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June 2004 issue:
Washington Hot News June 7, 2004 On June 7, California Gov. Schwarzenegger (R) signed into law Senate Bill 772, allowing the California Public Utilities Commission to create a special financing authority allowing Pacific Gas & Electric Co to issue recovery bonds that will finance a $2.21 billion "regulatory asset" to repay creditors, a key element of PG&E's bankruptcy reorganization plan. Authors needed! The Bankruptcy Section Newsletter Committee is looking for volunteers to write a Case Analysis for an upcoming edition. The Case Analysis is typically based on Court of Appeals or Supreme Court decisions, although you can use your discretion to discuss relevant BAP, District Court and Bankruptcy Court decisions. If you are interested or would like to learn more, please send an email to the Managing Editor. You can view the archive at www.cllabankruptcy.org. Your subscription You have been subscribed to this list as part of your membership in the Bankruptcy Section of the Commercial Law League of America. Changes to your e-mail address and all other comments can be sent to Editor@cllabankruptcy.org CLLA 70 East Lake Street, Suite 630 Phone: 312-781-2000 Newsletter design by: |
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the online version can be found here: Nomination deadline! KING AWARD FOR EXCELLENCE. Given to recognize that lawyer, judge, teacher or legislator who exemplifies the best in scholarship, advocacy, judicial administration or legislative activities in the field of bankruptcy. The recipient will exemplify the standards set by Professor King during a life-time of devotion to the practice and practitioners of bankruptcy. She or he will have made a lasting contribution to the improvement of commerce and to the fair and ethical treatment of debtors, creditors and the public at large. The award will recognize a career, not an event. The award will be presented at the Commercial Law League’s Annual Breakfast held at the 2004 National Conference of Bankruptcy Judges. Established in 2001, this award has been presented to Professor Lawrence King (in memoriam,2001), Professor Elizabeth Warren (2002) and The Honorable Joe Lee (2003). Nominations are due August 15, 2004. Click here for a nomination form. Sua Sponte Louis S. Robin When the Chair of the Bankruptcy Section reaches the end of his or her term and writes the concluding Sua Sponte, it is a tradition to acknowledge the many accomplishments of others. To repeat a phrase I utilized in my first Sua Sponte, there is good reason for such acknowledgements. Each and every day of the past year I have been overwhelmed by the efforts of so many in the League. As difficult as it may be, I will try to describe and give credit to the many. Case Analysis Jeffrey N. Schatzman Fourth Circuit Applies Literal Meaning to § 365(c), “Assume or Assign” The Fourth Circuit Court of Appeals in RCI Technology Corp. v. Sunterra Corp. (In re Sunterra Corp.), 361 F.3d 257 (4th Cir. 2004), decided that the “literal meaning,” not the “actual meaning” should apply when analyzing the “assume or assign” language of Section 365(c). The Fourth Circuit reversed both the Bankruptcy Court’s and District Court’s rulings that denied RCI’s motion to deem rejected its licensing agreement with Sunterra. Case Law UpdatePaige Barr, J.D. Emotional Damages Denied for Automatic Stay Violation. The court held that debtors could not recover damages for emotional distress under § 362(h) when a creditor violated the automatic stay that followed from the filing of a bankruptcy petition because the text of § 362(h) suggested that it was aimed at economic damages. "Actual damages" under § 362(h) did not include damages for emotional distress because the interests served by § 362(h) were economic. State laws provided tort remedies for intentional infliction of severe emotional distress, and § 362(h) did not duplicate those tort remedies. Dawson v. Wash. Mut. Bank (In re Dawson), 2004 U.S. App. LEXIS 9622 (9th Cir. May 18, 2004). ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Sua Sponte
Our educational programs have been of the highest quality. We have had speakers, materials, and subjects that are rivaled by none. They are everything to which educational programs aspire. To all this I must thank and give credit to Cathy Pike and Alan Gordon. Our Newsletter has been everything it should be. It has been informative, newsworthy, and current. The writers of the Case Analysis have provided well written summaries of pertinent recent cases that have provided guidance to us in our daily practices. These have been supplemented by practice alerts that have often been supplied by the many individuals of the League as a way of keeping everyone informed of the latest news. To all this I must thank and give credit to Karen Porter and Brian Behar. I must also thank Cathy Vance and Paige Barr for their efforts. Cathy reviewed all our articles, prepared legislative and related comments and papers, and was critical to our various successes over the years prior to leaving us and joining Bill Brandt's Development Specialists, Inc. To her credit, Cathy still voluntarily assists us by reviewing articles. Paige has been able to pick up the pieces, and has performed admirably, all while attending and graduating from DePaul Law School. Her efforts however may soon be ending as she takes the Bar Exam and looks to new opportunites. We congratulate her on her great achievements as a student and as our Case Law Update editor. Our efforts at the National Conference of Bankruptcy Judges have been exemplary. Our programs are well received, and our Professor King Award has been an honor to present. I thank Judge Judith Fitzgerald and Judy Miller for their hard work in setting the educational programs and the members of the Award Committee for their time and effort. We have continued our Legislative efforts in the past year. Although it has been a quiet year in Congress (thankfully), Peter Califano has continued our efforts on a number of fronts, including continued legislative comment on Congressional proposals, our Supreme Court amicus brief on Hood, and seeking new comments on future legislative efforts. In this last regard, you should have received a survey concerning your interests in the legislative forum, and your comments are very welcomed – if you haven’t responded, you can do so through June 30 by clicking here. No list of thanks would be complete without thanking Sarah Jolie (the Bankruptcy Section’s Director), David Goch (the League’s Washington Legislative Counsel) and David Watson (the League’s Executive Vice President). The Section would not run without Sarah – she’s always at the right place, at the right time, ensuring that we are doing what we are doing. David Goch is always keeping us informed on legislative matters, having us discuss the right issues with the right people. David Watson is always there when we need him. I must also thank the other officers of the Section and the Executive Council members. They have always performed and the highest level, making sure that I do my job. Similarly, I thank the many prior Chairs of the Bankruptcy Section, as they have set a bar that I was fortunate to follow. To those whose names I have somehow forgotten, please accept my apologies - - - your efforts deserve a grateful thanks. There is one set of names, however, which I may not recall or know to which I must pay tribute. These are the countless number of members tirelessly toiling in the profession of law. Each one of you, day in and day out, is committed to your practice, which serves your clients, your communities, and families. You practice without the tribute that you deserve. As lawyers, we do not perform God’s work, but we do perform civilization’s. If there is anything that has impressed me, it is your individual efforts in this regard. I leave you in good hands. Alan Nahmias is our Chair Elect, and he will do a wonderful job. Finally, I have used the words “honor” and “privilege” in describing how I feel in serving you. These words only begin to describe how I feel. I hope that I can serve you well during my service on the Board of Governors as the Bankruptcy Sections’ representative. Louis S. Robin Case Analysis Synopsis: The Fourth Circuit Court of Appeals in RCI Technology Corp. v. Sunterra Corp. (In re Sunterra Corp.), 361 F.3d 257 (4th Cir. 2004), decided that the “literal meaning,” not the “actual meaning” should apply when analyzing the “assume or assign” language of Section 365(c). The Fourth Circuit reversed both the Bankruptcy Court’s and District Court’s rulings that denied RCI’s motion to deem rejected its licensing agreement with Sunterra. Facts: Sunterra Corp. is one of the world’s largest resort management companies. Sunterra’s primary business involves the management, marketing and financing of timeshares. In the 1990's Sunterra launched a program where owners of timeshares at Sunterra resorts could trade their timeshare rights for rights at other Sunterra resorts. Due to the massive number of timeshare owners and units involved, Sunterra needed to acquire software to manage this process. In 1997, RCI and Sunterra entered into a software license agreement (the “Agreement”) whereby RCI granted to Sunterra a nonexclusive license to use its software. Under the Agreement, Sunterra was permitted to make enhancements to the software and granted RCI a license to use the enhancements. It is undisputed that RCI has a registered copyright for its software. Sunterra purchased RCI’s software for $3.5 million and invested approximately $38 million in enhancements. Sunterra filed a Chapter 11 bankruptcy on May 31, 2000 and confirmed its plan of reorganization on June 21, 2002. Prior to the confirmation (March 28, 2002), RCI filed a motion to have the bankruptcy court deem the Agreement rejected. RCI contended that the Agreement was executory and could not be assumed the under 11 U.S.C. § 365(c) without RCI’s consent, which it refused to give. Section 365 provides in pertinent part: (c) The trustee may not assume or assign any executory contract . . . of the debtor, whether or not such contract . . . prohibits or restricts assignment of rights or delegation of duties, if - (1)(A) applicable law excuses a party, other than the debtor, to such contract . . . from accepting performance from or rendering performance to an entity other than the debtor or debtor in possession, whether or not such contract . . . prohibits or restricts assignment of rights or delegation of duties; and (B) such party does not consent to such assumption or assignment . . .. Sunterra argued that Section 365(c) was inapplicable because the Agreement was not executory and that it was not precluded from assuming the Agreement because the statute only prohibited a debtor from assuming and assigning a contract. The bankruptcy court found that the Agreement was not executory and that if it was, § 365(c) did not preclude assumption since Sunterra did not intend to assign the Agreement. It rationalized its decision by finding no prejudice to RCI by permitting Sunterra to assume the Agreement. On RCI’s appeal, the district court found that the Agreement was executory, but affirmed the bankruptcy court’s decision permitting Sunterra to assume the Agreement by applying the “actual test” and interpreting the statutory language as “assume and assign” rather than the plain meaning of “assume or assign.” In applying the actual test, the district court followed the First Circuit and a majority of bankruptcy courts which hold that a decision should be made on a case-by-case basis to determine whether the non-debtor party would be compelled to accept performance from someone other than the original contracting party and whether a debtor should be precluded from assuming a contract unless it intended to assign the contract to a third party. Although the district court recognized that the Supreme Court decision of Patterson v. Shumate, 504 U.S. 753 (1992), among others, dictates that the plain meaning of a statute must be enforced when its terms are unambiguous, the court adopted the actual test on the premise that its decision was consistent with the general goals of Chapter 11 by permitting a licensee to benefit from the protections of the bankruptcy law while encouraging the maximization of the economic value of the debtor’s estate. The district court rejected the Third, Ninth and Eleventh Circuits’ application of the “literal test,” requiring a literal reading of the statute, which, in this case, would have resulted in a rejection of the Agreement. Copyright law excuses RCI from accepting performance from a third party and RCI did not consent to the assumption. Analysis: On appeal to the Fourth Circuit, Sunterra argued that the lower court decisions should be affirmed because the Agreement was not an executory contract and, alternatively, that application of the literal test would produce an absurd result or is otherwise inconsistent with the legislative intent. The Fourth Circuit agreed with the district court in holding that the agreement was executory. Applying the Countryman test, the court found that each party had a continuing obligation to maintain the confidentiality of the source code of the portions of the software developed by the other. Sunterra argued that there are two applicable exceptions to the plain meaning rule. First, that the literal application of the statutory language would result in an outcome that is absurd, so gross as to shock the general moral or common sense. Second, that literal application of the statutory language would result in an outcome that is demonstrably at odds with clearly expressed congressional intent. On the first issue, Sunterra attempted to convince the court that a literal reading of § 365(c)(1) is absurd in that it renders § 365(f)(1) inoperative and superfluous. The court reconciled this argument by relying on In re Magness, 972 F.2d 689 (6th Cir. 1992), which addressed the same issue. The court in In re Magness observed that the conflict between §§ 365(c)(1) and 365(f)(1) is illusory because each subsection recognizes an “applicable law” of markedly different scope. While § 365(f)(1) is a broad rule that prohibits, restricts, or conditions the assignment of executory contracts, §365(c)(1) creates an exception to the broad rule where the “applicable law” excuses a party from accepting performance from someone other than one with whom the party originally contracted. Sunterra contended that the phrase “or the debtor in possession” in § 365(c)(1) is rendered inoperative or superfluous. The Fourth Circuit disagreed and reasoned that assumption and assignment are two distinct events that a non-debtor must consent to independently. The debtor in possession must first obtain the non-debtor’s consent to assume the contract, and then must obtain its consent to assign the contract. In order to meet the second prong, §365(c)(1)(A) is applied to determine whether “applicable law excuses a party from accepting performance from or rendering performance to an entity other than . . . the debtor in possession.” The Fourth Circuit noted that the district court refused to apply the literal test because the result would be “quite unreasonable.” The exception to the plain meaning rule, however, is not whether the result would be quite unreasonable but whether it would be absurd. The Fourth Circuit did not find the application of the literal test to create an absurd result and therefore, rejected Sunterra’s argument. The court considered the Supreme Court’s ruling in United States v. Ron Pair Enterprises, Inc., 489 U.S. 235 (1989), where it held that the plain language of statutes must generally be enforced, unless such application would produce results that are unreasonable in light of the drafters’ intentions. The Fourth Circuit reviewed the legislative history but was unable to find anything to support Sunterra’s position that the application of the literal test would produce a result at odds with the legislative intent. Comments: It appears that the Circuit courts are leaning toward a literal reading of § 365(c) and assumption of an executory contract will depend not only upon the consent of the non-debtor party but also on the debtor’s or debtor in possession’s intent to assign the contract or whether there exists applicable law prohibiting an assignment. Jeffrey N. Schatzman Case Law UpdateEmotional Damages Denied for Automatic Stay Violation. The court held that debtors could not recover damages for emotional distress under § 362(h) when a creditor violated the automatic stay that followed from the filing of a bankruptcy petition because the text of § 362(h) suggested that it was aimed at economic damages. "Actual damages" under § 362(h) did not include damages for emotional distress because the interests served by § 362(h) were economic. State laws provided tort remedies for intentional infliction of severe emotional distress, and § 362(h) did not duplicate those tort remedies. Dawson v. Wash. Mut. Bank (In re Dawson), 2004 U.S. App. LEXIS 9622 (9th Cir. May 18, 2004). Emotional Damages Awarded For Discharge Injunction Violation. Court upheld award of damages for emotional distress and then also awarded attorneys’ fees and costs in debtors’ motion for civil contempt arising out of a violation of discharge by the IRS. Debtors’ unsecured federal tax liabilities were discharged in their Chapter 7 case. Nevertheless, the IRS initiated collection activities on the discharged tax liabilities. IRS conceded to a willful violation of the discharge injunction. Debtors were awarded damages for emotional distress, but their request for attorneys’ fees and costs was denied for failure to exhaust administrative remedies by the bankruptcy court. On appeal, the court affirmed the damages award, but reversed the denial of fees and costs. The court found that the equitable powers given to the trial court under § 105(a) included the power to award monetary relief for civil contempt and therefore, compensation for emotional distress attributable to violation of the discharge injunction. The denial of fees and costs was based solely on the 26 U.S.C.S. § 7430(b)(1) exception to 28 U.S.C.S. § 2412(d)(2)(A) of the Equal Access to Justice Act. As no specific treasury regulation related to a discharge injunction violation, the court found that the debtors may have exhausted the administrative remedies available. United States v. Rivera Torres (In re Rivera Torres), 2004 U.S. Bankr. LEXIS 667 (B.A.P. 1st Cir. May 21, 2004). Private School Tuition Not a Reasonably Necessary Expense, Not a Charitable Contribution, and Not Allowed Due to RFRA. Debtors’ plan provided for 36 monthly payments which would have paid unsecured creditors 25 percent of their claims. The debtors maintained their children’s private Catholic school tuition was reasonably necessary under the circumstances, that the expense was a "charitable contribution" and was therefore de facto reasonably necessary under the Religious Liberty and Charitable Donation Protection Act of 1998 (RLCDPA), or that it was protected by the Religious Freedom Restoration Act (RFRA). The appellate panel held that the bankruptcy court was not clearly erroneous in concluding that the tuition was not a reasonably necessary expense under the circumstances, specifically that the plan did not reflect a good faith attempt to maximize repayment to the unsecured creditors. The panel adopted the two prong test used by other jurisdictions in determining whether private school education is a reasonably necessary expense. The two pronged totality of the circumstances test first asks whether the debtor's plan reflects a good faith effort to maximize repayment to creditors. Bankruptcy courts have considered both the circumstances of the private schooling and the terms of the debtor's proposed Chapter 13 plan. In particular, bankruptcy courts have examined whether debtors have chosen private school education only where a compelling circumstance exists, or have compensated for such an expense by eliminating other reasonably necessary expenses such as health insurance. The Panel concluded that the debtors did not demonstrate an attempt to offset the private school tuition expense by eliminating or minimizing other reasonably necessary expenses. Moreover, the debtors proposed only a thirty-six rather than a sixty month plan, and proposed to repay unsecured creditors only twenty-five percent of the debt owed. The Panel also held that the tuition payments were not a "charitable contribution," and therefore were not protected as a de facto reasonably necessary expense under the Religious Liberty and Charitable Donation Protection Act of 1998 (RLCDPA). A gift is defined as giving something and not receiving anything in return. Private school tuition therefore does not qualify as a “gift” since the tuition is being paid and educational services are being received in return. Lastly, it concluded that the Religious Freedom Reformation Act (RFRA) did not afford the debtors the right to use disposable income for private religious school tuition payments. RFRA requires that one’s freedom to exercise religion is substantially burdened. Since education at a parochial school is not such a central belief, for the Roman Catholic Church does not mandate it, the Panel found that debtors’ freedom to exercise religion was not substantially burdened. Watson v. Boyajian, 2004 Bankr. LEXIS 668 (B.A.P. 1st Cir. May 21, 2004). Challenge To Termination Order After It Had Been Fully Consummated and Plan Had Been Implemented Found Equitably Moot. Court found the following factors weighed in favor of dismissing appeal as equitably moot. First, the airways never sought to obtain a stay of any kind and never attempted to stay the bankruptcy court's distress termination order, nor did it attempt to expedite its appeal of that order. The association also did not attempt either to stay the confirmation order or to prevent implementation of the reorganization plan. Rather, it took absolutely no action as the airways executed the termination order and implemented its reorganization plan by completing hundreds of transactions with third parties. Moreover, the termination order and the confirmation order had been fully consummated. Finally, the court could not see how the reversal of the termination order could be granted without undoing the airways' reorganization plan and without adversely impacting the interests of third parties who have relied upon the consummated confirmation order. Retired Pilots Ass’n v. U.S. Airways Corp. (In re U.S. Airways Group, Inc.), 2004 U.S. App. LEXIS 10461 (4th Cir. May 27, 2004). Chapter 13 Bankruptcy Plan May Not Provide for Lien Stripping With the Debtor Satisfying the Secured Claim Beyond the Life of the Chapter 13 Plan. The court held that a Chapter 13 debtor may not bifurcate a non-residential secured real estate loan under § 506(a), but maintain payments on the claim pursuant to § 1322(b)(5) beyond the life of a Chapter 13 plan as circumscribed by § 1322(d). The debtors' Chapter 13 bankruptcy schedules stated that the rental property had a value less than the amount encumbered by a first deed of trust held by the bank. The adversary complaint sought to bifurcate the loan into secured and unsecured claims pursuant to 11 U.S.C. § 506(a) and 1322(b)(2). The court held that (1) § 1322(b)(2) by itself does not permit the debtors to repay the secured claim over a period longer than the plan term; (2) a chapter 13 debtor may not invoke both a modification of a secured creditor's claim under § 1322(b)(2) and the right to "cure and maintain" beyond the plan term as authorized under § 1322(b)(5); and (3) a modification of secured debt under Chapter 13 must be accomplished in a manner consistent with § 1322(b)(2). Therefore, a debtor may not use § 506(a) in combination with § 1322(b)(5) to reduce the secured claim and repay it over a period longer than the plan term. Enewally v. Wash. Mut. Bank (In re Enewally), 2004 U.S. App. LEXIS 10446 (9th Cir. May 27, 2004). Taxpayer's Personal Bankruptcy Proceeding Did Not Discharge his Transferee Liability for Corporate Taxes Not Paid by His Defunct Business. The taxpayer was the sole shareholder of a corporation. The corporation was dismantled and its assets transferred to the taxpayer. Subsequently, the taxpayer included on his tax return net operating loss carry-forwards based upon net operating losses sustained by the corporation. The taxpayer filed a voluntary Chapter 7 bankruptcy schedules and obtained an order of discharge. A subsequent audit found that the corporation owed taxes for its last year of existence. The court held that, because the taxpayer's transferee liability was derived from a tax on or measured by income and exempt from discharge in bankruptcy under 11 U.S.C.S. § 523(a)(1)(A) and § 507(a)(8)(A)(iii), the liability was not discharged in the taxpayer's bankruptcy proceeding. McKowen v. IRS (In re McKowen), 2004 U.S. App. LEXIS 10766 (10th Cir. June 1, 2004). Section 521(2)(A) Does Not Prevent Non-Defaulting Debtors From Retaining Secured Property by Keeping Current on their Loans. Chapter 7 debtors listed two loans owed to a creditor secured by liens on their cars on their petition. The debtors filed a statement of intention indicating that they intended to continue regular payments to the creditor on the two secured loans and retain the two cars. The court held that § 521(2)(A) was a notice provision that did not restrict the debtors from retaining their cars while staying current on their loan payments. While § 521(2)(A) was capable of two readings, viewed as a whole, the Bankruptcy Code allowed debtors to retain collateral and keep current on their loans so long as that collateral was adequately protected. Price v. Del. State Police Fed. Credit Union (In re Price), 2004 U.S. App. LEXIS 10960 (3d Cir. June 3, 2004). Paige Barr, J.D Insol reportI attended the board meeting of INSOL International on April 17, 2004. As is the case every four years with INSOL there is a push for the quadrennial convention, which will be held in March 2005 in Sydney, Australia. The speakers will be invited in the near future and the final brochure should be available in the early fall. INSOL has announced that it has hired a Technical Manager. She is Sonali Abeyratne who until recently has worked at Linklaters in London. She is an English solicitor and a Sri Lankan attorney. She holds a PhD in Banking and Commercial Law. She will be a great resource for articles, educational programming and planning. INSOL has been searching for a Technical Manager for over a year. The Board is extremely pleased that we have filled the position with such a fine candidate. The Communication Committee, of which I am the chairman, is in the process of revising the web page, insol.org. We hope to have the new and improved web page up and running by the end of this year. Now that INSOL has a Technical Manager, we hope to use her talents to help improve the communication of interesting developments in worldwide insolvency. INSOL has numerous projects that it are being prepared. One such project is with the World Bank and UNCITRAL. The two groups have agreed to interface the UNCITRAL Guidelines, which will be published in their own right with the World Banks Principles in order to have one set of standards. The UNCITRAL Guide cannot be rewritten as it has taken four years to produce. INSOL has been asked to produce three sections of the unified standard document:
The Board responded that we would help with Corporate Workouts and Directors and Officers Liabilities sections, but INSOL could not produce a unified standard document in such short time. We are in discussion with the World Bank to determine the extent of INSOL’s involvement. INSOL will have involvement in the drafting of these important documents. Finally, INSOL has agreed to hire a PARN to help implement an improved governance at INSOL. The initial phase will commence shortly and should take six months to implement. It is hoped that INSOL will be a better organization for all of its member organizations. If any one is interested in the full text of the minutes send me an email at Greenfield@bucklaw.com and I will send the full text of the Board minutes to you. Harry W. Greenfield Washington Hot NewsJune 7, 2004 On June 7, California Gov. Schwarzenegger (R) signed into law Senate Bill 772, allowing the California Public Utilities Commission to create a special financing authority allowing Pacific Gas & Electric Co to issue recovery bonds that will finance a $2.21 billion "regulatory asset" to repay creditors, a key element of PG&E's bankruptcy reorganization plan. The text of the bill is available online. June 9, 2004 1. In June 1st and 8th letters to members of the House of Representatives, Republican Congressmen, the National Treasury Employees Union (NTEU), the Consumer Federation of America, National Association for the Advancement of Colored People, National Association of Retired Federal Employees, National Consumer Law Center on behalf of its low-income clients, and the National Consumers League, urged Congress to reject a proposal to allow the Internal Revenue Service to collect taxes using private collection professionals. The provision was included in the most recent version of export tax repeal legislation (H.R. 4520) released by House Ways and Means Committee Chairman Thomas (R-CA) June 4. According to the letter signed by 17 Republican members: "In this era of electronic information, instantaneous communications, and rampant identity theft, we have grave concerns about the release of sensitive personal information to entities and individuals outside of the federal government." The NTEU group letter alleged that private tax collection is less cost-effective than using IRS personnel. NTEU stated that with additional agency funding of $296 million, $9.47 billion in known tax debt collections would be realized--a net return of $31 for every $1 invested. By contrast, according to NTEU, the administration's privatization scheme would, in the best case, result in a net return of only $3 for every taxpayer dollar spent. The Ways and Means Committee is expected to mark up H.R. 4520 June 10. 2. On June 8th, The Federal Reserve Board provided financial institutions two model notices they can use to alert consumers that negative information about their credit status is being passed on to a credit bureau. The rule, which is required under Section 217 of the Fair and Accurate Credit Transactions Act of 2003, applies to a broad range of financial institutions, not just those regulated by the Fed including, for example: merchant creditors, debt collectors, and other firms that make loans and report negative information about consumers. Specifically, the rule amends Regulation V by making the model notices part of the rule and giving financial institutions guidance for implementing Section 217. Among other requirements, the notices must be provided to consumers before, or no later than 30 days after, the negative information is provided to a nationwide consumer reporting agency. The regulation is effective July 16. 3. On May 25th, Maryland Gov. Ehrlich (R) vetoed a bill that would have prohibited businesses from publicly posting or displaying an individual's Social Security number. In his veto message, Ehrlich called the bill's intent to prevent identity theft laudable, but said that the bill would make it difficult for insurers to transact business using e-mail and faxes. |
When the Chair of the Bankruptcy Section reaches the end of his or her term and writes the concluding Sua Sponte, it is a tradition to acknowledge the many accomplishments of others. To repeat a phrase I utilized in my first Sua Sponte, there is good reason for such acknowledgements. Each and every day of the past year I have been overwhelmed by the efforts of so many in the League. As difficult as it may be, I will try to describe and give credit to the many.
Fourth Circuit Applies Literal Meaning to § 365(c), “Assume or Assign”