Author: John Pottow

  • Warren & Westbrook: Two More Authors = Six More Pages?

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    John Pottow

    WWPP Text coverA dubious ROI you might think, but the long-awaited update to the classic is now here!

    Many readers may have learned from or taught from Warren & Westbrook's casebook,  The Law of Debtors and Creditors. Necessitated by one author's distracting moonlighting in Washington, it now picks up an even stronger Credit Slips connection, transforming into Warren, Westbrook, Porter & Pottow.  The Seventh Edition is now in print and ready for use: bankruptcy nerds rejoice!

    Those of us who have used this gem for years have recognized it was getting a trifle long in the tooth (the last edition was around 2008 when BAPCPA was just a pup).  Over the course of two years, we did a complete soup-to-nuts revision of the book, keeping the problem set focus and empirical bent — and of course favorite characters from the problems. We vastly updated and overhauled some content, all within the confines of keeping the book the same length (save six pages of Pottow verbosity).  To give just a flavor, the book now has multiple assignments and problems on 363 sales and a new section on "Beyond Chapter 11," covering such topics as municipal bankruptcy and "too big to fail" financial institutions.  Consumer coverage was also revamped, moving the means test after the students have learned the basics of chapter 7 and chapter 13, and adding a new section on consumer bankruptcy theory and practice.

    In the Teacher's Manual, we worked for more clear organization to help those of us in a pinch to prep. And of course, just as students have always feared, some answers changed–even when the problems didn't. We look forward to your comments and feedback, and hope you have as much fun teaching it as we did writing it.

  • Puerto Rico To Get Chapter 9?

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    John Pottow

    Long overdue, in my opinion, HR 5305 has been introduced by Resident Commissioner Pedro Pierluisi.  The one-sentence law would allow the territory of Puerto Rico to join the definition of "State" and hence provide access to chapter 9 for its municipal and other entities.  (And no, the territory itself can't file chapter 9, so don't get your hopes up for that solution to its finances.)

    It seems archaic and patronizing not to let the people of Puerto Rico authorize (or forbid) their public entities from using chapter 9.  In terms of the policy decisions involved — some states refuse their entities to access chapter 9 — it strikes me at least as eminently more sensible to let the government of that territory make that call rather than Congress.  Here's hoping to swift passage on what should be a non-contentious error correction to the Code.

  • Forget Argentina: How Do You Collect from Russia?

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    John Pottow

    Never let it be said that the wheels of international justice spin quickly, but, with the pace of a Siberian jail sentence, the Permanent Court of Arbitration finally handed down its merits award in the Yukos litigation.  (For those of you not in the know, Yukos was dismantled by the Russian government, nominally as seizure for back taxes — some levied ex post — purportedly as an attempt to stymie the political aspirations of its principal, Mikhail Khodorkovsky.)  The decision is a doozy: a unanimous and stinging denunciation of the Russian government in this series of transactions, with such zingers as "calculated expropriation" and accusations that the governmental scheme was "devious."  The award of a cool $50 billion was far less than the plaintiffs wanted but was a record-setter for the Court.

    Russia, of course, is vowing "appeal" (not quite sure to where — strongly worded letter?), but this really means the fight now enters the collection phase.  Maybe Russia has some frigates to grab?

    Here's a link to the ruling.

  • Stern II, now time for Stern III

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    John Pottow

    Thanks to Stephen for posting the Bellingham/Arkison/Executive Benefits opinion, which I will for simplicity think of as Stern II, as it's the second installment of what will necessarily be a trilogy of Supreme Court cases on the question.  True, the bankruptcy courts live to breathe another day, but the consent question remains unanswered.  (Actually, that's not really true: the consent question was answered already in the magistrate context; the question is really whether "narrow" Stern has changed the answer.)

    When will that next case come?  Could be as early as Monday when the orders from this Thursday's conference are announced, inlcuding the Wellness petition pending from CA7.  It could be a GVR "in light of" Stern II, in which case the split remains, or it could be Stern III.  Watch this space!

  • New Law on Exemption Surcharging

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    John Pottow

    Get it?

    Anyway, Law v. Siegel is now out, with a 9-0 opinion that shouldn't surprise anyone.  It finally gave Justice Scalia a chance to write a strongly textualist bankruptcy opinion for the Court, getting him out of the gulag of concurrences and dissents.  It helped, of course, that he cited myriad other ways to punish debtors than surcharing exemptions.  He wouldn't want to be accused of going soft.

  • Detroit’s Plan Submission — Now What?

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    John Pottow

    Much excitement in our nerdly circles is arising about Detroit's plan of adjustment, just filed yesterday.  This has gotten me thinking about what's next (other than the obvious ongoing cajolling/negotiations).  Three ruminations thereon:

    1. The future: the media are focused on the haircuts the major creditors are being asked to take, which is fine, but what's more interesting to me is the capital expenditures the city proposes investing — about a billion and a hallf.  This is important, because…

    2. Feasibility.  Even if the parties don't raise it, Judge Rhodes has an obligation to gauge feasibility.  He is not going to want a chapter 18.  (Cf. Valejo.)  This means that there has to be an ongoing plan of investment, services, etc. that will attract/retain a vibrant base of taxpayers (plus such banal matters as financial transparency and accountability).  This is as important if not more important than the creditor haircuts.  But let's not forget…

    3. Pension impairnment constitutionality appeal.  CA6 just accepted the certification (but declined expedition).  Will that reignite the pension fight and distract from signing on, or did CA6's coincidental timing of its order upon plan release mean the pension funds are on board?  This is a development I can't yet gauge well.  Given CA6 earlier stalled on issuing the order (pending a mediation update), I tentatively think the non-expedited route is a plan to slow-boat this issue in the hopes a consensual plan is done and everyone can do the equitable mootness dance. 

  • Debtor Audits, RIP

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    John Pottow

    Hot of the presses that the EOUST has (again) suspended its "required" debtor audits due to budgetary constraints.  Initially they were supposed to do 1 in every 250, and that number fell in recent years to one in every 1,500 or so due to constraints, and sometimes they just run out of money toward the end of the fiscal year.  This is the most precocious suspension I'm aware of.  (But it sounds like such a great idea on paper…)

  • Who Says Earnings Management’s Just for CEOs?

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    John Pottow

    A story from the sports world.

  • Stern Warnings from the Ninth Circuit

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    John Pottow

    The Ninth Circuit handed down Executive Benefits Insurance v. Arkinson today. [I want to call it "Bellingham Insurance," or "EBIA," but I leave to the Blogosphere to decide.]  It jumped in as a circuit court opining that bankruptcy judges lack the constitutional authority to enter final judgments in fraudulent conveyance actions (yes, federal ones under section 548 of the Code) — at least as pled against "strangers" to the estate — and at least if those strangers' claims are not "inextricably intertwined" with the claims resolution process (or whatever test was gleaned from Stern).

    But before the Article I Haters Club celebrates too heartily, I should point out that the entire disquisition, illuminating as it is, is obiter dictum.  This is because the court also held the appellant waived its constitutional argument, and because a "Stern" claim is not a subject-matter jurisdiction issue, it is fully waivable (technically, "consentable" through implied consent through conduct).  Thus, the appellant waived the very objection on which the court superfluously opined.

    I don't mind dictum here and there, but it's odd that the Ninth Circuit didn't acknowledge its ruminations were such, especially when in the course of the opinion it dropped a FN to the Seventh Circuit's Ortiz opinion (with which it rightly disagreed) and reminded that that court's Stern discussion was dictum.

    Still, dictum from a circuit court will surely make others take notice, especially those under its — yes — jurisdiction.  But I do feel compelled to play the role of party-pooper and call out the court for having fun by wandering into a constitutinal quagmire and playing around as a pure academic daliance.  (Isn't that what professors are supposed to do?!)

  • Bankruptcy and Politics: Junior Senator from Massachusetts Edition

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    John Pottow

    Politics is not my strong suit — this, ironically, from the faculty sponsor of both the Democratic and Republican student associations at Michigan Law.  (No, I am not confused; I was asked presumably because each group wanted a political independent, and I don't like to play favorites.)  So I have what may be a naive but is nonetheless a genuine question regarding Senator-Elect Warren's upcoming trip to Washington: does this increase the likelihood of substantive amendment of the bankruptcy laws in the next few years?

    I'm not talking about full-throated repeal of BAPCPA or anything like that (although maybe I should?), but does having a bankruptcy expert as one senator matter?  Is it a salience focus for committees?  E.g., is it more likley we'll see home mortgage policy addressed through amendments to Chapter 13?  Does it somehow beef up the CFPB knowing they have a "champion" in the Senate?  Does it mean the venue fights will roar back to life?

    I'd be curious if those more in the know have thoughts (with apologies in advance if this is dumb/trite).