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What Do You Mean My Claim Is Capped? Ninth Circuit Ruling Further Clarifies Types Of Damages Excluded From A Landlord’s Claim In Bankruptcy

March 2, 2017

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The Ninth Circuit Court of Appeals recently provided landlords dealing with a rejected lease with further guidance on the size and basis of their claims against a tenant’s bankruptcy estate.  Kupfer v. Salma (In re Kupfer), No. 14-16697 (9th Cir. Dec. 29, 2016).  The Ninth Circuit held that the statutory cap – 11 U.S.C. § 502(b)(6) – on a landlord’s claims against a tenant arising from lease rejection in bankruptcy applies only to claims that result directly from the lease termination; the cap does not apply to collateral claims.

The Statutory Cap in Bankruptcy Code Section 502(b)(6)

Bankruptcy Code Section 502(b)(6) caps a landlord’s claim for damages for a lease terminated before or during the tenant’s bankruptcy to (a) the greater of (i) one year’s worth of rent or (ii) 15%, not to exceed three years, of the remaining lease term; plus (b) any unpaid rent due under the lease as of the earlier of (x) the date the bankruptcy case was initiated (commonly called the “petition date”) or (y) the date the landlord repossessed the property or the tenant surrendered it.  The cap is designed to prevent landlords from pursuing large claims arising from terminated long-term leases, when in reality the landlord will likely be able to re-let the space at some point in the future.

Many courts have considered how broadly the statute should be construed and what type of damages are subject to the cap.   (Other cases have dealt with other idiosyncracies of Section 502(b)(6), such as whether the “15%” means 15% of the remaining rent (escalating over time under the lease), or 15% of the remaining lease months at the current rent.  For a recent post on this arcane “15% of what” issue, see here.)   In Kupfer, the Ninth Circuit specifically considered whether Section 502(b)(6) caps a landlord’s entire claim for attorney’s fees and costs, if some of such amounts arose from other lease breaches, and not the lease termination.

Factual Background And Lower Court Rulings

Two related tenants had leased two commercial properties, each lease running for ten years and containing an arbitration clause and a prevailing party attorney’s fees, arbitration fees, and costs provision.  Tenants stopped paying rent and eventually vacated the premises.   Landlords won in arbitration, obtaining a $1.3 million damages award against Tenants for unpaid past rent and the present value of future rent.  Landlords also received an attorney’s fees, arbitration fees, and costs award of almost $200,000.

Tenants subsequently filed Chapter 11 cases.  Landlords filed a proof of claim for the entire arbitration award.  Tenants objected, arguing that Section 502(b)(6) applied to the entire arbitration award, including past rent, future rent, and the fee award.  Landlords argued that the statutory cap should only apply to the past and future rent award, not the fee award.  The bankruptcy court agreed with Landlords and the District Court affirmed.  Tenants appealed to the Ninth Circuit.

The Ninth Circuit Decision

In ruling, the Ninth Circuit considered public policy, legislative history behind the statutory cap, and various cases, including its prior ruling in In re El Toro Materials Co., 504 F.3d 978 (9th Cir. 2007) (damages arising from tort claims for waste, trespass and nuisance were not subject to statutory cap because they would have existed regardless of lease termination).  In El Toro Materials, the Ninth Circuit held that the statutory cap in Section 502(b)(6) only applies to damages directly resulting from lease termination.  (For a contrary ruling that the cap encompasses virtually every form of damages a landlord could suffer, even a breach of the contractual duty to repair and maintain the premises, see the Mr. Gatti’s decision out of Texas, here.)

Extending its reasoning in El Toro Materials, the Ninth Circuit partially reversed the lower court rulings and held the statutory cap only extends to the portion of Landlords’ fee award attributable to litigating Landlords’ future rent claims.  Accordingly, Landlords’ award for attorney’s fees and costs related to claims for unpaid past rent and defending against counterclaims were not subject to the statutory cap.  The Ninth Circuit remanded the case for determining which portion of the fee award related to lease termination – and is therefore included in the cap and hence disallowed – and which portion of the fee award did not arise from the lease termination, and thus would be an additional allowed claim free from the cap of Bankruptcy Code section 502(b)(6).

Conclusion

In the Ninth Circuit, Bankruptcy Code section 502(b)(6) only caps landlord damages directly resulting from lease termination – including attorney’s fees and costs awards to the extent they are attributable to lease terminations.  Thus, a landlord’s claim is not limited if its damages would have existed regardless of a tenant’s lease terminations.

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Creditors Beware: Fifth Circuit Court of Appeals Expands Purview Of Potential FDCPA Violations And Furthers Circuit Split

October 23, 2016

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In Daugherty v. Convergent Outsourcing, Inc., No. 15-20392 (5th Cir. Sept. 8, 2016) the Fifth Circuit Court of Appeals recently joined the circuit split interpreting the Fair Debt Collections Practices Act (“FDCPA”) in a way that further limits debts collectors.

Under the FDCPA the term “debt collectors” is not limited to those collecting debts for others –  certain creditors collecting debts directly owed to them can be bound by the FDCPA.   This statute prohibits debt collectors from using “false, deceptive, or misleading representation or means in connection with the collection of any debt.”  A debt collector who violates the FDCPA can be forced to pay actual damages, costs, reasonable attorney’s fees and up to $1,000 of additional damages if the plaintiff is an individual or up to $500,000 or one percent of the debt collector’s net worth in a class action.

In Daugherty, the Fifth Circuit considered whether a collection letter for a time-barred debt which contained a discounted “settlement offer” but which was silent as to the unenforceability of the debt and did not threaten litigation could mislead an unsophisticated consumer to believe that the debt could be enforceable in court and thus violate the FDCPA.

There, the debt collector sent the debtor a collection letter which presented three settlement options for the debtor to pay to resolve the debt.  The collection letter did not threaten litigation.  However, the letter also did not disclose that the statute of limitations had run rendering the debt unable to be collected through litigation.  Additionally, the letter did not warn the consumer that a partial payment on the debt could revive the statute of limitations and allow a debt collector to pursue collecting that debt in court.  The debtor sued the debt collector for violating the FDCPA.  The district court dismissed debtor’s complaint, holding that efforts to collect time-barred debts do not violate the FDCPA if the debt collector does not threaten suit.

The Fifth Circuit reversed the district court and ruled that, regardless of whether litigation is threatened, a collection letter violates the FDCPA if its statements could mislead an unsophisticated consumer to believe that the time-barred debt is legally enforceable.

The Daugherty decision furthered the pending circuit split.  The Third and Eighth Circuits have taken a more restrictive view of the FDCPA by holding that a debt collector is permitted to seek a debtor’s voluntary repayment of a time-barred debt so long as the communications to the debtor do not initiate or threaten litigation.  However, the Sixth and Seventh Circuits have taken a more expansive view of the FDCPA in favor of debtors by holding that collection letters offering to settle time-barred debts which do not disclose that the debt is legally unenforceable can violate the FDCPA even without threatening litigation.  (More about the Sixth and Seventh Circuit’s position on this can be found here.)  Now, the Fifth Circuit has joined with the Sixth and Seventh Circuits in its recent ruling.

The FDCPA, always an active statutory scheme for the courts, will also be front and center next year as the Supreme Court determines whether filing a proof of claim on account of time-barred debt violates the FDCPA, as discussed here.

In sum, debt collectors must be compliant with varying legal requirements in multiple jurisdictions. Collection letters should contain sufficient information to avoid being exposed to litigation and potential damages for violating the FDCPA.

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Defending A Preference Action – Can You Setoff Post-Petition Amounts Owed by the Debtor Against Your Preference Liability?

September 21, 2016

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All bankruptcy lawyers (and most long-suffering trade creditors) know that creditors who receive payments from a debtor within the “preference period” – 90 days before a voluntary bankruptcy case was filed, or 1 year if the creditor is an “insider” of the debtor – are at risk of lawsuit to return those payments to the bankruptcy estate. Pre-petition claims the creditor hold are no automatic defense.  However, the Bankruptcy Court for the District of Delaware recently ruled, as a matter of first impression in that Court, that an allowed post-petition claim of the creditor can be used to set off the creditor’s preference liability. See Official Comm. of Unsecured Creditors of Quantum Foods, LLC v. Tyson Foods, Inc. (In re Quantum Foods, LLC), 2016 WL 4011727 (Bankr. D. Del. Jul. 25, 2016).  Here is a copy of the case.

The background of the case is simple. The Unsecured Creditors Committee filed various preference actions.  In the Quantum Foods preference case, the Committee sought to avoid and recover over $13 million in pre-petition transfers to two related Defendants.  The Defendants claimed, among other defenses, a right to set off a previously allowed administrative expense claim for $2.6 million in food products they had supplied to the Debtors post-petition.[1]

The Committee asserted that the Defendants’ setoff argument was a guise for a “post-petition new value defense.”  This would be improper, the Committee asserted, as a creditor’s new value defense is determined as of the bankruptcy petition date.  [The seminal decision on this is from Bankruptcy Judge Lundin, holding that “the preference window of § 547 close[s] on the date of the filing of the bankruptcy petition and post-petition payments [cannot] be used to deplete pre-petition ‘new value.'”  See here.]  However, while that is the rule in Delaware too under Friedman’s, the Court was not persuaded that this had anything to do with the new value defense.  It reasoned that a new value defense exclusively involves pre-petition activity, whereas the Defendants’ setoff claim was purely based on post-petition activity.  In short, post-petition activity (such as delivery of goods) will not give rise to a preference defense under the strict confines of the Bankruptcy Code, but may give rise to a plain old setoff defense under common law.

Thus, the question became not a matter of the new value defense under Section 547 of the Bankruptcy Code, but rather, the well-established doctrine of setoff.  In deciding whether the Defendants had valid setoff rights, the Court relied on the long-cited authority that, “setoff is only available in bankruptcy when the opposing obligations arise on the same side of the . . . bankruptcy petition date.”  Accordingly, setoff would only be permissible if the opposing obligation, i.e. the preference claim, also arose post-petition.  A “claim” in bankruptcy is defined as a “right to payment.”  Thus, the Court ruled, a preference claim is a “right to payment” which necessarily can only arise post-petition because a preference cause of action does not exist until after a bankruptcy case is initiated.

This is an important decision, from an important court.  It provides comfort to creditors that supply goods post-petition – non-payment for those goods, while a stinging result, can at least be used to reduce preference liability.

[1] The opinion did not address issues of mutuality of obligor and obligee.  That is, if Defendant A holds the $2.6 million post-petition claim, then it will be hard (actually, impossible) for that claim to be used as an offset against Defendant B’s liability.  So we will have to watch how this shakes out once the actual facts and mutuality of the claims among multiple parties are determined during discovery.

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Bankruptcy Courts Closing In – Will An Agreement Requiring Unanimous Consent To File For Bankruptcy Be Effective?

July 7, 2016

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Magnifying Glass and document close up

We’ve all seen it.  The business opportunity looks enticing but is laced with risk about a potential bankruptcy filing down the road.  As bankruptcy lawyers we are often asked how deals can be structured to prevent a potential bankruptcy filing.  One approach (really, about the only approach, and it has its own risks) has been to structure the deal requiring unanimous member/manager/director consent to place the entity into bankruptcy but meanwhile adding a member/manager/director who may vote against taking the entity into bankruptcy in the future, or who may have interests and motives other than those of insiders.

Two recent bankruptcy court decisions have called this practice into question, especially when this corporate structure is implemented when the company is in distress.  The Bankruptcy Court for the District of Delaware ruled in an opinion you can read here that a provision requiring unanimous consent of a company’s equityholders to seek bankruptcy protection was void as against public policy.  Meanwhile, the Bankruptcy Court for the Northern District of Illinois (here is that opinion) did not find that this that type of provision would be void against public policy but did rule that fiduciary duties owed to a company cannot be obviated.  These cases provide insight into (i) the enforceability of unanimous consent provisions in differing jurisdictions and (ii) how such provisions may be drafted (or not) to enhance the likelihood of enforceability if subsequently called into question. 

In re Intervention Energy Holdings, LLC

In re Intervention Energy Holdings, LLC filed its bankruptcy case in the Delaware Bankruptcy Court.  A creditor holding a single “common unit” of the LLC filed a motion to dismiss the case, stating that it did not consent to the bankruptcy filing.  The creditor claimed that the bankruptcy filing was unauthorized because a unanimous vote in favor of bankruptcy was required under the Debtor’s LLC agreement.  The court ruled that this unanimous consent provision was void as against well-established federal public policy because a debtor may not waive its right to seek bankruptcy protection.  The court extended this protection to business entities including LLCs.

Notably, the creditor in question, EIG Energy Fund XV-A, L.P. (“EIG”), had purchased a single common unit of Intervention Energy Holdings, LLC (“Intervention”) during negotiations of a forbearance agreement.  While EIG held one common unit, Intervention’s parent company owned the remaining 22 million common units.  EIG filed a motion to dismiss Intervention’s bankruptcy case.  EIG argued that Intervention needed EIG’s consent to seek bankruptcy protection because by owning its one common unit EIG was able to veto a bankruptcy filing, per the specific terms of Intervention’s corporate documents.

The court overruled EIG’s motion to dismiss.  The court held that a provision in Intervention’s prepetition operating agreement which allowed EIG to veto any voluntary bankruptcy filing by Intervention contravened public policy.  In reaching this decision the court relied on many prior rulings which found parties’ prepetition agreements to waive future bankruptcy protections to be unenforceable.

In re Lake Michigan Beach Pottawatamie Resort LLC

The Bankruptcy Court for the Northern District of Illinois took a more narrow approach in In re Lake Michigan Beach Pottawatamie Resort LLC.  There, the court considered the balance between unenforceable blanket bankruptcy prohibitions in agreements versus permissible “blocking director” provisions which allow directors to vote against putting the entity into bankruptcy but still require the blocking director to uphold its fiduciary duties to the entity.  (The latter are very common in structured finance matters.) The court found that public policy and fiduciary duty concerns involving “blocking director” provisions for corporations also extended to LLCs.

In the Lake Michigan case, before filing its bankruptcy case the debtor defaulted on its obligations to its lender, BCL-Bridge Funding LLC (“BCL”), which resulted in a forbearance agreement between the parties.  As part of the forbearance agreement, the debtor agreed to amend its operating agreement to add BCL as a “special member” of the debtor.  As a special member BCL had a right to approve or disapprove any “material action” by the debtor which included filing a bankruptcy case.  However, the amended operating agreement also provided that in acting as a special member BCL was only required to consider its own interests, rather than the interests of the debtor.

Ultimately, the debtor filed for bankruptcy protection.  All of the debtor’s members, except BCL, supported the bankruptcy filing.  BCL moved to dismiss the bankruptcy case asserting that the debtor did not have authority to file because BCL, as a special member, did not consent.  The debtor argued that the amended operating agreement requiring BCL’s consent to bankruptcy was void against public policy as a prohibition on a party’s right to seek bankruptcy protection.  The court did not find this provision void as against public policy.  Instead, the court held that the blocking member provision in the amended operating agreement contravened the fiduciary duties that BCL owed to the debtor under Michigan law.  Thus, the amended operating agreement provision which only required BCL to consider its own interests, not the debtor’s, was void.  This rendered the remaining directors’ votes in favor of the bankruptcy filing sufficient corporate authority.

Conclusion

These cases emphasize that unanimous consent provisions will not always be enforceable.  The language and structure of such provisions are crucial, as is the timing of when the provision is added to any organic documents.  Agreements limiting the fiduciary duties of a member/manager/director or limiting the ability of an entity to seek bankruptcy protection should be scrutinized – or rejected outright, frankly – to avoid future enforceability concerns.

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Will your claim in bankruptcy withstand the test?

May 18, 2015

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Within the past year bankruptcy courts and federal courts adjudicating bankruptcy appeals have further developed the law governing claims in bankruptcy which are generally governed by Sections 501 and 502 of Title 11 of the United States Code (the “Bankruptcy Code”) and related Federal Rules of Bankruptcy Procedure. Below is a discussion regarding two distinct cases that discuss the validity and priority of claims in bankruptcy.

Consumer Debt Buyers Beware: Think Before Filing A Proof of Claim

The Eleventh Circuit Court of Appeals held that a Chapter 13 debtor could prosecute an adversary proceeding against a consumer debt buyer for violating the Fair Debt Collections Practices Act (“FDCPA”) based on the creditor filing a proof of claim on debt which was uncollectible under the Alabama statute of limitations. Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014).

It appears the Eleventh Circuit’s decision comes in response to a significant increase in the number of consumer debt buyers “armed with hundreds of delinquent accounts purchased from creditors” who are filing proofs of claims on debts which are unenforceable pursuant to state statutes of limitation.

Factual And Procedural Background

Stanley Crawford, the Chapter 13 debtor and plaintiff in the adversary proceeding (“Crawford”) owed a debt in excess of $2,000 to a furniture company (the “Debt”). In September 2001 the furniture company sold the Debt to an affiliate of LVNV Funding, LLC[1]. Crawford’s last transaction on the account related to the Debt occurred in October 2001. Pursuant to Alabama’s three-year statute of limitations the Debt became unenforceable in both state and federal court in October 2004. Ala. Code Section 6-2-37(1).

In 2008, Crawford sought Chapter 13 bankruptcy protection. LVNV filed a proof of claim in attempt to collect from Crawford’s bankruptcy estate even though the Debt had been unenforceable under the Alabama statute of limitations for over four years.

Neither Crawford nor the Chapter 13 bankruptcy trustee objected to LVNV’s proof of claim. The trustee paid LVNV on the Debt from Crawford’s bankruptcy estate. It was not until four years later, in May 2012, that Crawford objected to LVNV’s claim through an adversary proceeding pursuant to Federal Rule of Bankruptcy Procedure (“FRBP”) 3007(b). Crawford alleged that LVNV routinely filed stale claims and that LVNV violated the FDCPA by attempting to collect the time-barred Debt.

The bankruptcy court dismissed Crawford’s adversary proceeding in its entirety. This decision was affirmed by the district court on appeal and subsequently appealed to the Eleventh Circuit which reversed the lower court’s ruling.

 

Fair Debt Collections Practices Act And The Least Sophisticated Consumer Test

The FDCPA is a consumer protection statute which prohibits false, deceptive or unfair debt-collection practices. The FDCPA regulates debt-collectors’ conduct. Note that not all creditors are considered “debt-collectors”. The FDCPA defines a debt-collector as one who, “regularly collects . . . debts owed or due or asserted to be owed or due another.”

Congress provided consumer debtors with a private right of action to enforce the FDCPA’s prohibitions. Debt collectors who violate the FDCPA can be liable for actual damages, statutory damages up to $1,000 and reasonable attorney’s fees and costs.

Pursuant to Section 1692e of the FDCPA, “a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.”

Under Section 1692f, “a debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt.”

The FDCPA does not define “unfair” or “unconscionable”. The Eleventh Circuit has concluded that these terms are vague and ambiguous.  As a result of the ambiguity the Eleventh Circuit has adopted a “least-sophisticated consumer” standard to assess whether a debt collector’s conduct is deceptive, misleading, unconscionable or unfair. The test is not whether the particular consumer involved was deceived or mislead. Instead, the threshold is whether the “least sophisticated consumer” would have been.

Eleventh Circuit’s Analysis

The Eleventh Circuit readily concluded that LVNV maintained a practice of filing time-barred proofs of claims because, unless the debtor or trustee objects, the time-barred claim is automatically allowed under 11 U.S.C. Section 502(a)-(b) and FRBP 3001(f). This results in Chapter 13 debtors paying the debt from his or her future wages as part of the Chapter 13 repayment plan, even though the debt is time-barred and unenforceable.

The Eleventh Circuit opined that a debt-collector’s filing of a time-barred proof of claim creates a misleading impression to a bankrupt debtor that the debt collector can legally enforce the debt. On that basis, the “least sophisticated” debtor may fail to object to the claim. In considering the Bankruptcy Code’s automatic allowance provision, in a Chapter 13 case, an otherwise unenforceable and time-barred debt will be paid from the debtor’s future wages as part of the Chapter 13 repayment plan. This necessarily reduces the funds available for legitimate creditors to recover on enforceable claims. Moreover, requiring a debtor to object to time-barred claims consumes a debtor’s resources, similar to filing a limitations defense in state court.

Eleventh Circuit Holding

The Eleventh Circuit, therefore, held that under the “least sophisticated consumer standard”, LVNV’s filing of a proof of claim for a time-barred Debt was unfair, unconscionable, deceptive and misleading under Sections 1692e and 1692f of the FDCPA.

In reaching this conclusion, the Eleventh Circuit expressly avoided the pending circuit split as to whether the Bankruptcy Code preempts the FDCPA.[2] LVNV did not argue preemption. LVNV only argued that its conduct did not fall under the FDCPA, or, alternatively, did not offend the FDCPA’s prohibitions.

International Treaty Thwarts Administrative Claim

The Bankruptcy Court for the Eastern District of Pennsylvania ruled on an issue of first impression. The Bankruptcy Court held that trade creditors who supplied goods to a debtor prior to its bankruptcy filing were not entitled to administrative priority status of their claims under Bankruptcy Code Section 503(b)(9). The Court reasoned that the goods were “received by the debtor” at the time they were placed on the vessels at Chinese ports, which was more than 20 days before the debtor’s bankruptcy filing. As a result, the debts were general unsecured debts. In re World Imports, Ltd., 511 B.R. 738 (Bankr. E.D. Pa. 2014).

Under Bankruptcy Code Section 503(b)(9) trade creditors who supplied the debtor with goods during the 20-day period prior to the debtor’s bankruptcy filing have administrative priority claims. These creditors can assert an administrative claim for “the value of any goods received by the debtor within 20 days before the date of commencement of a case under this title in which the goods have been sold to the debtor in the ordinary course of such debtor’s business.”

Based on the language in Section 503(b)(9) the date in which the debtor “received” the trade creditor’s goods is imperative. If a debtor is found to have received the goods anytime outside of the 20-day prepetition period, the creditor is only entitled to collect pro rata with other general unsecured creditors.[3]

Factual And Procedural Background

In this case the goods were shipped FOB (Free On Board) to the debtor from Shanghai and Xiamen. The goods were loaded on the vessel at the port of shipment more than 20 days before the debtor’s bankruptcy filing, but the debtor took physical possession of the goods in the United States during this 20-day prepetition period.

The creditors argued before the Bankruptcy Court that, because the Bankruptcy Code does not define the word “receive,” the Court should apply the definition of the term “receipt” found in the Uniform Commercial Code (“UCC”) article regarding the sale of goods. Under the UCC, “receipt” is taking physical possession of the goods. Under this definition, the debtor would have “received” the goods within the 20-day pre-petition period and the trade creditors would have administrative priority claims for the outstanding amounts due and owing.

However, the debtor and the creditors’ committee argued that the UCC’s definition of “receipt” should not apply because the relevant law at issue was international commercial law. Under international law, in a FOB sale, the transfer of the property to the buyer occurred once the goods were put on the ship, not when the buyer subsequently took physical possession of the property. Accordingly, under this theory, the debtor would have “received” the goods when they were first put on the vessels at port in China, before the 20-day prepetition period.

Bankruptcy Court’s Holding and Analysis

The Bankruptcy Court agreed with the debtor and the creditors’ committee and concluded that the debtor “received” the goods when they were placed on the vessels in China. The Bankruptcy Court reasoned that the transactions were governed by the Convention on Contracts for the International Sale of Goods (CISG), not the UCC. Under the CISG the risk of loss or damage passes to the buyer at the time the goods are placed on the vessel at port.

Accordingly, in addressing this issue of first impression, the Bankruptcy Court held that with respect to goods shipped FOB from overseas, the date the debtor “received” the goods is the date when the goods are loaded onto the vessel at the port of shipment, not later when the debtor actually took possession of the goods.

 

[1] LVNV Funding, LLC is among a group of affiliates and defendants in the adversary proceeding referred to here as “LVNV”.

[2] See Simmons v. Roundup Funding, LLC, 622 F.3d 93, 96 (2d Cir. 2010) (bankruptcy Code preempts FDCPA); Walls v. Wells Fargo Bank, N.A. 276 F.3d 502, 510 (9th Cir. 2002) (same); Simon v. FIA Card Ser., N.A., 732 F.3d 259, 271-74 (3d Cir. 2013) (bankruptcy code does not preempt FDCPA); Randolph v. IMBS, Inc., 368 F.3d 726, 730-33 (7th Cir. 2004) (same).

[3] In re World Imports, Ltd. does not address the 45-day reclamation period under 11 U.S.C. § 546(c). However, this section is helpful for trade creditors to consider if their buyer files for bankruptcy protection. Under this section a seller may reclaim its goods from the bankruptcy debtor if: (1) the seller sold goods to the debtor in the ordinary course of the seller’s business; (2) the debtor received the goods while insolvent within 45 days before debtor’s bankruptcy case was commenced; and (3) the seller demands reclamation of the goods in writing (A) not later than 45 days after the date of the debtor received the goods or (B) not later than 20 days after the debtor’s bankruptcy was commenced, if the 45-day period expires after the debtor’s bankruptcy was commenced.

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