Unsecured creditor had some reclamation rights – they don’t get paid, they send notice, and are entitled to return of goods. However, lenders often have floating security rights. Bankruptcy comes along, who has priority? Under BAPCPA (new bankruptcy law), apparently secured creditors get priority. Reclaiming creditors are SOL.
A garnishee defendant (usually an employer) can be required to withhold earnings of a debtor even if the debtor is an independent contractor if the contractor’s earnings are subject to periodic payments. (This defeats the position that the garnishee defendant has no responsibilities and the creditor has to get at the money some other way.)
Supreme Court decided to allow post-petition attorney’s fees involving issues of bankruptcy where creditor had a pre-petition contract with debtor allowing for attorney’s fees.
The bankruptcy code is there to give a fresh start to an honest but unfortunate debtor (not to mention the “crooked but lucky debtor” — per our lecturer). A debtor lies on his schedules and neglects to disclose that the real estate he transferred to a trust for no consideration was worth a lot of money. The Chapter 7 Trustee catches it and sees red and is going to hang this guy out to dry. Debtor decides to exercise what’s characterized as an absolute right to convert to a Chapter 13. He gets a new trustee this way. The Supreme Court held 5-4 that the right was not absolute.
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