Last week, the Trump administration and Congress proposed spending cuts that if enacted are likely to affect federally funded health insurance programs such as Medicaid and the Affordable Care Act (ACA). These cuts could disrupt cash flow for already vulnerable health care providers, bringing their financial problems into sharper focus as government payor programs face budget reductions. This may lead to increased rates of insolvency among health care institutions, particularly those that rely heavily on reimbursement from such programs. And that…More

Right now, a business with less than $7.5 million in debt can file an easier, cheaper, and more efficient bankruptcy than a traditional Chapter 11.  That privilege will soon be limited to businesses with less than around $3 million of total debt unless Congress acts before June 21, 2024.  This is not the first time small businesses have had to cope with uncertainty surrounding their access to a faster more affordable bankruptcy.  This blog post discusses the Final Report of the…More

On February 19, 2020, the Small Business Reorganization Act (the “SBRA”) became effective and created a new subchapter V to chapter 11 of the Bankruptcy Code.  As we have reported, subchapter V presents a new avenue for small business debtors to reorganize more efficiently than traditional chapter 11 cases.  However, the more efficient procedures of Subchapter V are only available to certain types of debtors that meet the eligibility requirements of section 1182(1) of the Bankruptcy Code.  Those eligibility requirements…More

Today, President Biden signed into law the Bankruptcy Threshold Adjustment and Technical Corrections Act, S. 3823, 117th Cong. (the “Act”), which, among other things, continues the temporary expansion of subchapter V eligibility.  Section 1182(i)(B)(1) of the Bankruptcy Code originally limited the term “debtor,” for subchapter V purposes, to a person engaged in commercial or business activities with aggregate noncontingent, liquidated debts not exceeding $2,725,625.  The Act extends the temporary increase of the debt limit to $7.5 million that was first…More

On March 14, 2022, Senator Chuck Grassley (R-IA) introduced proposed legislation that—if enacted—would make permanent the $7.5 million debt limit applicable to debtors under subchapter V of chapter 11 of the Bankruptcy Code that has enjoyed only temporary status under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) for the prior two years.  Of course, as bankruptcy practitioners may expect, the Bankruptcy Threshold Adjustment and Technical Corrections Act, S. 3823, 117th Cong. (as introduced to the S.…More

“Just enough” is an undeniable—if informal—legal precept.  The concept finds its way into canon from adequacy of pleading to application of equity.  See, e.g., K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1284 (Fed. Cir. 2013) (A complaint “must give just enough factual detail to provide ‘fair notice of what the . . . claim is and the grounds upon which it rests.’”) (emphasis added); Highway Cruisers of Cal., Inc. v. Sec. Indus., Inc., 374 F.2d 875,…More

In a recent post, our own Harriet Wallace observed a truism in a recent ruling by the United States Bankruptcy Court for the District of Delaware in the chapter 7 iteration of the infamous Jevic case—the wording of an order matters.  The Court saw fit to bold and underline that maxim in yet another recent holding in Insys Liquidation Trust v. MeKesson Corporation (In re Insys Therapeutics, Inc.), No. 21-50176 (JTD), 2021 WL 3083325 (Bankr. D. Del. July 21, 2021).  To…More

The Snowball effect, the Domino effect, and even the Streisand effect all demonstrate the accretive impact of small changes.  Though without a catchy metaphor, the tendency of Circuit splits to attract new and deviating opinions fits the concept—particularly as applied to the deepening rift between Circuits over the constitutionality of United States Trustee fee increases in the Bankruptcy Judgeship Act of 2017 (the “2017 Amendment”).  A recent ruling from the United States Bankruptcy Court for the Southern District of Ohio…More

Somewhere in our rough memories of high school science, we should recall the general principle that a gas will always expand to fill a given void.  Although the Bankruptcy Code diverges markedly from scientific principles, newly enacted provisions in Subchapter V of Chapter 11 of the Bankruptcy Code suggest some similarity.  In In re Dani Transport Service, Inc., the United States Bankruptcy Court for the Central District of California found that Sections 1183 and 1185 of the Bankruptcy Code can…More