In a recent opinion, Honorable Colleen McMahon of U.S. District Court for the Southern District of New York, ruled that non-consensual releases of creditors’ direct claims against non-debtors in a Bankruptcy reorganization plan are not allowed under the provisions of the United States Bankruptcy Code.
On August 23, 2019, President Trump signed into law the Small Business Reorganization Act (“Act”), which is intended to make bankruptcy reorganizations a faster, more efficient, and more affordable debt-management option for small businesses.
The sole shareholder (“Shareholder”) of the Borrower signs a personal guaranty for his Company’s loan. Due to circumstances unrelated to the Company, the Shareholder files for bankruptcy, eventually receiving a Chapter 7 discharge.
The Seventh Circuit Court of Appeals held, as a matter of first impression, that a secured creditor must file a proof of claim in a Chapter 13 bankruptcy no later than the deadline set by Bankruptcy Rule 3002(c) in order to be paid pursuant to a debtor's chapter 13 plan.
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