Dallas Bar Association
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Focus | Antitrust & Trade/Bankruptcy & Commercial Law
June 2021 Volume 46 Number 6
Virtual Law Day
On May 3, the DBA hosted a Virtual Law Day program, at which Louis J. Freeh, former FBI Director, was the keynote speaker. Mr. Freeh was interviewed by DBA President Aaron Tobin on the topic of “Advancing the Rule of Law Now.” The program was supported by 11 Bar Associations around the state.
Focus
Bankruptcy & Commercial Law
Creditor Options: Involuntary Bankruptcy vs. Receivership BY LYNDEL ANNE VARGAS AND EMILY WALL
Clients want results. Creditors in Texas have several options to collect significant business debts from individuals or entities holding non-exempt assets. This article is a brief overview of two types of remedies that can bring results when collecting business debts. Although involuntary bankruptcies make up less than 1 percent of total bankruptcy filings, they can be a useful tool for creditors interested in benefitting from the collective bankruptcy process. A bankruptcy case and oversight can minimize a loss or transfer of assets available to pay debts. The requirements for filing an involuntary bankruptcy differ depending on how many creditors a debtor has and how much the creditors are owed. If the debtor has more than 12 creditors, three or more creditors can commence an involuntary bankruptcy if the creditors (a) each hold a non-contingent, undisputed, unsecured claim and (b) are collectively owed at least $16,750. If the debtor has fewer than 12 creditors, only one petitioning creditor is required, so long as the creditor holds a noncontingent, undisputed, and unsecured claim of at least $16,750. A debtor has 21 days to respond to an involuntary petition, and absent consent, the bankruptcy court will then hold a hearing to determine whether to grant the involuntary petition and enter an order for bankruptcy relief. At the hearing, petitioning
creditors must show that (a) the debtor is generally not paying its debts as they become due; or (b) a custodian was appointed or took possession of the debtor’s property within 120-days before the involuntary petition was filed. The second option can present a scenario where bankruptcy law trumps a state law receivership or similar proceeding. Involuntary bankruptcies are only available under chapter 7 (liquidation) and chapter 11 (reorganization), and the debtor must be eligible to be a debtor under the designated chapter. Typically, chapter 11 debtors remain in control of their operations and assets—although a trustee could be appointed—whereas chapter 7 results in the automatic appointment of a trustee to oversee the liquidation process and make distributions to creditors. Creditors considering an involuntary filing should be aware that all creditors of the debtor (not just those that initiate the petition) will benefit and share pro-rata in distributions, subject to priorities. Any creditor considering filing an involuntary bankruptcy petition should proceed with caution. In the event the court dismisses the petition (unless all parties consent to dismissal) the court can enter judgment against the petitioning creditors for the debtor’s costs and attorney fees. Additionally, creditors who are found to have filed an involuntary petition in bad faith could be liable for damages caused by the filing or even punitive damages.
Bar None 2021 Presents Remotely Entertaining This Summer BY MICHELLE M. ALDEN
Join the cast and crew of Bar None this summer as they present Bar None 2021: Remotely Entertaining. Bar None’s annual variety show promises to be a great one, although it will be virtual and shorter than usual. Watch Dallas area lawyers and judges sing, dance, and make you laugh so hard your sides hurt. As much as the cast and crew love performing and making people laugh, their real motivation is to support the Sarah T. Hughes Diversity Scholarship program. The scholarship program was established in honor of U.S. District Judge Sarah T. Hughes, a former trustee of the Dallas Bar Foundation, who devoted herself to improving the rights of women and minorities. The Hughes Scholarship provides tuition and fees for deserving minority students each year. Students at SMU Dedman School of Law, UNT Dallas College of Law, and Texas A&M School of Law are eligible to apply for the scholarship. The Dallas Bar Foundation takes
its responsibility for finding deserving recipients seriously. If you have ever met a Hughes Scholar, you know how impressive these students are. The scholarships continue during the pandemic, so the show must go on! Many volunteer hours go into putting on this production each year. The hours come from lawyers all over the metroplex including 35-year veteran Director Martha Hardwick Hofmeister and Producer Tom Mighell, as well as the choreographers, script writers, committee members, actors, and numerous behind-the-scenes staff. Show your support for the Dallas legal community and the Hughes Scholars by becoming a Friend of Bar None or purchasing another sponsorship opportunity. To learn more, visit www.barnoneshow.com; for sponsorship and information, contact Elizabeth Philipp at (214) 220-7487 or ephilipp@dallasbar.org. HN Michelle Alden is the Director of the Dallas Volunteer Attorney Program and a Member of the Marketing Committee of the Bar None Production Company. She can be reached at aldenm@lanwt.org.
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Inside 6 Even During A Pandemic, Bankruptcy Courts “Do Equity” 14 First Criminal Charges for Wage-Fixing & No-Poach Agreements 19 Avoiding Stay Violations in a Bankruptcy Case 21 DBA Golf Tournament
Need Help? You’re Not Alone. Texas Lawyers’ Assistance Program…………...(800) 343-8527 Alcoholics Anonymous…………………………...(214) 887-6699 Narcotics Anonymous…………………………….(972) 699-9306 Al Anon…………………………………………..…..(214) 363-0461 Mental Health Assoc…………………………….…(214) 828-4192 Crisis Hotline………………………………………..1-800-SUICIDE Suicide Crisis Ctr SMU.…………………………...(214) 828-1000 Metrocare Services………………………………...(214) 743-1200 More resources available online at www.dallasbar.org/content/peer-assistance-committee
