bankruptcy court

Bankruptcy Court Holds EITC Refunds Are Not Exempt From Creditors In Bankruptcy

The intersection of taxes and bankruptcy present interesting issues. A recent bankruptcy case demonstrated this by considering whether Earned Income Tax Credit refunds (and their New Mexico state equivalents) can be exempt from creditors in a bankruptcy proceeding. The case shows how the answer can depend on where you live! In this case, under New Mexico law, the bankruptcy court held that these refunds were not generally exempt from creditors.

In the case, the debtor was entitled to tax refunds, which were in part attributable to the Earned Income Tax Credit (EITC) and a New Mexico version, the Working Families Tax Credit. As the court explained, these credits are “intended to provide economic relief to low-income heads of household who work.”

The debtor listed the tax refunds under the state’s “wildcard” exemption, which allows a debtor to choose what property to exempt; however, the wildcard exemption here had a limit of $500. The bankruptcy trustee eventually objected to the claimed exemptions to the extent they exceeded the $500 limit.

This post will consider two of the arguments made in response to the trustee’s objection. First, that the EITC tax refunds were not part of

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January 2, 2023 by ATTORNEY

FTX Is Allowed to Hide the Identity of Its 50 Biggest Creditors

(Bloomberg) — FTX creditors, including rich investors who don’t want their names made public, can remain anonymous and still participate in the company’s bankruptcy case for now, a judge ruled at the company’s first court hearing Tuesday. 

US Bankruptcy Judge John Dorsey agreed to let the fallen crypto exchange redact the names of the 50 biggest unsecured creditors owed a total of $3.1 billion. The US Bankruptcy Code normally requires the names be filed in documents available to the public. Representatives for FTX argued those creditors are also customers and disclosure would allow rivals to steal their business. 

The sudden fall of Sam Bankman-Fried’s crypto empire into bankruptcy Nov. 11 was so fast, and so disorganized that many standard procedures, including Tuesday’s hearing, have been subject to delays. The hearing began with FTX attorney James Bromley saying a “substantial amount” of the group’s assets “have either been stolen or are missing.” 

At least two groups of crypto creditors sent lawyers to the hearing to support the company’s request to keep their identities secret. One included members that are among FTX’s largest unsecured creditors — likely setting the stage for future fights for assets among various groups.

Dorsey agreed to

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November 24, 2022 by ATTORNEY

Biomass company with plants in Maine files for bankruptcy

A company that owns biomass electricity plants in West Enfield and Jonesboro and had access to millions in state subsidies to help it stay afloat has filed for bankruptcy, stating it owes $17.8 million to creditors including an energy market investor, the states of Maine and New Hampshire, and Maine loggers.

Stored Solar LLC and all but one of its subsidiaries filed for Chapter 11 bankruptcy protection in September in U.S. Bankruptcy Court in Bangor. Chapter 11 of the bankruptcy code provides a way for companies to reorganize their operations.

The filing comes six years after Maine lawmakers passed a $13 million bailout of the state’s biomass industry, which uses waste wood to produce electricity, with the aim of preserving electric plants and logging jobs.

Stored Solar was one of two companies to benefit from the subsidy package, which used taxpayer dollars to guarantee biomass producers above-market prices for their electricity. But the company, which bought the West Enfield and Jonesboro plants in 2016 after previous owner Covanta shut them down, only ran the plants intermittently following the bailout’s passage.

The West Enfield plant hasn’t produced power since December 2020 while the Jonesboro plant last produced power earlier this year,

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November 8, 2022 by ATTORNEY

Kahrig enters guilty plea to bankruptcy fraud charge

EAST ST. LOUIS — A former Edwardsville resident has pleaded guilty to making false statements during his 2018 bankruptcy case in the U.S. Bankruptcy Court for the Southern District of Illinois.

Kevin Kahrig, 49, a former area building contractor, concealed assets from his creditors by transferring those assets to his girlfriend-turned-spouse, Catharine Kahrig, prior to filing bankruptcy, according to court documents.

All told, Kahrig concealed hundreds of thousands of dollars in assets from his creditors, according to United States Attorney Rachelle Aud Crowe. He could receive up to five years in prison and a $250,000 fine at his Feb. 2, 2023 sentencing hearing in East St. Louis.

“Individuals who hide assets and make false statements on bankruptcy pleadings not only defraud their creditors, but they use the federal courts as a part of their fraud,” said Crowe.

“That is an intolerable abuse of the bankruptcy system which demands transparency and forthrightness by those seeking to have their debts discharged or restructured,” she said. “Those who engage in such behavior will be held accountable by this office.”

The case is being prosecuted by Assistant United States Attorney Peter T. Reed.

As part of his Oct. 28 plea, Kevin Kahrig admitted

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November 6, 2022 by ATTORNEY

Chapter 7 Bankruptcy: What to Expect & How Bankruptcy Works | Business

Filing for bankruptcy is never an easy choice.

But sometimes, it can feel like the only way to escape the vice grip of debt and move on with life.

Most personal bankruptcy filers will turn to a Chapter 7 bankruptcy, which offers almost total debt forgiveness and a quick discharge time.

But before you can get a fresh start from a Chapter 7 bankruptcy, you should know the basics — and what to expect from the bankruptcy process.

What Is Chapter 7 Bankruptcy?

In researching your options, you’ll find there are two common types of bankruptcy for individuals and couples: Chapter 7 and Chapter 13. While similar in many ways, they differ in some big areas.

Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” is a bankruptcy by which individuals or couples who are deemed to not have a high enough income to pay back debts can absolve themselves through liquidating their assets. You can include both secured debts and unsecured debts.

If the liquidation doesn’t cover the entire debt, then the remaining balance is typically forgiven.

Chapter 13 bankruptcy, also known as “wage-earner bankruptcy,” is for those whose income or other qualifiers make them ineligible

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October 28, 2022 by ATTORNEY
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