sold and delivered electronic device components worth more than $160,000 to Chrysalis Manufacturing Corp.  Chrysalis, then under the financial control of Daniel Ritz, failed to pay for the goods and Ritz encouraged the transfer of funds from Chrysalis to various other companies.  Ritz held substantial ownership stakes in these companies, which had not given reasonably equivalent value in exchange for the Chrysalis funds.

In May 2009, Husky sued Ritz in federal district court, seeking to hold him personally liable for Chrysalis’s debt. Ritz filed a voluntary Chapter 7 bankruptcy petition, and Husky then filed a complaint in the bankruptcy court alleging actual fraud, to preclude a discharge of Ritz’s debts. The bankruptcy court ruled that Husky had failed to prove actual fraud, however, and the district court affirmed that decision.  The U.S. Court of Appeals for the Fifth Circuit likewise affirmed the lower court judgments, finding no record evidence of a false representation by the debtor, which the Fifth Circuit deemed a necessary predicate to establish actual fraud.

The question now before the Supreme Court is whether the “actual fraud” bar to discharge under Section 523(a)(2)(A) of the Bankruptcy Code applies only when the debtor has made a false representation, or whether the bar also applies when the debtor has deliberately obtained money through a fraudulent-transfer scheme that was actually intended to cheat a creditor.

To discuss the case, we have Zvi Rosen, who is a visiting scholar at Hofstra University Maurice A. Deane School of Law.

Explaining the Next Crisis - Event Audio/Video

2015 National Lawyers Convention
Phil Gramm, Frank Medina, Karen Shaw Petrou, J.W. Verret, Edith H. Jones November 18, 2015

Many observers of the U.S. financial system increasingly believe that the United States will soon experience another financial crisis – the only questions are when and how bad will it be? With that expectation in mind, the panel could address the following issues: What are the likely early indicators that another crisis is in the offing? What economic conditions are the likely causes of that crisis (rising housing prices, the reemgence of shadow banking, other consequences of Dodd-Frank, crises emanating from other countries, etc.)? What might ignite that crisis? Who will likely be blamed for causing the next crisis and who or what should be blamed? What might be the political/legislative response(s) to the next crisis? What, if anything, can be done to mitigate the consequences of the next financial crisis and possibly even steer the U.S. economy away from future financial crises?

Financial Services: Explaining the Next Crisis
12:00 noon – 2:15 p.m.
Chinese Room

  • Hon. Phil Gramm, Senior Advisor, US Policy Metrics and Former United States Senator
  • Mr. Frank Medina, Senior Counsel & Director of Research, Better Markets
  • Ms. Karen Shaw Petrou, Managing Partner, Federal Financial Analytics, Inc.
  • Prof. J.W. Verret, Assistant Professor of Law, George Mason University School of Law
  • Moderator: Hon. Edith H. Jones, U.S. Court of Appeals, Fifth Circuit

The Mayflower Hotel
Washington, DC

Supreme Court Bankruptcy Round Up - October Term 2014 - Podcast

Corporations, Securities & Antitrust Practice Group Podcast
Thomas Plank, Zvi Rosen, David Skeel July 28, 2015

The Supreme Court issued a number of notable opinions in the area of bankruptcy law during the recently concluded term. Our experts offered their analysis on recent developments in the field and took questions from a call-in audience.

  • Prof. Thomas Plank, Joel A. Katz Distinguished Professor of Law, University of Tennessee College of Law
  • Prof. Zvi Rosen Visiting Assistant Professor of Law, Hofstra University Maurice A. Deane School of Law
  • Prof. David Skeel, S. Samuel Arsht Professor of Corporate Law, University of Pennsylvania Law School

Wellness International Network v. Sharif - Post-Decision SCOTUScast

SCOTUScast 6-22-15 featuring Thomas Plank.
Thomas Plank June 22, 2015

On May 26, 2015, the Supreme Court delivered its opinion in Wellness International Network, Limited v. Sharif.  This case relates to the Court’s 2011 decision in Stern v. Marshall, in which the Court held that Congress violated Article III by authorizing bankruptcy judges to decide certain claims for which litigants are constitutionally entitled to an Article III adjudication. Here the question is whether Article III allows bankruptcy judges to adjudicate such claims with the parties’ consent. 

In an opinion delivered by Justice Sotomayor, the Court held by a vote of 6-3 that Article III permits bankruptcy judges to adjudicate Stern claims with the parties’ knowing and voluntary consent. The judgment of the Seventh Circuit was reversed and the case was remanded. 

Justice Sotomayor’s opinion was joined by Justices Kennedy, Ginsburg, Breyer, and Kagan, and by Justice Alito in part.  Justice Alito filed an opinion concurring in part and concurring in the judgment. The Chief Justice filed a dissenting opinion, joined by Justice Scalia and by Justice Thomas as to Part I.  Justice Thomas also filed a dissenting opinion. 

To discuss the case, we have Thomas Plank, who is the Joel A. Katz Distinguished Professor of Law at the University of Tennessee College of Law.