I've been meaning to post about this for awhile. In a nutshell, this lawsuit is about whether the standard NCAA scholarship which permanently assigns a player's likeness to the NCAA violates anti-trust laws. Here, here, and here are some links about it.
These past two weeks have involved a lot of driving for me, so I have racked up a lot of sports talk radio hours. For obvious reasons (namely protect their networks valuable relationships with the NCAA) the talk show hosts are being openly hostile and dismissive of any claims to pay NCAA atheletes. This post is going to briefly summarize the common lay-person objections with my response.
1. Players are paid fairly with a scholarship and associated benefits - This is missing the point. The point is the players can't negotiate. If I am Johnny Manziel, maybe I desire additional compensation beyond my athletic scholarship. However, the NCAA says I can't. Further, Johnny Football's likeness is quite a valuable asset - and forever assigning its use to the NCAA is just highway robbery (without an arms-length negotiation that is)
2. Law Students, Medical Students etc... others don't get paid while at school - That is sort of true. However, there is nothing precluding professional students from obtaining employment during school or during breaks at any compensation. And, there is no real setting limits on scholarship terms for potential law students - I imagine a law school could make a pretty sweet compensation offer to a potential student who had Supreme Court written on them, to reap the later benefits of having an alumnus on SCOTUS.
3. Without Football or March Madness Money there'd be no resources for other sports - This is really the last refuge of the damned i.e. claiming some higher purpose for something of questionable legality. The reality is that Nick Saban isn't going to assign his likeness to fund Alabama's Woman's Golf team, nor should any of his players have the profits from their likenesses be unilaterally misappropriated as well.
Whatever funding necessary for the "non-revenue" sports should come from somewhere else. It might sound callous, but that is really the only fair answer.
I like College Football a lot and have since I was a very young kid. However, I can't support a system that exploits its labor like this. The players have no right to organize, no ability to negotiate, and when they graduate (i.e. no longer obstenible amatuers) no ability to get compensated for others profiting off their likeness. So this year, I'm going to try to pay less attention, even though I probably will fail.
Sunday, August 25, 2013
Monday, July 15, 2013
Perspective
Over the last few days a client and I had a falling out over how the case should proceed, so sadly I had to tell him he needed he a new attorney. I say sadly because I had his case in good shape, and I doubt he'll find another attorney to take it over, and probably won't be able to make it pro-per.
I noticed in this particular client, his refusal to accept legal reality is he feels that certain parties (large banks) have wronged him in such a way and ruined his life, to settle with them is somehow capitulating.
In my termination email to him, I told him he still had his health and his family so he couldn't say everything was gone, but that didn't work.
This made me think of some of the horrible events of recent history some of my clients have lived through - things that can really ruin life, far worse than a foreclosure or a few crooked banks. So here are some:
-jewish clients living in Ukraine in 1941
-client who does not have a birth certificate because his village was destroyed by the French Army and later served in the South Vietnamese Army and barely made it out after we bailed in 1975
-client who lived through this in Argentina and served in this conflict
-clients who were born in Burma and are of this ethnicity;
-clients born in 1970 in this country;
There are more - my point is, it could be a lot worse.
I noticed in this particular client, his refusal to accept legal reality is he feels that certain parties (large banks) have wronged him in such a way and ruined his life, to settle with them is somehow capitulating.
In my termination email to him, I told him he still had his health and his family so he couldn't say everything was gone, but that didn't work.
This made me think of some of the horrible events of recent history some of my clients have lived through - things that can really ruin life, far worse than a foreclosure or a few crooked banks. So here are some:
-jewish clients living in Ukraine in 1941
-client who does not have a birth certificate because his village was destroyed by the French Army and later served in the South Vietnamese Army and barely made it out after we bailed in 1975
-client who lived through this in Argentina and served in this conflict
-clients who were born in Burma and are of this ethnicity;
-clients born in 1970 in this country;
There are more - my point is, it could be a lot worse.
Friday, July 12, 2013
Jurors Are Not Capable of Performing their Alleged Most Important Task - Part 1
I have a confession to make. I have never laid eyes on a jury in real life. Not as an observer, nor in practice. I've never been on a jury and probably never will be. And I don't feel like I am missing out. So the rest of what follows might all be a bunch of shit I made up...(I don't think it is)
Our legal system loves juries. There are epic poems thinly disguised as legal scholarship or judicial opinions talking about the sanctity of the jury, the province of the jury, the deference to the jury, and how amazingly awesome it is for an impartial panel of your fellow citizens to decide whether you really meant to give the car back that you drove away in or whether you really didn't see that puddle of piss that you slipped on in the Appelbees men's room.
The jury decides facts (judges decide law). During a trial (again remember I have never actually seen one) evidence is presented, lawyers argue, and then the jury has to decide what really happened and whether what really happened constitutes a crime or civil liability.
It goes without saying that prosecution and defense and plaintiff and defense have very different views as to what really happened. It could be a matter of perspective, bias, or outright lies. When there is a situation where witness A says A happened and witness B says B happened, the jury gets to determine who is telling the truth, or how as it is called in legal-speak, determine credibility.
Generally speaking, juries are neither qualified nor capable of performing this task. There are two obvious reasons for this. First, most people (or most stupid people or 95% of the people on juries) think they can perceive that someone is lying by their demeanor such as whether a person is sweating, stuttering, crying too much, not crying enough, blinking their eyes too much, shifting in their chair, speaking too softly, speaking too loudly etc...
Some of these traits might be indicative of lying. If a jury can figure it out, then those jurors should be playing professional poker (incidentally pro pokers players do not use these types of cues to determine what their opponent may hold). Therefore, unless a juror can demonstrate he or she has in fact won a large sum of money playing poker, it must be concluded said juror is unable to use these sorts of cues to determine whether one is telling the truth or not. Further, because many people think they can figure it out, there should be a jury instruction which reads:
"You and 99.9% of all humans lack the ability to observe the demeanor of a person you have never met before and determine with any sort of certainty from this whether that person is testifying truthfully. This includes **list of all conventional wisdom observations**. If you already know this, you are probably the smartest person on this jury. Please try to convince your fellows jurors of this fact. They probably won't listen because of stuff like "my ex-wife always was sweating when I asked her Jim was", but you should try."
Second is summed up in three words: Rules of Evidence. It shouldn't take fancy terms like hearsay and personal knowledge to explain why what Billy said to Jimmy which was overheard by Jimmy Lee who then testified that Billy had seen some guy who sort of looked like the defendant steal the missionaries bicycle for one to realize this type of evidence is really useless.
Nor should it take much thought for someone to determine that it isn't science when a witness is paid by that party to perform an experiment where the answer is pre-determined.
The whole point of the rules of evidence is to keep information away from people who are too dumb to figure out the obvious.
But, Matt, this is a panel of your peers, an impartial group of people just like you - they'll get justice for you.....next part will talk about this.
Our legal system loves juries. There are epic poems thinly disguised as legal scholarship or judicial opinions talking about the sanctity of the jury, the province of the jury, the deference to the jury, and how amazingly awesome it is for an impartial panel of your fellow citizens to decide whether you really meant to give the car back that you drove away in or whether you really didn't see that puddle of piss that you slipped on in the Appelbees men's room.
The jury decides facts (judges decide law). During a trial (again remember I have never actually seen one) evidence is presented, lawyers argue, and then the jury has to decide what really happened and whether what really happened constitutes a crime or civil liability.
It goes without saying that prosecution and defense and plaintiff and defense have very different views as to what really happened. It could be a matter of perspective, bias, or outright lies. When there is a situation where witness A says A happened and witness B says B happened, the jury gets to determine who is telling the truth, or how as it is called in legal-speak, determine credibility.
Generally speaking, juries are neither qualified nor capable of performing this task. There are two obvious reasons for this. First, most people (or most stupid people or 95% of the people on juries) think they can perceive that someone is lying by their demeanor such as whether a person is sweating, stuttering, crying too much, not crying enough, blinking their eyes too much, shifting in their chair, speaking too softly, speaking too loudly etc...
Some of these traits might be indicative of lying. If a jury can figure it out, then those jurors should be playing professional poker (incidentally pro pokers players do not use these types of cues to determine what their opponent may hold). Therefore, unless a juror can demonstrate he or she has in fact won a large sum of money playing poker, it must be concluded said juror is unable to use these sorts of cues to determine whether one is telling the truth or not. Further, because many people think they can figure it out, there should be a jury instruction which reads:
"You and 99.9% of all humans lack the ability to observe the demeanor of a person you have never met before and determine with any sort of certainty from this whether that person is testifying truthfully. This includes **list of all conventional wisdom observations**. If you already know this, you are probably the smartest person on this jury. Please try to convince your fellows jurors of this fact. They probably won't listen because of stuff like "my ex-wife always was sweating when I asked her Jim was", but you should try."
Second is summed up in three words: Rules of Evidence. It shouldn't take fancy terms like hearsay and personal knowledge to explain why what Billy said to Jimmy which was overheard by Jimmy Lee who then testified that Billy had seen some guy who sort of looked like the defendant steal the missionaries bicycle for one to realize this type of evidence is really useless.
Nor should it take much thought for someone to determine that it isn't science when a witness is paid by that party to perform an experiment where the answer is pre-determined.
The whole point of the rules of evidence is to keep information away from people who are too dumb to figure out the obvious.
But, Matt, this is a panel of your peers, an impartial group of people just like you - they'll get justice for you.....next part will talk about this.
Wednesday, June 26, 2013
Thoughts on Windsor and Hollingsworth
I believe that the Defense of Marriage Act ("DOMA") and California Proposition 8 are wrong. I would never vote or support either.
However, upon further reflection I think it is very bad policy to let the Supreme Court be the final arbiter of this. Here is how I view it:
To pass any law it requires both the Senate and House to approve it. The House is highly gerrymandered and the Senate is probably the most undemocratic body in "democracy". Each state gets 2 senators regardless of size AND because of the fillibuster often requires 60 votes. Then the President has to sign on.
If someone out there thinks the law is unconstitutional, that person can file an action in federal court arguing as such. At that point, one judge rules however he or she sees fit. Then it can be appealed when a panel of 3 judges decides one way or the other. Then, it can be appealed to the Supreme Court where 9 judges get to decide. By the way, all the judges are attorneys probably from about 10 different law schools and probably have very limited at best experience outside the theoretical aspects of law (academia, appellate work).
My point is this isn't democracy. The decisions are all made by a few people not representative of the country as a whole. If the Supreme Court was some sort of non-partisan, highly intellectual body of scholars who neutrally evaluated things, it might be different. But that is the exact opposite of what the Supreme Court is. The Supreme Court is just another political body cloaked as some sort of guardian of te constituion.
The Hollingsworth holding is a classic example. The "standing" argument is garbage. The court wanted to rule in a way that wouldn't create outrage. The easiest way to do that was to dismiss the appeal - same-sex marriage in California is not a controversial issue anymore - Prop 8 would be repealed by wide margins if voted on, so allowing same-sex marriage to remain legal in California offends no one. Therefore, it is an obvious political opinion, all the intellectual stuff about "standing", "cases and controversys" and "injury" are words lawyers use when they trying sound smart, but really are terms for "we do not want to decide this".
I think judicial review has had its day and it is time for it to go - but that won't be possible until we actually have a democracy, not some system where 500,000 people in North Dakota have the same say as 40 million in California.
However, upon further reflection I think it is very bad policy to let the Supreme Court be the final arbiter of this. Here is how I view it:
To pass any law it requires both the Senate and House to approve it. The House is highly gerrymandered and the Senate is probably the most undemocratic body in "democracy". Each state gets 2 senators regardless of size AND because of the fillibuster often requires 60 votes. Then the President has to sign on.
If someone out there thinks the law is unconstitutional, that person can file an action in federal court arguing as such. At that point, one judge rules however he or she sees fit. Then it can be appealed when a panel of 3 judges decides one way or the other. Then, it can be appealed to the Supreme Court where 9 judges get to decide. By the way, all the judges are attorneys probably from about 10 different law schools and probably have very limited at best experience outside the theoretical aspects of law (academia, appellate work).
My point is this isn't democracy. The decisions are all made by a few people not representative of the country as a whole. If the Supreme Court was some sort of non-partisan, highly intellectual body of scholars who neutrally evaluated things, it might be different. But that is the exact opposite of what the Supreme Court is. The Supreme Court is just another political body cloaked as some sort of guardian of te constituion.
The Hollingsworth holding is a classic example. The "standing" argument is garbage. The court wanted to rule in a way that wouldn't create outrage. The easiest way to do that was to dismiss the appeal - same-sex marriage in California is not a controversial issue anymore - Prop 8 would be repealed by wide margins if voted on, so allowing same-sex marriage to remain legal in California offends no one. Therefore, it is an obvious political opinion, all the intellectual stuff about "standing", "cases and controversys" and "injury" are words lawyers use when they trying sound smart, but really are terms for "we do not want to decide this".
I think judicial review has had its day and it is time for it to go - but that won't be possible until we actually have a democracy, not some system where 500,000 people in North Dakota have the same say as 40 million in California.
Tuesday, June 11, 2013
Attorneys are too Serious Part III
Not to needless belabor my point, but take a look on my facebook page as to what my law offices mission is. What do you think when read that? If you think it is inappropriate, unprofessional, or the like, you are too serious.
When we are doing whatever it is we do, especially in bankruptcy, nobody dies. I can understand the gravity in criminal law, but in bankruptcy? Come on. Get a grip.
Have fun. Try to put witty stuff in your pleadings / correspondence as necessary. I for one would rather read clever analogies about how shitty my case is. For example:
Serious Attorney: "your case is wholly without merit and is frivilous. My client will be seeking attorneys from you and your client if blah blah isn't done"
Witty Attorney: "your case makes about as much sense as a football bat"
What is more effective?
Serious Attorney, when addressing court: "good morning your honor, Clarence Darrow on behalf of the Debtor"
Less Serious Attorney: Good Morning your honor, I'd like to wish everyone a happy X day. I always try to mention significant days in history as they apply - I've been able to work in Pearl Harbor Day, April Fools Day, D-day, Bastille Day and countless others. No idea why I do this, but for me it loosens me up. Plus a lot of these are important for us to remember.
Anyway, I hope I've made my point and I will stop ranting. Colleagues, I implore you loosen up and relax. It isn't that bad. I'll meet you in the middle - I'll gladly accept your attached correspondence as long as it doesn't come from a secretary.
Finally, be yourself. I'm sure some people are naturally pensive types of people, but I know many are not. As I mentioned in the beginning, I am different than most, I learned at a young age my round peg wasn't fitting in the square hole, so I stopped trying and found life much more easier.
When we are doing whatever it is we do, especially in bankruptcy, nobody dies. I can understand the gravity in criminal law, but in bankruptcy? Come on. Get a grip.
Have fun. Try to put witty stuff in your pleadings / correspondence as necessary. I for one would rather read clever analogies about how shitty my case is. For example:
Serious Attorney: "your case is wholly without merit and is frivilous. My client will be seeking attorneys from you and your client if blah blah isn't done"
Witty Attorney: "your case makes about as much sense as a football bat"
What is more effective?
Serious Attorney, when addressing court: "good morning your honor, Clarence Darrow on behalf of the Debtor"
Less Serious Attorney: Good Morning your honor, I'd like to wish everyone a happy X day. I always try to mention significant days in history as they apply - I've been able to work in Pearl Harbor Day, April Fools Day, D-day, Bastille Day and countless others. No idea why I do this, but for me it loosens me up. Plus a lot of these are important for us to remember.
Anyway, I hope I've made my point and I will stop ranting. Colleagues, I implore you loosen up and relax. It isn't that bad. I'll meet you in the middle - I'll gladly accept your attached correspondence as long as it doesn't come from a secretary.
Finally, be yourself. I'm sure some people are naturally pensive types of people, but I know many are not. As I mentioned in the beginning, I am different than most, I learned at a young age my round peg wasn't fitting in the square hole, so I stopped trying and found life much more easier.
Attorneys are too Serious Part II
A lot of attorneys think they are tough guys, especially when dealing with younger attorneys. Some things tough attorneys do to is younger attorneys is sound serious and try to imply fuck around time is over. Examples of this -
1. Referring to opposing counsel in correspondence as "Mr. Faler"
My Response: Judges call me Mr., and to everyone else I am Matt. (not entirely true, many of my friends call me by a few nicknames, but I do not use them professionally).
2. Sending Letters on Fancy Stationary
My Response: We scan everything, so I will be reading your letter on pdf regardless of the cotton stock.
3. Attaching a Signed Letter to an Email
My Response: This drives me nuts. I can literally remember the last time I did this (ironically trying to sound like a hard-ass to a client who hasn't paid his bill yet). Before that, I cannot recall. I've heard a bunch of reasons for it, but all of them suck. If you want to communicate to me something in writing, write an email, put my email address in the send block, and press send. It is that simple. The attachment part does not make me read it more attentively, think fuck around time is over, or think wow, so and so must really have the goods on me / my client, so I'd better acquiesce to all their unreasonable demands on the spot. I have largely instituted a new rule: opposing counsel gets one email letter attachment, before they get the "I will delete any correspondence attached to an email" schtick. And I will do it.
4. Sending a Signed Letter in an Email from a Secretary
My Response: This is not acceptable to me in any way, shape or form. I by the very nature of my practice am the lead attorney on my cases. Therefore, I communicate with attorneys only. Secretaries, paralegals (with a few exceptions usually for trustee personnel) do not send me anything, or more specifically, secretaries who send me attached correspondence drafted by themselves or their superiors will find it deleted and a response sent to the attorney stating as such. This is done because opposing counsel is trying to show me they are so busy that they can't bother to send an email. And I delete it because I am too busy to open correspondence from non-attorneys.
5. Threatening Sanctions
My Response: This is my favorite. "if you don't do XYZ, I am going to seek sanctions pursuant to whatever section and blah blah blah". I really love the bolding. In fact I love all correspondence and pleadings with bolded and italicized parts, it really makes understand how grave the matter at hand is. Whenever this happens, I always give the same short but LEGALLY CORRECT RESPONSE and this whether it be Cal Civ Pro, FRCP, or FRBP before any motion for sanctions is filed, the moving party must serve the motion on the responding party giving said party an oppurtunity to withdraw the offending pleading. Therefore my brief responses is "I'll look forward to reading your motion, and then using my safe harbor period to determine what I will do". To date in 7 seven years of practice I have yet to have a sanctions motion filed against me, nor even one served on me. (I have gotten sanctioned for stupid shit like missing a hearing and not filing status reports, but those occurences are solely my fault).
6. Using Some Sort of Stupid Term like "considered you and your client warned" ; "govern yourself accordingly" ; "all legally available remedies under all applicable laws"
My Responses: LOL. Do what you need to do dude, but if you are trying to show me how serious you are try something else, because stuff like this makes me laugh.
Anyway, it is my belief attorneys do and use the above actions to show how serious they are. I can't speak for others, but I'm fairly positive my reactions and/or opinions of all of the above are in the minority to some degree.
For informations sake I would handle the above situations as follows:
1. I call people by their first name or any other name that they request. I use titles for military ranks, doctors, dentists, academics, judges and maybe certain older people. If you want to be called Mr., too bad.
2. I don't send letters by snail mail
3. I do not do this
4. I would never order a secretary to do this, because I consider this action to be beyond disrespectful.
5. I don't threaten, if I'm going to do something, I'll do it. I think I may have served one sanctions motion in 7 years and I believe the issue was resolved without anything being filed.
6. I usually just say what I am going to do i.e. file xyz motion seeking xyz relief on xyz day.
Now that we have covered, some things I think attorneys do to sound serious, I'm going to mention some things I think serious attorneys should do, to like loosen up and enjoy life more.
1. Referring to opposing counsel in correspondence as "Mr. Faler"
My Response: Judges call me Mr., and to everyone else I am Matt. (not entirely true, many of my friends call me by a few nicknames, but I do not use them professionally).
2. Sending Letters on Fancy Stationary
My Response: We scan everything, so I will be reading your letter on pdf regardless of the cotton stock.
3. Attaching a Signed Letter to an Email
My Response: This drives me nuts. I can literally remember the last time I did this (ironically trying to sound like a hard-ass to a client who hasn't paid his bill yet). Before that, I cannot recall. I've heard a bunch of reasons for it, but all of them suck. If you want to communicate to me something in writing, write an email, put my email address in the send block, and press send. It is that simple. The attachment part does not make me read it more attentively, think fuck around time is over, or think wow, so and so must really have the goods on me / my client, so I'd better acquiesce to all their unreasonable demands on the spot. I have largely instituted a new rule: opposing counsel gets one email letter attachment, before they get the "I will delete any correspondence attached to an email" schtick. And I will do it.
4. Sending a Signed Letter in an Email from a Secretary
My Response: This is not acceptable to me in any way, shape or form. I by the very nature of my practice am the lead attorney on my cases. Therefore, I communicate with attorneys only. Secretaries, paralegals (with a few exceptions usually for trustee personnel) do not send me anything, or more specifically, secretaries who send me attached correspondence drafted by themselves or their superiors will find it deleted and a response sent to the attorney stating as such. This is done because opposing counsel is trying to show me they are so busy that they can't bother to send an email. And I delete it because I am too busy to open correspondence from non-attorneys.
5. Threatening Sanctions
My Response: This is my favorite. "if you don't do XYZ, I am going to seek sanctions pursuant to whatever section and blah blah blah". I really love the bolding. In fact I love all correspondence and pleadings with bolded and italicized parts, it really makes understand how grave the matter at hand is. Whenever this happens, I always give the same short but LEGALLY CORRECT RESPONSE and this whether it be Cal Civ Pro, FRCP, or FRBP before any motion for sanctions is filed, the moving party must serve the motion on the responding party giving said party an oppurtunity to withdraw the offending pleading. Therefore my brief responses is "I'll look forward to reading your motion, and then using my safe harbor period to determine what I will do". To date in 7 seven years of practice I have yet to have a sanctions motion filed against me, nor even one served on me. (I have gotten sanctioned for stupid shit like missing a hearing and not filing status reports, but those occurences are solely my fault).
6. Using Some Sort of Stupid Term like "considered you and your client warned" ; "govern yourself accordingly" ; "all legally available remedies under all applicable laws"
My Responses: LOL. Do what you need to do dude, but if you are trying to show me how serious you are try something else, because stuff like this makes me laugh.
Anyway, it is my belief attorneys do and use the above actions to show how serious they are. I can't speak for others, but I'm fairly positive my reactions and/or opinions of all of the above are in the minority to some degree.
For informations sake I would handle the above situations as follows:
1. I call people by their first name or any other name that they request. I use titles for military ranks, doctors, dentists, academics, judges and maybe certain older people. If you want to be called Mr., too bad.
2. I don't send letters by snail mail
3. I do not do this
4. I would never order a secretary to do this, because I consider this action to be beyond disrespectful.
5. I don't threaten, if I'm going to do something, I'll do it. I think I may have served one sanctions motion in 7 years and I believe the issue was resolved without anything being filed.
6. I usually just say what I am going to do i.e. file xyz motion seeking xyz relief on xyz day.
Now that we have covered, some things I think attorneys do to sound serious, I'm going to mention some things I think serious attorneys should do, to like loosen up and enjoy life more.
Attorneys are too Serious Part I
First, a little background on why I believe the title of this post is true. I was once asked (nevermind whom) what feeling I have felt or most strongly felt my entire life. This was an easy question. The answer is : different. Not different good, not different bad, just different. Specifically, as far back as I can remember I have looked at the world in ways that are different from most. I call this vision, others call it eccentric, some insanity, a few charismatic (I like these people a lot), and far too many call it bullshit.
Anyway, virtually everytime I pursue a new endeavor, I quickly realize that I'm likely thinking about things for the most part outside the norm. A good example was law school. I started law school at age 27, about a year after I left the Army. I hadn't been in a classroom (Field Artillery OBC excluded) in 5 years. I really didn't know much about the law. I had no idea was law review, moot court, inns of court (still don't know what this is) and/or mock trial were. I certainly didn't know that the preceeding what were all the smarts kids did.
I remember one of the big fears first year was getting "called on" by the Professor and asked questions you clearly couldn't possibly answer. I'll admit this was a little unsettling to me, but it didn't really inspire me to study more or less than I already did - I mean I did my best to learn the material but if I didn't get it or whatever and I got called on, so what? What was the worst that could happen? Probably look stupid. I think this bothered many people a lot more than me.
Same thing will finals. It was a little stressful, I suppose, but again all I can really do is my best. If I get a shitty grade so what? I figure if I learned something than I can't complain too much. Now, I can say this is decidedly a very, very minority attitude in law school.
Most people care a lot about their grades. This is because good grades get you good jobs (see large firms, clerkships) or more appropriately good grades plus "activities" get you good jobs. I had no idea about this, I figured with an accounting degree, four years of service as an Army officer, and decent grades, that'd be all I needed. And seriously, while I didnt get straight A's (B+, I looked at my transcripts to verify) nor did I participate in any activity not involving softball or beer, I felt like I learned the material pretty well. And at the end of the day, I was ok with that.
I think the broader point here is I didn't take law school seriously, or more specifically, I didn't take it seriously enough. Or perhaps it is better phrased, my level of outward seriousness towards law school was much less than the average level of seriousness of my fellow students.
Sadly, this concept of "serious-ness" carries over to practice. Part II will discuss my observations on practice.
Anyway, virtually everytime I pursue a new endeavor, I quickly realize that I'm likely thinking about things for the most part outside the norm. A good example was law school. I started law school at age 27, about a year after I left the Army. I hadn't been in a classroom (Field Artillery OBC excluded) in 5 years. I really didn't know much about the law. I had no idea was law review, moot court, inns of court (still don't know what this is) and/or mock trial were. I certainly didn't know that the preceeding what were all the smarts kids did.
I remember one of the big fears first year was getting "called on" by the Professor and asked questions you clearly couldn't possibly answer. I'll admit this was a little unsettling to me, but it didn't really inspire me to study more or less than I already did - I mean I did my best to learn the material but if I didn't get it or whatever and I got called on, so what? What was the worst that could happen? Probably look stupid. I think this bothered many people a lot more than me.
Same thing will finals. It was a little stressful, I suppose, but again all I can really do is my best. If I get a shitty grade so what? I figure if I learned something than I can't complain too much. Now, I can say this is decidedly a very, very minority attitude in law school.
Most people care a lot about their grades. This is because good grades get you good jobs (see large firms, clerkships) or more appropriately good grades plus "activities" get you good jobs. I had no idea about this, I figured with an accounting degree, four years of service as an Army officer, and decent grades, that'd be all I needed. And seriously, while I didnt get straight A's (B+, I looked at my transcripts to verify) nor did I participate in any activity not involving softball or beer, I felt like I learned the material pretty well. And at the end of the day, I was ok with that.
I think the broader point here is I didn't take law school seriously, or more specifically, I didn't take it seriously enough. Or perhaps it is better phrased, my level of outward seriousness towards law school was much less than the average level of seriousness of my fellow students.
Sadly, this concept of "serious-ness" carries over to practice. Part II will discuss my observations on practice.
Unexplained Hiatus
This appears to be my first blog post in about a month. I always have a lot to say, so I can't blame writers block. Perhaps it was a combination of playing an excessive amount of poker, busy-ish work schedule, and perhaps a tad of pre-occupation with impending fatherhood.
Whatever the reason is, I'm back. I suppose the big news (besides becoming a father) is that I have created a Law Offices of Matthew Faler facebook page. Much like Linkedin, I am not sure what the protocol is for putting stuff on it is I can say with certainty that whatever the protocol is, I will definitely ignore it, because, well that is the way I do things.
Here is the linkedin profile and here is my Law Office facebook page. Feel free to comment.
The other less than big news is all the in progress series are going to be temporarily halted, because honestly I don't know where I left off. But I will try to pick them back up as time allows.
Even lesser news than the previous comment, is I have drafted two fresh off the presses blog posts which I'm just dying to cut from word and into the blogosphere.
I am going to finish them up now.
Whatever the reason is, I'm back. I suppose the big news (besides becoming a father) is that I have created a Law Offices of Matthew Faler facebook page. Much like Linkedin, I am not sure what the protocol is for putting stuff on it is I can say with certainty that whatever the protocol is, I will definitely ignore it, because, well that is the way I do things.
Here is the linkedin profile and here is my Law Office facebook page. Feel free to comment.
The other less than big news is all the in progress series are going to be temporarily halted, because honestly I don't know where I left off. But I will try to pick them back up as time allows.
Even lesser news than the previous comment, is I have drafted two fresh off the presses blog posts which I'm just dying to cut from word and into the blogosphere.
I am going to finish them up now.
Friday, May 10, 2013
Seattle v Sacramento - My Legal Take Part 1 - The Introduction
The NBA is not my favorite sport. In no particular order, I prefer the following sporting events to the NBA - MLB, NFL, Golf Majors, College Football, International Football (soccer), Association Football (soocer), the Olympics (both Winter and Summer), Tennis Majors, March Madness, and NCAA La Crosse. Just kidding on last one.
Even in my teens, when the Sonics were good and the Mariners and Seahawks sucked (See 1992 Seahawks Team for a laugh), I was more into the Mariners and Seahawks. It isn't like I am unfamilar with Derek McKey and Michael Cage, but I could rattle off a long list of Seattle athletes I like better than Gary Payton, Shawn Kemp, and Jim McIlvane.
As to why I do not like the NBA that is another story for another day, needless to say whether the Sonics return to Seattle or not isn't really something I am all jazzed about (For the record, 10 years in SoCal and I'm not about the Lakers and Clippers). Honestly, I do not care that much.
The Seattle ownership group has offered a ridiculous amount of money to the Maloof family. In a perfect market, the Maloofs would sell the team in a heartbeat for this amount of money. It is literally a deal they cannot refuse. Further, and unless the Sacramento group matches the offer all the other league owners benefit. If a team in Seattle is worth $625 million, a team in Los Angeles, even a shitty one like the Clippers is worth at least $1 billion. (I shudder to think what the Yankees or Cowboys would be worth in this market). In essence this offer probably makes every other ownership group in the United States and Canada wealthier.
So this begs the question as to why the NBA would block a sale which makes them wealthier in an instant? I do not know the answer. One possible answer is the NBA is creating a bidding war, hoping the offers will get higher and higher, perhaps increasing the value of their teams even more. I think that the former is a side benefit. The real answer is control.
Unlike most businesses, an owner of a North American sports franchise cannot move the team unilaterally. The players they employ are acquired via a draft. They monopolize the venues they play in (and don't pay for). An owner cannot sell a franchise to whoever they want. And even better, these leagues have largely figured out how to have our Universities pick up the tab for player development (mainly football, but all sports draft a lot of college player - this is completely unheard of in Europe in all sports).
One doesn't need to be on Harvard Law Review (University of San Diego, non law review is sufficient) to figure out this seems like an anti-trust problem.
Wow, that was a long introduction, but I'm going to try to make some legal sense of the whole situation in a few parts. Our discourse is sports law starts over 90 years ago in a Supreme Court opninion by the great Oliver Wendell Holmes. It is probably the worst SCOTUS opinion this side of Dred Scott and Plessy v. Ferguson.
The opinion is Federal Baseball Club of Baltimore v. National of Professional Baseball Clubs et. al.
The jist of the opinion was professional baseball was not interstate commerce so it was exempt from anti-trust laws. In 1919 (three years before this opinion), there was an famous "trade" of a certain player between a team in New York and a team in Massachusetts. This sale was for $125,000, not even chump change now, let alone in 1919. And at that time, teams played against each other against teams in other states, and even played in something called the World Series. The players got paid. The Philadelphia A's won three World Series between 1910-1914. However, their owner the immortal Connie Mack decided his players were too expensive, and decided to re-build with a younger team. Does that sound familar? Marlins fans can take solace that Mack after 15 years built another dynasty and the A's appeared in consecutively in the 1929, 1930, and 1931 World Series winning it twice.
Long story short - Professional sports is interstate commerce.
Next, we are going to skip ahead a few years to Jim McIlvane's best friend, free agency.
Even in my teens, when the Sonics were good and the Mariners and Seahawks sucked (See 1992 Seahawks Team for a laugh), I was more into the Mariners and Seahawks. It isn't like I am unfamilar with Derek McKey and Michael Cage, but I could rattle off a long list of Seattle athletes I like better than Gary Payton, Shawn Kemp, and Jim McIlvane.
As to why I do not like the NBA that is another story for another day, needless to say whether the Sonics return to Seattle or not isn't really something I am all jazzed about (For the record, 10 years in SoCal and I'm not about the Lakers and Clippers). Honestly, I do not care that much.
The Seattle ownership group has offered a ridiculous amount of money to the Maloof family. In a perfect market, the Maloofs would sell the team in a heartbeat for this amount of money. It is literally a deal they cannot refuse. Further, and unless the Sacramento group matches the offer all the other league owners benefit. If a team in Seattle is worth $625 million, a team in Los Angeles, even a shitty one like the Clippers is worth at least $1 billion. (I shudder to think what the Yankees or Cowboys would be worth in this market). In essence this offer probably makes every other ownership group in the United States and Canada wealthier.
So this begs the question as to why the NBA would block a sale which makes them wealthier in an instant? I do not know the answer. One possible answer is the NBA is creating a bidding war, hoping the offers will get higher and higher, perhaps increasing the value of their teams even more. I think that the former is a side benefit. The real answer is control.
Unlike most businesses, an owner of a North American sports franchise cannot move the team unilaterally. The players they employ are acquired via a draft. They monopolize the venues they play in (and don't pay for). An owner cannot sell a franchise to whoever they want. And even better, these leagues have largely figured out how to have our Universities pick up the tab for player development (mainly football, but all sports draft a lot of college player - this is completely unheard of in Europe in all sports).
One doesn't need to be on Harvard Law Review (University of San Diego, non law review is sufficient) to figure out this seems like an anti-trust problem.
Wow, that was a long introduction, but I'm going to try to make some legal sense of the whole situation in a few parts. Our discourse is sports law starts over 90 years ago in a Supreme Court opninion by the great Oliver Wendell Holmes. It is probably the worst SCOTUS opinion this side of Dred Scott and Plessy v. Ferguson.
The opinion is Federal Baseball Club of Baltimore v. National of Professional Baseball Clubs et. al.
The jist of the opinion was professional baseball was not interstate commerce so it was exempt from anti-trust laws. In 1919 (three years before this opinion), there was an famous "trade" of a certain player between a team in New York and a team in Massachusetts. This sale was for $125,000, not even chump change now, let alone in 1919. And at that time, teams played against each other against teams in other states, and even played in something called the World Series. The players got paid. The Philadelphia A's won three World Series between 1910-1914. However, their owner the immortal Connie Mack decided his players were too expensive, and decided to re-build with a younger team. Does that sound familar? Marlins fans can take solace that Mack after 15 years built another dynasty and the A's appeared in consecutively in the 1929, 1930, and 1931 World Series winning it twice.
Long story short - Professional sports is interstate commerce.
Next, we are going to skip ahead a few years to Jim McIlvane's best friend, free agency.
Thursday, May 2, 2013
May 1, 2013 - Killers Concert Review
I've been a Killers fan since their debut in 2005, however until last night I had not seen them live in concert. Perhaps the most bizarre part of the concert, was when I was walking in, they had just taken the stage and were playing "Mr. Brightside" as their first song with the lights on. Never seen that before.
After that, the lights went down as is normal and the show proceeded. The band sounded great all across the board - They played with a lot of energy, and I was very impressed with Bradon Flowers stage presence, he was able to keep the crowd engaged and really seemed to enjoy performing and not there just to cash his quite large paycheck.
The set list had 19 songs. The inclusion of "Jenny was a Friend of Mine" as the first encore was a pleasant surprise. I was sort of expecting "All these Things That I've Done" to be an encore (it was the last song of the main set) largely because it has an "encore-ish" feel to it - I can't really explain what an "encore-ish" feel is except to analogize to my many Depeche Mode concerts.
To the best of my knowledge "Everything Counts" has been the final encore for the vast majority of Depeche Mode concerts since the Music for the Masses tour. While it is a great song, it doesn't crack my top ten list of any DM song list, perhaps not even top 20. It does however have sort of an "epic" (maybe the more appropriate musical term is anthemic) feel both in its pace, arrangement and lyrics. The chorus especially is great to sing a long to. So I think it makes sense to end a concert with an energetic song like that, where the entire crowd can sing "The grabbing hands, grab all they can, all for themselves afterall, Everything Counts in Large Amounts......" And since they have been doing it for so long, it is pretty much expected by the fan base (Cure is similar with the Forest, though I would not categorize the Forest as anthemic).
"All These Things....." has they same sort of feel in its pace, arrangement and lyrics - And almost anyone remotely familar with pop music over the past 10 years can sing "I've got soul, but I'm not a Soldier...." Perhaps, the Killers plan their set list to be a little unexecpted like that and if so, good for them, it is always good to mix up the songs a bit - though in my opinion, I do not really like a slow paced song to end a show, I like to go out with a bang.
Anyhow, I'd have like to seen "Sam's Town" included in the set list, I think it is one of their very best songs, and would play very well live. I perused their most recent set lists from previous shows and they appear to have played it a few times on this tour - perhaps next time. Also, it appears they have been mixing in a cover song or two per show - at this concert, it was "I Think We Are Alone Now" - Props to shopping malls and Tiffany. I liked it.
All in all very good show and I look forward to seeing the Killers in concert next go around - only slight negative is that when the songs from the new album are played alongside the past songs, it is pretty obvious that Battle Born is inferior to their previous efforts, so hopefully this is just a result of the obvious fact that it can be difficult to make every album excellent.
After that, the lights went down as is normal and the show proceeded. The band sounded great all across the board - They played with a lot of energy, and I was very impressed with Bradon Flowers stage presence, he was able to keep the crowd engaged and really seemed to enjoy performing and not there just to cash his quite large paycheck.
The set list had 19 songs. The inclusion of "Jenny was a Friend of Mine" as the first encore was a pleasant surprise. I was sort of expecting "All these Things That I've Done" to be an encore (it was the last song of the main set) largely because it has an "encore-ish" feel to it - I can't really explain what an "encore-ish" feel is except to analogize to my many Depeche Mode concerts.
To the best of my knowledge "Everything Counts" has been the final encore for the vast majority of Depeche Mode concerts since the Music for the Masses tour. While it is a great song, it doesn't crack my top ten list of any DM song list, perhaps not even top 20. It does however have sort of an "epic" (maybe the more appropriate musical term is anthemic) feel both in its pace, arrangement and lyrics. The chorus especially is great to sing a long to. So I think it makes sense to end a concert with an energetic song like that, where the entire crowd can sing "The grabbing hands, grab all they can, all for themselves afterall, Everything Counts in Large Amounts......" And since they have been doing it for so long, it is pretty much expected by the fan base (Cure is similar with the Forest, though I would not categorize the Forest as anthemic).
"All These Things....." has they same sort of feel in its pace, arrangement and lyrics - And almost anyone remotely familar with pop music over the past 10 years can sing "I've got soul, but I'm not a Soldier...." Perhaps, the Killers plan their set list to be a little unexecpted like that and if so, good for them, it is always good to mix up the songs a bit - though in my opinion, I do not really like a slow paced song to end a show, I like to go out with a bang.
Anyhow, I'd have like to seen "Sam's Town" included in the set list, I think it is one of their very best songs, and would play very well live. I perused their most recent set lists from previous shows and they appear to have played it a few times on this tour - perhaps next time. Also, it appears they have been mixing in a cover song or two per show - at this concert, it was "I Think We Are Alone Now" - Props to shopping malls and Tiffany. I liked it.
All in all very good show and I look forward to seeing the Killers in concert next go around - only slight negative is that when the songs from the new album are played alongside the past songs, it is pretty obvious that Battle Born is inferior to their previous efforts, so hopefully this is just a result of the obvious fact that it can be difficult to make every album excellent.
Tuesday, April 23, 2013
Sort of Simple Pleasures or Let me see you Stripped.......
Today, I teetered on having a meltdown for reasons that aren't relevant here. Thankfully, I avoided it. I really wanted to say "THIS IS WHY CHAPTER 13 FUCKING SUCKS", but I pulled myself back from the cliff.
Anyway, sometimes people like me (see title of blog) need some techniques to get a grip. Or methods to keep me from saying "Fuck you very much, your honor".
What I try to do is think about things I enjoy and things I look forward to and wouldn't want to jeopardize with a trip to the US Marshal holding pen at the Ronald Reagan Building in Santa Ana.
So in general I try to think / do some of the following:
Listen to music I like specifically - Depeche Mode Some Great Reward through Violator with two songs from Playing the Angel.
Read certain magazines I like - Harpers, Discover, and Scientific America
Read About the 2013 Seahawks Seasons - this is very exciting and always makes me feel better!
Think back to when the Huskies won a national title, and the Mariners were relevant, usually with some help from youtube to remind me, it was actually real and not some random altered memory.
Surf Wikipedia Endlessly about random people and random stuff from history.
Anyway, those are my "simple pleasures" to the extent there is anything simple about it. And for what it is worth, I am listening to this and reading about this guy. And I feel much more relaxed...thankfully
Anyway, sometimes people like me (see title of blog) need some techniques to get a grip. Or methods to keep me from saying "Fuck you very much, your honor".
What I try to do is think about things I enjoy and things I look forward to and wouldn't want to jeopardize with a trip to the US Marshal holding pen at the Ronald Reagan Building in Santa Ana.
So in general I try to think / do some of the following:
Listen to music I like specifically - Depeche Mode Some Great Reward through Violator with two songs from Playing the Angel.
Read certain magazines I like - Harpers, Discover, and Scientific America
Read About the 2013 Seahawks Seasons - this is very exciting and always makes me feel better!
Think back to when the Huskies won a national title, and the Mariners were relevant, usually with some help from youtube to remind me, it was actually real and not some random altered memory.
Surf Wikipedia Endlessly about random people and random stuff from history.
Anyway, those are my "simple pleasures" to the extent there is anything simple about it. And for what it is worth, I am listening to this and reading about this guy. And I feel much more relaxed...thankfully
Monday, April 22, 2013
Insomnia Inspired Irritability
I titled this post more to show off my kickass alliteration skills - thank you Mr. Marchbank. Well actually, it is sort of descriptive. A bit. I am having trouble sleeping, I feel inspired, and I am a bit cranky, so go figure.
Anyway, my small, growing and loyal readership has demands of my posts making some sort of point, god forbid they find another blog to read. The last few posts have alternated between bankruptcy law stuff and another series I am trying to start about teachers. I haven't had a chance to get to teachers yet (aside from a reference in this post)..
The origin of the name is that the majority of the world is different than me - they are not bipolar. This isn't really suprising to anyone. So the basic point of the name is to emphasize I am and feel different than most people of the world.
The primary point of the name is pride (in the name of love). It is a misconception that we bipolar people have a disability (legally bipolar is disability, but I'm not making a legal argument). We are just different. I am not going to sit in the psychiatric closet (second place was going to the back of the psychiatric bus).
Therefore, the point of the name is to express to the world I am not ashamed of my condition. In fact I embrace it. Before you say "surely you can't be serious", I say - "check out this list, and don't call me Shirley.
Anyway, my small, growing and loyal readership has demands of my posts making some sort of point, god forbid they find another blog to read. The last few posts have alternated between bankruptcy law stuff and another series I am trying to start about teachers. I haven't had a chance to get to teachers yet (aside from a reference in this post)..
The origin of the name is that the majority of the world is different than me - they are not bipolar. This isn't really suprising to anyone. So the basic point of the name is to emphasize I am and feel different than most people of the world.
The primary point of the name is pride (in the name of love). It is a misconception that we bipolar people have a disability (legally bipolar is disability, but I'm not making a legal argument). We are just different. I am not going to sit in the psychiatric closet (second place was going to the back of the psychiatric bus).
Therefore, the point of the name is to express to the world I am not ashamed of my condition. In fact I embrace it. Before you say "surely you can't be serious", I say - "check out this list, and don't call me Shirley.
Sunday, April 21, 2013
Teachers / Professors of Mine - Part I
I think teachers at all levels get a bad rap. When kids do well, their parents take all the credit, when kids do poorly, teachers take all the blame. Further, good teachers are often forgotten even by students who appreciated their effort. Whenever, my friends and I are discussing various teachers / professors it almost invariably leads to which teachers / professor's "mailed it in".
This outlook really reinforces the worst stereotypes of the profession i.e. lazy teachers with tenure who don't care. Therefore the purpose of this series will be to discuss teachers I have had at all levels of education with a dash of cynicism and praise for those who did well and those who did not. I'm going to include the following schools I attended -
Marvista Elementary, Normandy Park, WA 1982 - 1988
Sylvester Middle School, Burien, WA 1988 - 1990
Highline High School, Burien, WA 1990- 1994
University of Washington, Seattle, WA 1994- 1998 - Note this will emphasize my major of Business / Accounting
University San Diego, School of Law, San Diego, CA - 2003 - 2006
Any classmates from those, feel free to comment.
This outlook really reinforces the worst stereotypes of the profession i.e. lazy teachers with tenure who don't care. Therefore the purpose of this series will be to discuss teachers I have had at all levels of education with a dash of cynicism and praise for those who did well and those who did not. I'm going to include the following schools I attended -
Marvista Elementary, Normandy Park, WA 1982 - 1988
Sylvester Middle School, Burien, WA 1988 - 1990
Highline High School, Burien, WA 1990- 1994
University of Washington, Seattle, WA 1994- 1998 - Note this will emphasize my major of Business / Accounting
University San Diego, School of Law, San Diego, CA - 2003 - 2006
Any classmates from those, feel free to comment.
Boston Marathon Bombers
I warn you in advance this might piss some people off.
I was watching Meet the Press this morning and the entire show was dedicated to the bombing, the perpetrators and the aftermath. The show cut out to a crowd in Boston chanting -
"U.S.A. , U.S.A....."
Really? Is this an Olympic hockey game? World Cup? Did Michael Phelps win another medal?
I remember thinking the same thing when similar chants were heard outside the White House after Bin Laden was killed.
Where were these chants when Christopher Dorner was killed? I bet 95% of non Southern California residents couldn't even tell you who Dorner was? I'm serious, if anyone outside SoCal knew about him, please let me know.
Dorner was every bit the terrorist the Boston Bombers were. People commit horrific crimes all the time. To me the attention to Boston Bombers, somehow makes me feel that somehow crimes / terror in my neck of the woods are less important. So let's keep the USA chants on hold until the 2014 World Cup - we will really need them much more then.
I was watching Meet the Press this morning and the entire show was dedicated to the bombing, the perpetrators and the aftermath. The show cut out to a crowd in Boston chanting -
"U.S.A. , U.S.A....."
Really? Is this an Olympic hockey game? World Cup? Did Michael Phelps win another medal?
I remember thinking the same thing when similar chants were heard outside the White House after Bin Laden was killed.
Where were these chants when Christopher Dorner was killed? I bet 95% of non Southern California residents couldn't even tell you who Dorner was? I'm serious, if anyone outside SoCal knew about him, please let me know.
Dorner was every bit the terrorist the Boston Bombers were. People commit horrific crimes all the time. To me the attention to Boston Bombers, somehow makes me feel that somehow crimes / terror in my neck of the woods are less important. So let's keep the USA chants on hold until the 2014 World Cup - we will really need them much more then.
Thursday, April 18, 2013
Concept - Part II - Insiders
I think the biggest mistake people make in life is expecting there to be a right answer to every question. This kind of thinking, leads people to spend endless hours trying to find the right answer when it doesn't exist.
In the practice of law this problem runs rampant. It almost seems like some practitioners are looking for a button on their computer which says "Do work" ; "write response" ; "think for me". I have a theory on this, but that is another series for another day.
I was in court last week, and the Judge asked me if a certain person was an insider. I cannot off the top of head give the verbatim definition of an insider per 11 USC 101(31)
The real issue is why does it matter if some party is an "insider" or not? We could sift through the code and see where it is mentioned and how it is applied in cases. I can think of a few sections where I know it is mentioned, but I'm sure there are more. I am going to off the top of my head, and without looking rattle off three situations where I know there are insider issues that could run afoul of the "Concept"
1. The proposed broker who is going to sell a parcel of real property is a business partner of the debtor.
2. Class 2 of unsecured creditors is accepted because the debtor's mom and dad are creditors and have sufficient numerosity to carry the class.
3. Debtor paid his best friend back a couple weeks before he filed for Chapter 7, in a case where other creditors get nothing.
There are more. Applying the "Concept" to insiders, we can infer a sub-concept that is goes something to this effect -
"transactions involving any party shall not benefit insiders of that party at the expense of any other party"
You could probably add something like this to Sub-Concept 1 "...and all transactions with insiders should be clearly and completely disclosed with ample notice for anyone else to object"
Seems pretty obvious to me.
In the practice of law this problem runs rampant. It almost seems like some practitioners are looking for a button on their computer which says "Do work" ; "write response" ; "think for me". I have a theory on this, but that is another series for another day.
I was in court last week, and the Judge asked me if a certain person was an insider. I cannot off the top of head give the verbatim definition of an insider per 11 USC 101(31)
The real issue is why does it matter if some party is an "insider" or not? We could sift through the code and see where it is mentioned and how it is applied in cases. I can think of a few sections where I know it is mentioned, but I'm sure there are more. I am going to off the top of my head, and without looking rattle off three situations where I know there are insider issues that could run afoul of the "Concept"
1. The proposed broker who is going to sell a parcel of real property is a business partner of the debtor.
2. Class 2 of unsecured creditors is accepted because the debtor's mom and dad are creditors and have sufficient numerosity to carry the class.
3. Debtor paid his best friend back a couple weeks before he filed for Chapter 7, in a case where other creditors get nothing.
There are more. Applying the "Concept" to insiders, we can infer a sub-concept that is goes something to this effect -
"transactions involving any party shall not benefit insiders of that party at the expense of any other party"
You could probably add something like this to Sub-Concept 1 "...and all transactions with insiders should be clearly and completely disclosed with ample notice for anyone else to object"
Seems pretty obvious to me.
Concept - Part I
I am sure that my tiny, loyal, but growing readership really reads my entries for my intro commentary as opposed to actual substance. This post is no different, there is some pre-game commentary, in this a quasi self-congratulotory statement.
I think almost anyone who knows me, realizes that I am, um, well different than most. See the name of this blog. It goes without saying that I learn things a little differently than most. Since as early as I can remember, I've never been able to learn by listening to teachers talk. I spent the vast majority of my classroom time day dreaming, doodling, and by law school playing online poker. I can honestly say in undergraduate and law school I may have went to office hours or extra study session once or twice. I am not lying.
I learn things via observation and reading about it. Regarding reading about the law, I do not read practice guides - I read the statutes, the cases, and the secondary sources. By observation, when I am sitting through boring-ass calendars I watch what happens and try to make mental notes about what might be useful later. Finally, I try to synthezize into some useful broader concepts that help me analyze situations that are novel.
I really think bankruptcy law can be condensed into almost one sentence, which I am more or less paraphrasing from various cases
"the purpose of bankruptcy law is to allow debtors a chance to re-organize (or fresh start) his/her/their financial affiars, in a manner which is fair and equitable to creditors, equity interests, and any other party in interest"
That is it. For the purpose of this series we will call this the Concept. Arrogant, I know. But I don't give a fuck, it is my blog and I can quote Winston Wolf all I want.
I hate to rag on Chapter 13 some more, but Chapter 13 for the most part is about mechanics. The means test says you can't deduct that, the applicable commitment period is this, cable bills can't exceed $40, plan payments must be made monthly on the day the case was filed, and the list goes on and on.
That kind of stuff doesn't float my boat. Nor does chasing down clients for cashier's checks on the day of the confirmation hearing. I am not into lengthy rules written and unwritten that are about procedures and rules that have nothing to do with my above concept, and more to do with some sort of bizarre power play over debtors and counsel. If someone feels the need to put down consumer debtors like that, I postulate said person spent most of high school stuffed in a locker, most of college being that weird guy in your pledge class with a lot of comic books, and most of law school laughed at because he or she thought moot court was real.
So this series will attempt to apply the "Concept" to certain situations and see if it helps us resolve from some common problems in Chapter 11 and other Chapters as need be.
I think almost anyone who knows me, realizes that I am, um, well different than most. See the name of this blog. It goes without saying that I learn things a little differently than most. Since as early as I can remember, I've never been able to learn by listening to teachers talk. I spent the vast majority of my classroom time day dreaming, doodling, and by law school playing online poker. I can honestly say in undergraduate and law school I may have went to office hours or extra study session once or twice. I am not lying.
I learn things via observation and reading about it. Regarding reading about the law, I do not read practice guides - I read the statutes, the cases, and the secondary sources. By observation, when I am sitting through boring-ass calendars I watch what happens and try to make mental notes about what might be useful later. Finally, I try to synthezize into some useful broader concepts that help me analyze situations that are novel.
I really think bankruptcy law can be condensed into almost one sentence, which I am more or less paraphrasing from various cases
"the purpose of bankruptcy law is to allow debtors a chance to re-organize (or fresh start) his/her/their financial affiars, in a manner which is fair and equitable to creditors, equity interests, and any other party in interest"
That is it. For the purpose of this series we will call this the Concept. Arrogant, I know. But I don't give a fuck, it is my blog and I can quote Winston Wolf all I want.
I hate to rag on Chapter 13 some more, but Chapter 13 for the most part is about mechanics. The means test says you can't deduct that, the applicable commitment period is this, cable bills can't exceed $40, plan payments must be made monthly on the day the case was filed, and the list goes on and on.
That kind of stuff doesn't float my boat. Nor does chasing down clients for cashier's checks on the day of the confirmation hearing. I am not into lengthy rules written and unwritten that are about procedures and rules that have nothing to do with my above concept, and more to do with some sort of bizarre power play over debtors and counsel. If someone feels the need to put down consumer debtors like that, I postulate said person spent most of high school stuffed in a locker, most of college being that weird guy in your pledge class with a lot of comic books, and most of law school laughed at because he or she thought moot court was real.
So this series will attempt to apply the "Concept" to certain situations and see if it helps us resolve from some common problems in Chapter 11 and other Chapters as need be.
Wednesday, April 17, 2013
Legal Status of Terrorists
The recent bombing in Boston was a horrific event. I will not summarize which is already well known. This is about the legal status of terrorists.
There was a lot of discussion (see griping) about the fact the "underwear" bomber was read his Miranda rights after he was apprehended. Here is a summary of the griping.
The argument that foreign terrorists should not be read their Miranda rights is rooted in the laws of war. Under the laws of war, "spies" or "saboteurs" are not subject to treatment as prisoners of war and can be dispatched (see killed) relatively summarily. The United States Supreme Court has held as such. The factual background behind Ex Parte Quirin is as interesting as the law.
On first blush, I tend to agree that foreign terrorists operating in the United States are the effective equivalent of "spies" and therefore are not subject to varous constitutional rights like a regular criminal suspect. This of course leads to the question - Who decides whether someone is a spy or a terrorist?
The answer can be found to some degree in Hamdan v. Rumsfeld. In what I think is an excellent opinion, Justice Stevens explains that both under the Uniform Code of Military Justice, the Geneva Convention, and the common Laws of War, this must determined by a "regularily constituted court". However, there is a distinction in that in Hamdan the alleged offense was that Hamdan was an "unlawful combatant". Briefly, summarizing Hamdan was captured abroad in Afghanistan during the initial combat between United States forces and the Taliban.
Another distinction is an "unlawful combatant" is largely a creation of the fertile imagination of the Bush adminstration. In a nutshell it pre-supposes that some person in foreign country under attack by the United States has in fact no right to in fact be in combat. As this person is not covered under the Geneva Convetion, he can be subject to a wide range of punishments. This creates a dangerous precedent in my mind. The United States conducts military operations in some country. We take some prisoners and make some unilateral decision that said prisoners are "unlawful combatants" and therefore the Geneva Convention does not apply.
The only way the "no miranda" argument works is if the alleged terrorist is analogous to a saboteur. The term unlawful combatant is meangingless in this context. I think my worry is that the government would start apprehending all sorts of people under the auspices of being "terrorists". Considering the Obama administration has decided it is ok to kill American citizens with drones, I can't say I trust anyone in the executive branch to make this kind of decision. Afterall, if terrorists are saboteurs, and a person can be designated a terrorist by the executive, it pretty much gives the executive branch free reign. And if this can happen to alleged foreign terrorists, it could happen to American citizens next.
I am still not sure how I feel about it. I think it gives the executive too much power. But I also believe the laws of war clearly allow detention of foreign military agents conducting "terror". No easy answer on this.
There was a lot of discussion (see griping) about the fact the "underwear" bomber was read his Miranda rights after he was apprehended. Here is a summary of the griping.
The argument that foreign terrorists should not be read their Miranda rights is rooted in the laws of war. Under the laws of war, "spies" or "saboteurs" are not subject to treatment as prisoners of war and can be dispatched (see killed) relatively summarily. The United States Supreme Court has held as such. The factual background behind Ex Parte Quirin is as interesting as the law.
On first blush, I tend to agree that foreign terrorists operating in the United States are the effective equivalent of "spies" and therefore are not subject to varous constitutional rights like a regular criminal suspect. This of course leads to the question - Who decides whether someone is a spy or a terrorist?
The answer can be found to some degree in Hamdan v. Rumsfeld. In what I think is an excellent opinion, Justice Stevens explains that both under the Uniform Code of Military Justice, the Geneva Convention, and the common Laws of War, this must determined by a "regularily constituted court". However, there is a distinction in that in Hamdan the alleged offense was that Hamdan was an "unlawful combatant". Briefly, summarizing Hamdan was captured abroad in Afghanistan during the initial combat between United States forces and the Taliban.
Another distinction is an "unlawful combatant" is largely a creation of the fertile imagination of the Bush adminstration. In a nutshell it pre-supposes that some person in foreign country under attack by the United States has in fact no right to in fact be in combat. As this person is not covered under the Geneva Convetion, he can be subject to a wide range of punishments. This creates a dangerous precedent in my mind. The United States conducts military operations in some country. We take some prisoners and make some unilateral decision that said prisoners are "unlawful combatants" and therefore the Geneva Convention does not apply.
The only way the "no miranda" argument works is if the alleged terrorist is analogous to a saboteur. The term unlawful combatant is meangingless in this context. I think my worry is that the government would start apprehending all sorts of people under the auspices of being "terrorists". Considering the Obama administration has decided it is ok to kill American citizens with drones, I can't say I trust anyone in the executive branch to make this kind of decision. Afterall, if terrorists are saboteurs, and a person can be designated a terrorist by the executive, it pretty much gives the executive branch free reign. And if this can happen to alleged foreign terrorists, it could happen to American citizens next.
I am still not sure how I feel about it. I think it gives the executive too much power. But I also believe the laws of war clearly allow detention of foreign military agents conducting "terror". No easy answer on this.
Thursday, April 11, 2013
Chapter 11 v Chapter 13 - Part 6 - The Showdown
The details of our outlay in a Chapter 13 are detailed here. The estimated gross cost of Chapter 13 is $55,400.
We didn't break down our Chapter 11 outlay yet, but it looks something like this -
Admins - $15,000
Filing Fee - $1,213
UST Fees for a year - $2700
Unsecured Creditors - 24 *250 = $6,000
Uncle Joe if needed - $10,000 - this assumes Joe has to kickback his new value to Uncle Joe at some later date.
The tally - Chapter 13: $55,400 ; Chapter 11: $34,913
Money isn't the only consideration. In a Chapter 13, Joe has to pay via certified funds, which is a cost. In a Chapter 11, Joe has to complete monthly operating reports, which is some work. The Chapter 13 discharge is broader than a Chapter 11 discharge. The Chapter 11 discharge will be entered sooner. There is no real way to modify a Chapter 11 post-confirmation, the Debtor is in it for the long haul, while in a 13 the Debtor has some modification flexibility.
However, at the end of the day, Joe would be a fool to file a 13 here. He has far more flexibility in constructing his plan and he saves money. He gets his discharge faster. He has control of his plan, not the trustee. His attorney gets paid more.
The only thing stopping Joe from filing Chapter 11 is fear of the term Chapter 11. For whatever reason, a lot of debtor's counsel think Chapter 11 is too hard. Don't sell yourself short. One of my philosophies on life is don't worry about what you can't do, focus on what you can do, and a large majority of my fellow Debtor's counsel colleagues can do this, I know that for a fact.
I know it is a fact because I figured it out by asking a few veterans some questions, using westlaw, and stealing pleadings off pacer. Nobody showed me how to do it, I just figured it out. The good news is anyone who bothers to read this blog is smart enough to figure it out too. I'll be happy to give you my insight, thoughts, and of course some unsolicited opinions about things you certainly don't care about. You have to take the good with the bad. ... and there is more good in Chapter 11 than bad.
We didn't break down our Chapter 11 outlay yet, but it looks something like this -
Admins - $15,000
Filing Fee - $1,213
UST Fees for a year - $2700
Unsecured Creditors - 24 *250 = $6,000
Uncle Joe if needed - $10,000 - this assumes Joe has to kickback his new value to Uncle Joe at some later date.
The tally - Chapter 13: $55,400 ; Chapter 11: $34,913
Money isn't the only consideration. In a Chapter 13, Joe has to pay via certified funds, which is a cost. In a Chapter 11, Joe has to complete monthly operating reports, which is some work. The Chapter 13 discharge is broader than a Chapter 11 discharge. The Chapter 11 discharge will be entered sooner. There is no real way to modify a Chapter 11 post-confirmation, the Debtor is in it for the long haul, while in a 13 the Debtor has some modification flexibility.
However, at the end of the day, Joe would be a fool to file a 13 here. He has far more flexibility in constructing his plan and he saves money. He gets his discharge faster. He has control of his plan, not the trustee. His attorney gets paid more.
The only thing stopping Joe from filing Chapter 11 is fear of the term Chapter 11. For whatever reason, a lot of debtor's counsel think Chapter 11 is too hard. Don't sell yourself short. One of my philosophies on life is don't worry about what you can't do, focus on what you can do, and a large majority of my fellow Debtor's counsel colleagues can do this, I know that for a fact.
I know it is a fact because I figured it out by asking a few veterans some questions, using westlaw, and stealing pleadings off pacer. Nobody showed me how to do it, I just figured it out. The good news is anyone who bothers to read this blog is smart enough to figure it out too. I'll be happy to give you my insight, thoughts, and of course some unsolicited opinions about things you certainly don't care about. You have to take the good with the bad. ... and there is more good in Chapter 11 than bad.
Chapter 11 v Chapter 13 Part 5
Now it is time for Joe to confirm his plan of re-organization. In order for a plan to be confirmed, there 15 elements that need to be met - See 11 USC 1129(a). The most important one is getting one impaired class to accept the plan. Once you get that, you are in the game.
I don't think I discussed what "impairment" means. It is any claim whose legal rights are altered by the plan. The easiest way to get an impaired class on board is via modifying a vehicle loan. There is no "hanging paragraph", so that 2013 Porsche you bought 2 days before you filed is fair game.
In this scenario, remember Joe had 36 more months on his ride @ 300 per month. Let's say his vehicle is worth $10k and the present value of the loan is $12,500. Very simple, split the claim, go 5 years secured @ 4.5% for the $10k and slide the $2.5k into your unsecured class. Usually this will get you some sort of response from the secured claim holder. We want this.
At this point, the end game of the car loan is irrelevant as long as Joe and the lender agree to whatever terms. This is where it gets slick. Joe's objective is to get the lender to agree to some sort of terms that require it to accept the plan as to the secured class AND accept as to the unsecured class (bifurcated portion). Now, without any voting, we have an acceptance of class 1 and an acceptance of class 2.
Since, I have a consenting class in my back pocket the rest is really academic. Joe's "I-J" is still $600 or so, but who cares? I'd slide our class two about $250 per month for 24 months. Most of the time, the rest of the unsecured creditors won't bother to return ballots. If they don't, you have both impaired classes accepting and you are confirmed.
Let's say some guy in Amex's BK department tries to play hero and rejects as to class 2. If he is the only other voter, Class 2 hasn't accepted. Not a problem at all. A little background here.
When a Debtor faces this situation, where he has met all the confirmation elements aside from all impaired classes accepting the plan, he must attempt to "cram down the plan". This is colloquially known as the "Absolute Priority Rule". While it sounds like a Richard Marx album and rather intimidating, at its essence it is pretty simple - if the non-consenting impaired class is secured, the creditor must be paid the full value of its secured claim w/ interest. That is usually easy to work out. If the non-consenting class is unsecured, then you must pay this class the full amount of its claim (THIS IS A PARAPHRASE, IT IS ACTUALLY MORE COMPLICATED THAN THIS OFTEN).
Joe has no desire to pay his unsecured creditors in full. In fact his precise words are "fuck that", I'd rather be sending tax refunds to the trustee for 5 years than doing this. The good news is according to some courts, BACPA has said "fuck that" to the Absolute Priority Rule in individual 11s. In the 9th Circuit, the BAP in In re Fridman has held the APR does not imply in individual 11s.
First, next time you are in Judge Clarkson's courtroom be sure to thank him for this ruling. Second, the absence of the APR makes confirming individual 11s so easy, it isn't funny. Some judges though, are too cool for the BAP (ironically, Judge Clarkson has a great opinion, In re Rinard where he makes a compelling argument the BAP is not binding on lower bankruptcy courts, or in effect a judge can be too cool for the BAP).
Let's say you find yourself in Santa Ana, Courtroom 5B. The APR is alive and well here. See In re Khamel. The situation is still not insurmountable. Joe must provide "new value". New value makes a lot of sense in non-individual cases, but in individual cases it can be a bit counter-intuitive. Again this is my paraphrase of new value - essentially the interests who are junior to the unsecured class (i.e. equity) must contribute money upon confirmation of the plan that represents the going concern value of the re-organized entity. I will provide a list of useful cases on this at the end of the series.
In an individual case, basically the Debtor must provide money that represents the going concern value of himself. Further this money has to come from some place beyond the estate. As stated by Judge Albert, this new value needs to come from "uncle joe" as a sort of gift. It is wise to plan ahead for this, so it is important to have "Uncle Joe" in place well before plan confirmation, so if needed he can pump 5 or 10,000 bucks into the plan which is probably sufficient to be new value. The best part, is this new value will in almost all likliehood go to administrative costs i.e. your fees.
Congrats. Joe has a confirmed Chapter 11 plan. He is a re-organized debtor. His name will be engraved on the Wall of Fame in the Office of the United States Trustee and he can tell all of his friends about the great job his attorney did and provide him a bunch of referrals for more Chapter 11 work.
Now it is time for comparison. Which is better for Joe? Stay tuned....
I don't think I discussed what "impairment" means. It is any claim whose legal rights are altered by the plan. The easiest way to get an impaired class on board is via modifying a vehicle loan. There is no "hanging paragraph", so that 2013 Porsche you bought 2 days before you filed is fair game.
In this scenario, remember Joe had 36 more months on his ride @ 300 per month. Let's say his vehicle is worth $10k and the present value of the loan is $12,500. Very simple, split the claim, go 5 years secured @ 4.5% for the $10k and slide the $2.5k into your unsecured class. Usually this will get you some sort of response from the secured claim holder. We want this.
At this point, the end game of the car loan is irrelevant as long as Joe and the lender agree to whatever terms. This is where it gets slick. Joe's objective is to get the lender to agree to some sort of terms that require it to accept the plan as to the secured class AND accept as to the unsecured class (bifurcated portion). Now, without any voting, we have an acceptance of class 1 and an acceptance of class 2.
Since, I have a consenting class in my back pocket the rest is really academic. Joe's "I-J" is still $600 or so, but who cares? I'd slide our class two about $250 per month for 24 months. Most of the time, the rest of the unsecured creditors won't bother to return ballots. If they don't, you have both impaired classes accepting and you are confirmed.
Let's say some guy in Amex's BK department tries to play hero and rejects as to class 2. If he is the only other voter, Class 2 hasn't accepted. Not a problem at all. A little background here.
When a Debtor faces this situation, where he has met all the confirmation elements aside from all impaired classes accepting the plan, he must attempt to "cram down the plan". This is colloquially known as the "Absolute Priority Rule". While it sounds like a Richard Marx album and rather intimidating, at its essence it is pretty simple - if the non-consenting impaired class is secured, the creditor must be paid the full value of its secured claim w/ interest. That is usually easy to work out. If the non-consenting class is unsecured, then you must pay this class the full amount of its claim (THIS IS A PARAPHRASE, IT IS ACTUALLY MORE COMPLICATED THAN THIS OFTEN).
Joe has no desire to pay his unsecured creditors in full. In fact his precise words are "fuck that", I'd rather be sending tax refunds to the trustee for 5 years than doing this. The good news is according to some courts, BACPA has said "fuck that" to the Absolute Priority Rule in individual 11s. In the 9th Circuit, the BAP in In re Fridman has held the APR does not imply in individual 11s.
First, next time you are in Judge Clarkson's courtroom be sure to thank him for this ruling. Second, the absence of the APR makes confirming individual 11s so easy, it isn't funny. Some judges though, are too cool for the BAP (ironically, Judge Clarkson has a great opinion, In re Rinard where he makes a compelling argument the BAP is not binding on lower bankruptcy courts, or in effect a judge can be too cool for the BAP).
Let's say you find yourself in Santa Ana, Courtroom 5B. The APR is alive and well here. See In re Khamel. The situation is still not insurmountable. Joe must provide "new value". New value makes a lot of sense in non-individual cases, but in individual cases it can be a bit counter-intuitive. Again this is my paraphrase of new value - essentially the interests who are junior to the unsecured class (i.e. equity) must contribute money upon confirmation of the plan that represents the going concern value of the re-organized entity. I will provide a list of useful cases on this at the end of the series.
In an individual case, basically the Debtor must provide money that represents the going concern value of himself. Further this money has to come from some place beyond the estate. As stated by Judge Albert, this new value needs to come from "uncle joe" as a sort of gift. It is wise to plan ahead for this, so it is important to have "Uncle Joe" in place well before plan confirmation, so if needed he can pump 5 or 10,000 bucks into the plan which is probably sufficient to be new value. The best part, is this new value will in almost all likliehood go to administrative costs i.e. your fees.
Congrats. Joe has a confirmed Chapter 11 plan. He is a re-organized debtor. His name will be engraved on the Wall of Fame in the Office of the United States Trustee and he can tell all of his friends about the great job his attorney did and provide him a bunch of referrals for more Chapter 11 work.
Now it is time for comparison. Which is better for Joe? Stay tuned....
My Evolution on Abortion
The term du jour in the debate about same-sex marriage is "evolution". Every politician who has changed his or her view describes it as an evolution. Apparently, in this context "evolution" is code for meaning the evolved person's changed opinion is based on his or her true feelings as opposed to political expediency. Any politician with a functioning cerebral cortex can see that being against same-sex marriage will soon squarely put him or her on the wrong side of history. As a result, I might be a tad skeptical as who is really evolving or who is just doing good politics.
I am going to talk about an evolution I have had, meaning I really feel this way (or so I say, I could be posturing for my future political career...). So here it is.
I am going to talk about an evolution I have had, meaning I really feel this way (or so I say, I could be posturing for my future political career...). So here it is.
I am not a big believer in sudden life changing events. I guess if I won the lotto, it might change my financial lot in life, but it wouldn't really change how I see the world (I hope).
That being said, when I viewed our to-be born child's ultra sound it was pretty profound. You can call it whatever you want, but it is life, or more specifically human life.
I have never held adamant opinions on the never-ending abortion debate, because I viewed it as something other people dealt with. Since, I viewed it as something other people deal with, I naturally gravitated towards the so-called "pro-choice" position.
However, seeing the ultrasound picture has definitely changed my view on this. Again, you can call abortion whatever you want, but it is terminating a human life. There is really no other way to describe the procedure.
This doesn't necessarily make put me in the hardcore "pro-life" camp. The pro-life argument is something to the effect it is wrong to kill an innocent life. This argument assumes intentionally killing an innocent person is always wrong. It is not, or at least society has said it is not.
The obvious example is war. In war a lot of people die. We like to tell ourselves that is only Taliban and al Queda bad guys who got what they deserved. This is patently false. The average soldier in an any Army is just some poor guy doing what he is told. He isn't guilty of anything aside from being in the wrong place, at the wrong time. Nor is the civilian killed in what is Orwellian described as "collateral damage".
For better or worse, war is sometimes necessary. I suppose if one was 100% pro-life on abortion, a consistent position for that person would be almost complete pacifism on war. I am by no means a pacifist.
So where does that leave me? I can't in good conscience say that any abortion for any reason is right or should be legal. That being said, much like war, there is some sort of balancing act between the rights of the mother and the child, or put it another way, if I believe that are certain reasons that justify the killing of innocents in war, it follows there may be certain reasons for justifying an abortion.
I think my rationalization is that we as a society should look seriously as to why certain women have abortions. The obvious reason is unwanted pregnancy. If we were to take steps to eliminate this i.e. access to birth control, better education of women it would help a lot. For those women who do find themselves with an unwanted pregnancy, our society should provide them with resources to deal with it, medical care, counseling, adoption alternatives, economic incentives etc...
Beyond that it is complicated as to how much choice a woman should have. I do not claim to have the answer, except that our society should create conditions where women with an unwanted pregnancy should not feel like an abortion is their only option.
I'll leave it with a quote from General Robert E. Lee -
"It is well that war is so terrible, lest we should grow too fond it".
Tuesday, April 9, 2013
I'm Taking a Ride with My Best Friend........
A little break from law related posts. I figure to post about music. Here are some albums or clusters of albums which I think fucking rock.
1) Black Celebration, Music for the Masses, and Violator - Depeche Mode
Words cannot express how rad these albums are. I am pretty certain I know all the lyrics to all of these albums and can identify the songs after one or two notes.
When I listened to the dud, that is DM’s new album, I realized since Alan Wilder left the band, only Playing the Angel is worth listening to. Kind of sad how one guy made all the difference.
2) Diesel and Dust - Midnight Oil
This taught me everything I know about the history of Australia and the Aborigines.
3) Kiss Me, Kiss Me, Kiss Me ; Disintegration, Wish - the Cure
The tune to Lullaby is in my head as I am typing this. Enough said.
4) Unforgettable Fire - U2
I could have flanked this with War and Joshua Tree, however this album seems to get a bad rap in the U2 pantheon. I couldn’t disagree more, the title track, Bad, A Sort of Homecoming, Pride are all excellent songs.
5) The Cars - The Cars
This album is just what I needed. It is a close race between this and Heartbeat City for the Cars finest work. And for what it is worth, the Cars reunion album from 2011 was pretty good.
6) Hopes and Fears - Keane
I guess I needed am album from post 1991. Keane is kind of cheesy, but I listened to this a lot in law school and still a lot today. First 4 songs are really good.
Friday, April 5, 2013
Chapter 11 v Chapter 13 - Series Summary to Date
Excerpt from Chapter 13 Good Faith Rant, I mean Brief
This relates to my previous post about April Fools and Chapter 13. Before, I get to the excerpt, I'm going to start a little contest with my tiny, but hopefully growing readership. In paragraphs 3 and 4, I give some examples of Debtor expenses - the best expense that someone can provide from a REAL CASE, I will add to my brief. Enjoy.
It is well settled good faith is a totality of the circumstances analysis. See In re Goeb, 675 F .2d 1386, 1387 (9th Cir. 1982). A Debtor who merely takes advantage of the bankruptcy code offers him is not acting in bad faith. In re Ragos, 700 F .3d 220, 227 (5th Cir. 2012) .
The 9th Circuit has recently held that the concept of disposable income no longer has a role in determining good faith. In re Welsh, 2013 WL 1192961. While, the Welsh court was specifically analyzing social security income and secured debt payments the holding goes beyond that. Since disposable income is strictly defined, a bankruptcy court no longer has the discretion to make good faith determinations based on Debtor's individual expenses stated on their Schedule J.
The implications of this may be unsettling to some. A Debtor who lists expenses for Directv NFL Package, figure skating lessons for children, premium gasoline, fast track, or buying organic groceries might be seen as someone who could "tighten their belt" and pay creditors more. An argument can be made that when unsecured creditors are getting paid less than the full value of their claims, a debtor should expect to only watch the Fox Game of the week, provide their child with a set of used roller skates, buy 87 octane gas, sit in traffic and shop at Albertsons and devote the difference to their creditors.
On the other hand, it could be argued that a debtor who gets to watch his favorite NFL team every Sunday, provide his children with the sporting activities of their choice, puts high quality fuel in his car, spends less time in traffic (perhaps more time at work), and eats healthy food would be a happier, healthier and less stressed person. On account of this, this hypothetical debtor might be more economical productive during the life of the plan and hence unsecured creditors would benefit in the long run.
Unfortunately, Congress has foreclosed all of the analysis of the above. The bottom line is when a Debtor has committed his projected disposable income to the plan, what his "actual" expenses are has no bearing on good faith.
to make a finding of bad faith.
Thursday, April 4, 2013
April Fools Edition of Chapter 13
I started off this week feeling really optimistic about the future of my Chapter 13 practice. Haha. April Fools.
No, in reality, I started out this week dreading the fact I had a Chapter 13 341a on Tuesday. I will not say where, but let's say it is approximately 47 miles east of my residence in Huntington Beach. That was the bad news. The good news was the individual adjudicating the confirmability of the plan, has at least of today not issued a manifesto regarding Chapter 13 plan procedure.
A little background on this case, my Debtors have a pretty solid income and there legit 22C spits out about $125 a month, and with a 401k step, their plan looks something like -
$275 for 30
$850 for 30
15% - there are a bit of taxes, a little arrears, and of course counsel's cut
I had all my docs in and got my lien avoid granted on the tentative. So, the optimist in me figured a little negotiating and I'd be back in the office by 11 with a plan on consent maybe somewhere around $375 / $1000. Obviously, if it worked out that way I wouldn't be writing this post.
First, some of the people involved in the bankruptcy universe have no fucking sense of humor. None. I am going to re-tell my joke from Tuesday here it is -
Trustee Counsel - Next calling the case of (totally botched the name, clients are Cambodian)
(we shuffle up to the table)
Faler - Good morning, I'd like to start off by saying there has been a big change of events in this case....
Trustee Counsel (scowling) - appearances please
Faler - Oh, Matt Faler for the debtors - anyway, the big change of events is Mrs. Debtor just found out on Sunday she inherited $400,000 so we can pay this plan in full
Trustee Counsel (glaring at me and about to speak)-
Faler- April Fools! But, I did get the lien strip granted and that isn't a joke.
My joke got my clients to laugh, the assistant, a few random people in the room, but nothing but stern looks from Trustee attorney.
Anyway, we got down to business and utilizing some sort of mathematical formula requiring an abacus and the number pi taken to the 3rd power, the trustee had concluded my Debtors could pay $600 per month before the step. More specifically, the trustee had concluded that we had (1) taken an illegit expense for 401k contribution (2) overstated our insurances expenditures and (3) didn't believe our charitable contribution expense.
Regarding point (2) - there wasn't a real dispute as to the amount of incurred but rather whether the numbers were in fact reasonable. It was implied the Debtors should have done more comparison shopping for their insurance numbers. Regarding point (3) it was implied my clients didn't actually donate to charity.
My response was we will provide you actual invoices for insurance and I used the average number from the last 3 years of itemized deductions for the charitable deduction number and I didn't think Buddhist Temples gave receipts for donations.
Anyway, it was agreed I would provide evidence of the following in advance of our continued hearing. To top it off, the trustee counsel took the time to briefly lecture my clients on their spendthrift ways and promised to go through their budget with what could best be described as double-secret strict scrutiny.
This rather unpleasant experience did leave me with a golden oppurtunity to finally argue a factoid of law that is well settled in the Ninth Circuit but little enforced in places and that is :
BAD FAITH IS MORE THAN A FEW SUBJECTIVELY UNREASONABLE EXPENSES. IF YOU THINK OTHERWISE READ IN RE GOEB 675 F.2D 1386 (9TH CIR. 1982). I HAVE EVEN INCLUDED A HYPERLINK FOR YOU. IF YOU STILL DONT UNDERSTAND WHAT BAD FAITH IS THEN READ IT AGAIN AND AGAIN AND AGAIN UNTIL YOU UNDERSTAND.
I promise to post my brief when I file it.
And another Chapter 13 event of this week was I had a client dissatisfied with the amount of a fee application for some extra Chapter 13 work. It went in front of the judge, and as to the Judge's ruling, all I would tell my clients is LOL (and pay up).
No, in reality, I started out this week dreading the fact I had a Chapter 13 341a on Tuesday. I will not say where, but let's say it is approximately 47 miles east of my residence in Huntington Beach. That was the bad news. The good news was the individual adjudicating the confirmability of the plan, has at least of today not issued a manifesto regarding Chapter 13 plan procedure.
A little background on this case, my Debtors have a pretty solid income and there legit 22C spits out about $125 a month, and with a 401k step, their plan looks something like -
$275 for 30
$850 for 30
15% - there are a bit of taxes, a little arrears, and of course counsel's cut
I had all my docs in and got my lien avoid granted on the tentative. So, the optimist in me figured a little negotiating and I'd be back in the office by 11 with a plan on consent maybe somewhere around $375 / $1000. Obviously, if it worked out that way I wouldn't be writing this post.
First, some of the people involved in the bankruptcy universe have no fucking sense of humor. None. I am going to re-tell my joke from Tuesday here it is -
Trustee Counsel - Next calling the case of (totally botched the name, clients are Cambodian)
(we shuffle up to the table)
Faler - Good morning, I'd like to start off by saying there has been a big change of events in this case....
Trustee Counsel (scowling) - appearances please
Faler - Oh, Matt Faler for the debtors - anyway, the big change of events is Mrs. Debtor just found out on Sunday she inherited $400,000 so we can pay this plan in full
Trustee Counsel (glaring at me and about to speak)-
Faler- April Fools! But, I did get the lien strip granted and that isn't a joke.
My joke got my clients to laugh, the assistant, a few random people in the room, but nothing but stern looks from Trustee attorney.
Anyway, we got down to business and utilizing some sort of mathematical formula requiring an abacus and the number pi taken to the 3rd power, the trustee had concluded my Debtors could pay $600 per month before the step. More specifically, the trustee had concluded that we had (1) taken an illegit expense for 401k contribution (2) overstated our insurances expenditures and (3) didn't believe our charitable contribution expense.
Regarding point (2) - there wasn't a real dispute as to the amount of incurred but rather whether the numbers were in fact reasonable. It was implied the Debtors should have done more comparison shopping for their insurance numbers. Regarding point (3) it was implied my clients didn't actually donate to charity.
My response was we will provide you actual invoices for insurance and I used the average number from the last 3 years of itemized deductions for the charitable deduction number and I didn't think Buddhist Temples gave receipts for donations.
Anyway, it was agreed I would provide evidence of the following in advance of our continued hearing. To top it off, the trustee counsel took the time to briefly lecture my clients on their spendthrift ways and promised to go through their budget with what could best be described as double-secret strict scrutiny.
This rather unpleasant experience did leave me with a golden oppurtunity to finally argue a factoid of law that is well settled in the Ninth Circuit but little enforced in places and that is :
BAD FAITH IS MORE THAN A FEW SUBJECTIVELY UNREASONABLE EXPENSES. IF YOU THINK OTHERWISE READ IN RE GOEB 675 F.2D 1386 (9TH CIR. 1982). I HAVE EVEN INCLUDED A HYPERLINK FOR YOU. IF YOU STILL DONT UNDERSTAND WHAT BAD FAITH IS THEN READ IT AGAIN AND AGAIN AND AGAIN UNTIL YOU UNDERSTAND.
I promise to post my brief when I file it.
And another Chapter 13 event of this week was I had a client dissatisfied with the amount of a fee application for some extra Chapter 13 work. It went in front of the judge, and as to the Judge's ruling, all I would tell my clients is LOL (and pay up).
Chapter 11 v Chapter 13 - Part 4
I think we left off somewhere around where the disclosure statement was to be filed. The purpose of a disclosure statement is to provide "adequate information" for a claim holder to either accept or reject the plan.
In a nutshell, the disclosure statement should really explain how and why your plan will work, and to some extent "sell" your plan to the entities which will end up voting on it. As to what information is necessary to accomplish this, it is really common sense. It is important to substantiate your DS - use bank statements, property leases, pay stubs, tax returns, appraisals, listing agreements if real property is to be sold etc....
The DS should also describe how the various classes have been designated and how they will be treated. It should address any assumed leases or planned adversaries. In the context of our hypothetical, much of the information used to draft the disclosure statement is the same information remitted to the Chapter 13 trustee.
The plan is really who gets paid what and when, and other legal consequences of plan acceptance. I personally find it way more fun to draft Chapter 11 plans, as you have a lot of latitude on how to structure your plan. There is no time limit. It can last for years or have a lump sum payout and pretty much anything inbetween. However, when drafting it keep in mind while you could conceivably force a class to acceptance its payments in pennies, they probably would be disinclined to accept your plan, nor would you pass a good faith test, so try to keep it within bounds.
The DS and Plan are filed simultaneously and there is a hearing on the adequacy of statement. There are really two types of objections to DS - (1) Legitimate objections because you have glossed over some point, and there is missing information. By glossed over, I mean made some assertions regarding the plan lacking substantiation. (2) Veiled plan objections. There are a few cases out there standing for the proposition that if your plan is so bad, it can be denied at the DS stage because going beyond that is pointless. This usually is the case if your plan has completely improper classifications or attempts to do something that isn't allowed. However, some creditors borrow a page from the Chapter 13 trustee and use this oppurtunity to launch myriads of objections to the plan that are premature in an attempt to derail the case.
The good news is the more numerous and detailed the veiled plan objections are is excellent evidence your DS provides adequate information. If a creditor has all kinds of objections about how shitty your plan is for them, you can tell the court, that you provided adequate information because said creditor has enough to information to conclude the plan sucks. In fact you can trap creditors on this, if you make some statement as to is there any information that the plan proponent could provide which would cause said creditor to accept the plan. Usually the answer is no and the DS is approved.
Anyway back to our example, this whole process can take a while. I'd estimate around 15 hours or so of legal work, but let's say it is 25 hours total and at $300 per, our Debtor is now in the hole to his counsel for $7500, but the DS is approved and the plan is set for confirmation. Keep track of these numbers as there is going to be an item by item breakdown at the end.
Joe our debtor has been at this point paying his quarterly fees and any necessary adequate protection payments, but he is not making "plan payments" so to speak. If things are going well, you will notice your client's DIP accounts steadily increasing every month. If they are not increasing, your client is either completing bullshit operating reports (not unheard of) or the plan isn't going to work.
It is important to note we have not heard the term 22C and definitely no discussion about expenses for cell phone data plans or prom dresses for kids or about the job prospects for a 21 year old child kicking it at home while masquerading as a community college student.
So this concludes part 4. We might go up to parts 7 or 8 before I'm done. However, I am going to take a brief interlude to explain some Chapter 13 adventures from this week.
In a nutshell, the disclosure statement should really explain how and why your plan will work, and to some extent "sell" your plan to the entities which will end up voting on it. As to what information is necessary to accomplish this, it is really common sense. It is important to substantiate your DS - use bank statements, property leases, pay stubs, tax returns, appraisals, listing agreements if real property is to be sold etc....
The DS should also describe how the various classes have been designated and how they will be treated. It should address any assumed leases or planned adversaries. In the context of our hypothetical, much of the information used to draft the disclosure statement is the same information remitted to the Chapter 13 trustee.
The plan is really who gets paid what and when, and other legal consequences of plan acceptance. I personally find it way more fun to draft Chapter 11 plans, as you have a lot of latitude on how to structure your plan. There is no time limit. It can last for years or have a lump sum payout and pretty much anything inbetween. However, when drafting it keep in mind while you could conceivably force a class to acceptance its payments in pennies, they probably would be disinclined to accept your plan, nor would you pass a good faith test, so try to keep it within bounds.
The DS and Plan are filed simultaneously and there is a hearing on the adequacy of statement. There are really two types of objections to DS - (1) Legitimate objections because you have glossed over some point, and there is missing information. By glossed over, I mean made some assertions regarding the plan lacking substantiation. (2) Veiled plan objections. There are a few cases out there standing for the proposition that if your plan is so bad, it can be denied at the DS stage because going beyond that is pointless. This usually is the case if your plan has completely improper classifications or attempts to do something that isn't allowed. However, some creditors borrow a page from the Chapter 13 trustee and use this oppurtunity to launch myriads of objections to the plan that are premature in an attempt to derail the case.
The good news is the more numerous and detailed the veiled plan objections are is excellent evidence your DS provides adequate information. If a creditor has all kinds of objections about how shitty your plan is for them, you can tell the court, that you provided adequate information because said creditor has enough to information to conclude the plan sucks. In fact you can trap creditors on this, if you make some statement as to is there any information that the plan proponent could provide which would cause said creditor to accept the plan. Usually the answer is no and the DS is approved.
Anyway back to our example, this whole process can take a while. I'd estimate around 15 hours or so of legal work, but let's say it is 25 hours total and at $300 per, our Debtor is now in the hole to his counsel for $7500, but the DS is approved and the plan is set for confirmation. Keep track of these numbers as there is going to be an item by item breakdown at the end.
Joe our debtor has been at this point paying his quarterly fees and any necessary adequate protection payments, but he is not making "plan payments" so to speak. If things are going well, you will notice your client's DIP accounts steadily increasing every month. If they are not increasing, your client is either completing bullshit operating reports (not unheard of) or the plan isn't going to work.
It is important to note we have not heard the term 22C and definitely no discussion about expenses for cell phone data plans or prom dresses for kids or about the job prospects for a 21 year old child kicking it at home while masquerading as a community college student.
So this concludes part 4. We might go up to parts 7 or 8 before I'm done. However, I am going to take a brief interlude to explain some Chapter 13 adventures from this week.
Thursday, March 28, 2013
Chapter 11 v Chapter 13 - Part 3
This is the next part in this series. There will be at least a part 4, because I didn't get all I wanted to into this. In this part, Joe Sixpack has decided (or been talked into) to filing for Chapter 11. Before, I get to this, I must say I have been very appreciative of the positive feedback I have gotten on this and I welcome any further commentary positive or negative. However on to the merits....
Here is Joe Sixpack's factual scenario again -
Here is Joe Sixpack's factual scenario again -
The Debtor Joe Sixpack has $90,000 in unsecured debt. His non gerrymandered form 22C gives him projected disposable income of $500 per month. He has a car payment of $300 per month for the next 36 months. He also has a 401k loan of $200 per month that ends in 24 months. Further, his non gerrymandered and properly re-allocated schedules I and J show a positive $600. The Chapter 13 trustee's vig is estimated to be 5.0%.. One detail I forgot in my previous hypo was, we will assume that Joe's quarterly disbursements will require him to pay a United States Trustee fee of $675 every quarter.
So Joe files for Chapter 11. When he retains his brilliant attorney , he is fortunate that his Chapter 11 counsel is ridiculously cheap (or stupid) and only requires $5,000 up front plus the Chapter 11 filing of $1,246. Joe hims and haws and talks about some guy on a billboard heading east bound on the 10 says he will do a bankruptcy for $399, but our brilliant attorney does a masterful sales pitch, and Joe digs up the cash and pays up. Joe's attorney agrees to charge him $300 an hour and with standard cost reimbursements.
The case is filed. In Chapter 11, once a case is filed we have to do what are known as "7-day package" for the United States Trustee. This sounds a bit daunting, but it really isn't substantially different than the documents one would submit for a similar Chapter 13. One of the matters which is different from 13 to 11 is the Debtor (or really Debtor-in-possession) has to close out existing bank accounts on the day of filing and open what are called Debtor-in-possession accounts or for short, DIP accounts. I won't go into all the ins and outs of this, but this while being a pain in the ass, is not all that complicated. I suggest US Bank for this, they are easy to deal with and it is on the UST approved list.
While Joe is doing his bank account work, brilliant attorney ("BA" after this) has some work to do. He needs to get employed, so he will file an employment application. This is not rocket science, but it needs to get done, if BA wants to get paid. This motion is normally done on negative notice and you won't see any objections unless you have some screwy terms, or you are on the UST shit list. Try to stay off that. Also, some judges are pretty particular and make you follow the local rules to a "T", others rubber stamp absent objection. I suggest drafting a template that conforms to the local rules.
Often you and Joe will be required to attend an "initial debtor interview" or IDI. This is usually a couple weeks or so after you file the case, and is best described as a 341a pre-game show. The UST analyst makes sure your 7-day is in, and basically briefs you and the debtor on how things work in Chapter 11.
After this approximately 3 weeks later, you have the 341a hearing with either the UST analyst or staff attorney. This is like your standard Chapter 13 341a where ids are checked and the schedules are verified for completeness and there is some discussion about what the goal of the case is. This usually takes about 15 minutes and then you are on your merry way.
While this is going on, the Debtor has to file his monthly operating reports. Some debtors are good at this, some are not. A monthly operating report is really a spreadsheet that shows money in, money out and shows whether the debtor is going positive in cash flow (good) or negative in cash flow (bad).
Usually at some point somewhat after the 341a, there will be a status conference. BA will have to file a status report. The point of the conference is to ensure compliance with UST regulations and set some dates. The dates to be set are usually - claims bar date, deadline to file plan / disclosure statement, and sometimes deadline to object to claims. Some judges will waive your appearance if you get your status report in on time and you are current on operating reports and other requirements.
So about now, we are about two months deep into our case. Notice that no one has asked about why you pay $1200 a month for your daughters figure skating lessons (real expense from a chapter 7 of mine....) or asked about step ups or inquired about your plan payment status or asked about mortgage payments or threatened dismissals with a bar or presented you with 42 page manifesto on Chapter 11 procedure in a particular judge's court or referenced poorly reasoned cases like the BAP decision about 401k payments in Chapter 13s.
There is a reason for this and that is because ACCORDING TO 11 USC 1112(b)(2) A MOTION TO DISMISS OR CONVERT REQUIRES NOTICE AND A HEARING AND IT IS ACTUALLY ENFORCED. It is really amazing. Attorneys have to do stuff like file motions supported by real law and evidence, and amazingly oral assertions are not taken as gospel. Perhaps even most amazing, is for once BA gets to feel like a real attorney, where issues are actually decided on the law and not quizzical objections. It is really easy to sit behind a desk and rattle off objections on case after case, but when an attorney actually has to draft a motion, support it with evidence, come to a hearing that has been properly noticed, and respond to the other party's opposition, it makes flimsy motions to dismiss really not worth the time and effort unless you have legitimate grounds.
That concludes Part 3. Part 4 will get to the disclosure statement and hopefully confirmation, then I hope part 5 will be the cost-benefit analysis and I think there will be a Part 6 trying to wrap it all up.
The case is filed. In Chapter 11, once a case is filed we have to do what are known as "7-day package" for the United States Trustee. This sounds a bit daunting, but it really isn't substantially different than the documents one would submit for a similar Chapter 13. One of the matters which is different from 13 to 11 is the Debtor (or really Debtor-in-possession) has to close out existing bank accounts on the day of filing and open what are called Debtor-in-possession accounts or for short, DIP accounts. I won't go into all the ins and outs of this, but this while being a pain in the ass, is not all that complicated. I suggest US Bank for this, they are easy to deal with and it is on the UST approved list.
While Joe is doing his bank account work, brilliant attorney ("BA" after this) has some work to do. He needs to get employed, so he will file an employment application. This is not rocket science, but it needs to get done, if BA wants to get paid. This motion is normally done on negative notice and you won't see any objections unless you have some screwy terms, or you are on the UST shit list. Try to stay off that. Also, some judges are pretty particular and make you follow the local rules to a "T", others rubber stamp absent objection. I suggest drafting a template that conforms to the local rules.
Often you and Joe will be required to attend an "initial debtor interview" or IDI. This is usually a couple weeks or so after you file the case, and is best described as a 341a pre-game show. The UST analyst makes sure your 7-day is in, and basically briefs you and the debtor on how things work in Chapter 11.
After this approximately 3 weeks later, you have the 341a hearing with either the UST analyst or staff attorney. This is like your standard Chapter 13 341a where ids are checked and the schedules are verified for completeness and there is some discussion about what the goal of the case is. This usually takes about 15 minutes and then you are on your merry way.
While this is going on, the Debtor has to file his monthly operating reports. Some debtors are good at this, some are not. A monthly operating report is really a spreadsheet that shows money in, money out and shows whether the debtor is going positive in cash flow (good) or negative in cash flow (bad).
Usually at some point somewhat after the 341a, there will be a status conference. BA will have to file a status report. The point of the conference is to ensure compliance with UST regulations and set some dates. The dates to be set are usually - claims bar date, deadline to file plan / disclosure statement, and sometimes deadline to object to claims. Some judges will waive your appearance if you get your status report in on time and you are current on operating reports and other requirements.
So about now, we are about two months deep into our case. Notice that no one has asked about why you pay $1200 a month for your daughters figure skating lessons (real expense from a chapter 7 of mine....) or asked about step ups or inquired about your plan payment status or asked about mortgage payments or threatened dismissals with a bar or presented you with 42 page manifesto on Chapter 11 procedure in a particular judge's court or referenced poorly reasoned cases like the BAP decision about 401k payments in Chapter 13s.
There is a reason for this and that is because ACCORDING TO 11 USC 1112(b)(2) A MOTION TO DISMISS OR CONVERT REQUIRES NOTICE AND A HEARING AND IT IS ACTUALLY ENFORCED. It is really amazing. Attorneys have to do stuff like file motions supported by real law and evidence, and amazingly oral assertions are not taken as gospel. Perhaps even most amazing, is for once BA gets to feel like a real attorney, where issues are actually decided on the law and not quizzical objections. It is really easy to sit behind a desk and rattle off objections on case after case, but when an attorney actually has to draft a motion, support it with evidence, come to a hearing that has been properly noticed, and respond to the other party's opposition, it makes flimsy motions to dismiss really not worth the time and effort unless you have legitimate grounds.
That concludes Part 3. Part 4 will get to the disclosure statement and hopefully confirmation, then I hope part 5 will be the cost-benefit analysis and I think there will be a Part 6 trying to wrap it all up.
Thursday, March 21, 2013
Chapter 11 v. Chapter 13 Part 2
For part two on Chapter 11 v Chapter 13, I am going to dispose of lengthy discussions about exclusivity period, 1111(b) elections, disclosure statement hearings and absolute priority rules. Instead, I'm going to do this law school style with a hypo. This post will be about the Chapter 13 side to the hypo
So here are the facts:
The Debtor Joe Sixpack has $90,000 in unsecured debt. His non gerrymandered form 22C gives him projected disposable income of $500 per month. He has a car payment of $300 per month for the next 36 months. He also has a 401k loan of $200 per month that ends in 24 months. Further, his non gerrymandered and properly re-allocated schedules I and J show a positive $600. The Chapter 13 trustee's vig is estimated to be 5.0%.
So Joe files for Chapter 13. When he retains his brilliant attorney, he pays him $2,000 and his counsel will receive $2,000 "through the plan". Joe's plan proposes to pay $600 per month for 60 months. This will pay his creditors the $30,000 they are required to recieve, his counsel gets his extra $2,000 and trustee gets his vig and there is a little left over. All documents are in order, Joe brings his properly completed cashiers check to the 341a he is good to go, right?
No he is not. While not specified in the code or really backed up by reality, the common law of Chapter 13s state "when a periodic obligation that is not treated under the plan is paid off, that amount of payment is disposable income more or less irrefutably". So Joe would now being staring down a plan that looks something like:
Month 1-24: $600 per month
Months 25 -36: $800 per month (401k loan paid off)
Months 37-60: $1100 (Car paid off)
Plan base is now $50,400.
Joe is good now, right? He is only 60 months and 50 grand away from being back in the High Life....
Not quite. The trustee's hands grabbing all that they can, will (usually) take possession of the Joe's tax
refunds. Let's say Joe's average tax refund is $500 per year, so his outlay is now $55,400 (includes his $2,000 retainer to counsel). For simplicity sake I am not going to present value this cash flow.
Next up is Chapter 11
Chapter 11 v Chapter 13 - Part I
I have quasi advocating for sometime that for many if not
most individuals who are filing a re-organization bankruptcy would be better
served by Chapter 11 as opposed to the conventional wisdom of filing for
Chapter 13. This is a two part
post. The first part talks about some
drawbacks of Chapter 13.
Yesterday, I watched the video of the oral argument of Danielson
v. Flores in front of the Ninth Circuit sitting en banc. I could tell the
panel was largely uneducated in things Chapter 13. I realized this when Judge Kozinski asked
Elizabeth whether she represented the Debtor.
Not really.
During the trustee’s oral argument, Judge Kozinski asked
counsel multiple times if a Debtor has zero disposable income what is the
Debtor is committing to? And counsel did
an excellent job of explaining why a Debtor might do this, owing the IRS,
mortgage arrears, and the ubiquitous lien strip. However, her best argument was what she didn’t
say.
The panel was not told by any party what really happens on
the ground in Chapter 13. The way it
works is the Debtor completes form 22C.
If the Debtor is below median, then the “means test” doesn’t apply. If the Debtor is above median, then form 22C
is completed. If the number is positive,
then you multiply 60 times the number and that equals the amount general
unsecured creditors must be paid over the life of the plan. Further, the plan must be 60 months in
duration.
However, if the
Debtor is negative on projected disposable income then technically the Debtor
does not have to pay anything to unsecured creditors. The panel seemed to think that when a debtor
was negative on projected disposable income, it would be obvious, unsecured
creditors would get paid nothing and that would be that.
However, while not at issue, the panel was not told what
really happens when a negative projected disposable income debtor files for
Chapter 13 for whatever reason. What
really happens, is the trustee will proceed to nickel and dime the Debtor on
every expense on Schedules I and J. This
is done under the auspices of “good faith”.
Anyone who can run a query on westlaw (or google scholar) would find out
that good
faith is not defined by some measure of the reasonableness of
expenses nor is Directv NFL Package per se unreasonable(if to watch Seahawks very reasonable, to watch 49ers unreasonable) Rather, it is a combination of
many factors of which expenses is just one area.
The reason the nickel and diming is an effective strategy is
that the trustee owns an immense tactical advantage over Debtors for many
reasons. First, Debtor’s counsel are
underpaid like no tomorrow. In order for
a Chapter 13 to be profitable for counsel it really needs to be confirmed
quickly with few hearings, or cases must be filed in large groups. Forcing the Debtor’s counsel to attend
multiple hearings simply wears down the Debtor counsel.
Second, and this is perhaps the trustee’s most potent
weapon, is that the trustee can make an oral motion to dismiss at any hearing
and on virtually any grounds. Often
these motions are based on technical aspects involving plan payments, mortgage
payments, tax returns, credit counseling certificates, and a myriad of local
concerns. Very few Chapter 13s are
dismissed on the merits i.e. failure to confirm a plan because of some missing
1325(a) element.
Third is some judges just don’t
like Chapter 13. I can’t blame them. The calendars are long and half the
cases
have zero chance of working. Here is one
judge
who really doesn’t like Chapter 13s.
There are many more and those are
just the three that came to mind. I am
not even going to get into all the
post-confirmation problems like tax refunds,
motions to modify / dismiss and the hurdles of actually getting
the discharge
order in hand.
Nor am I going to get into the limitations
on bifurcation of secured claims, the 60-month limit (no more,
no less) on
repayments and general inflexibility.
The next installment will get to
why in fact Chapter 11 is superior in many cases.
Finally, I am not begrudging or
criticizing any trustee or their counsel for doing the above things. I
respect the trustee’s business judgment, if
they believe doing the above helps them further their
responsibilities and duties,
then I respect that and won’t question it at all.
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