Libraries Are For Hobos: New Resources For Legal Research

Category: Bankruptcy Law
Published: Wednesday, 31 December 2014
Written by Admin

A few weeks ago, I was asked to substitute teach a paralegal class. The regular instructor told me that we would be going over legal research and that the class was going to meet at the library and grab a reporter and sit at the big conference room table at 6:30.

Not only can legal books make good decorations, but in a bind, they can also be burned for warmth.

I got there at 6:00. Not because I'm extra diligent, but because I have no idea how to do research out of the books and I needed to familiarize myself with what the books looked like before I taught the class. For me, and probably (hopefully) most of the first world, when someone says "bring out the books," that would be like going to a hospital for high blood pressure and they say, "bring out the leeches."

I spent about five minutes looking at the books, and decided that I just couldn't do it. Class started and I said, "Class, libraries are for hobos. Let's go back to the classroom and I'll show you how to do legal research like an adult." I showed them how hyperlinking works, what red flags and yellow flags mean, and all of the other good things that make legal research tolerable.

I don't even think books are good as backdrops for professional photos. It would be like if your CPA posed in front of a big abacus.

There Is Real Competition For Online Legal Research Tools

When people think about electronic legal research, most people think about Lexis and Westlaw. There are a couple of other good state-specific resources out there also, but certainly Lexis and Westlaw have the lion's share of the market.

A few weeks ago, Bloomberg BNA announced a new legal research tool for Bankruptcy. It offers over 600 chapters of analysis of bankruptcy law, written mostly by judges and lawyers at top law firms. Unlike most other resources, which are updated quarterly or annually, the Bloomberg BNA treatise is updated almost real time with new updates (click to enlarge):

It also offers a one-stop solution for things like local rules, legal news and commentary, and court docket searches. Docket searches can be one of the most valuable, overlooked online legal research tools. Not only do you find out how the judge in your case has ruled in similar matters, but often, the orders will cite case law that the judge used to reach that decision. Knowing the specific cases that a judge relies on obviously gives you a huge advantage as you prepare your oral arguments. With Bloomberg BNA, once someone does a docket search and downloads a certain document (you have to pay for that), it becomes part of the Bloomberg library and everyone can access it (again, click to enlarge):


When most people in the legal field think about rapidly evolving legal technology, they think about cybersecurity, e-discovery, or practice management tools, but don’t give a second thought to online legal research. Even people who consider themselves current with technology trends don’t think about legal research beyond the basics. The truth is, there are many good tools out there. If you don’t branch out and see what else is available, you are losing out on a lot of excellent resources.

Jeff Bennion is a solo practitioner from San Diego. When not handling his own cases, he's consulting lawyers on how to use technology to not be boring in trial or managing e-discovery projects in mass torts/complex litigation cases. If you want to be disappointed in a lack of posts, you can follow him on Twitter or on Facebook. If you have any ideas of things you want him to cover, email Jeff at This email address is being protected from spambots. You need JavaScript enabled to view it..

House passes Financial Institution Bankruptcy Act of 2014

Category: Bankruptcy Law
Published: Tuesday, 30 December 2014
Written by Admin

The House of Representatives passed the Financial Institution Bankruptcy Act of 2014 (HR 5421) on December 1, 2014. The bill, if enacted, would add provisions to the US Bankruptcy Code, including a new subchapter V of chapter 11, under which covered financial institutions would be eligible to be debtors in a chapter 11 bankruptcy case.

The House Report says that the bill seeks to implement a transparent judicial process that allows for the reorganization, rather than the liquidation, of a large financial institution as a preferable resolution strategy because of, among other things, the benefits of due process.1

HR 5421 would amend[] chapter 11 of the Bankruptcy Code to address better the unique challenges presented by the insolvency of a financial institution and better allow such an institution to be resolved through the bankruptcy process.2 It would allow the hellip; holding company that sits atop the financial firm#39;s corporate structure to transfer its assets, including the equity in all of its operating subsidiaries, to a newly-formed bridge company over a single weekend. The debt, any remaining assets, and equity of the holding company will remain in the bankruptcy process and absorb the losses of the financial institution.3

HR 5421 would function as an alternative to the FDIC receivership proceedings under title II of the Dodd-Frank Act, although the House bill does not expressly repeal title II of Dodd-Frank.4 HR 5421 would use a single point of entry approach that is similar to an FDIC receivership. Single point of entry refers to placing only the parent or holding company, and not its various subsidiaries, into bankruptcy.5

Covered financial institutions eligible to be chapter 11 debtors under HR 5421

Under HR 5421, a covered financial institution would be eligible to be a chapter 11 debtor. The bill defines a covered financial institution as either (1) a bank holding company, as defined in section 2(a) of the Bank Holding Company Act of 1956 or (2) a corporation that exists primarily for the purpose of owning, controlling and financing subsidiaries that have consolidated assets of $50 billion or more and that derives 85 percent or more of its revenue or total assets from activities that are financial in nature, as defined in section 4(k) of the Bank Holding Company Act of 1956.6

Filing a chapter 11 covered financial institution bankruptcy case

HR 5421 would authorize a covered financial institution to file a voluntary chapter 11 petition with the bankruptcy court, and the bill also provides for the Board of Governors of the Federal Reserve (the Board) to file an involuntary petition against a covered financial institution.7 The covered financial institution could then consent to an involuntary chapter 11 petition filed by the Board, or dispute it.

Proposed section 1183 provides that in support of an involuntary petition against a covered financial institution, the Board must state under penalty of perjury that one of the following conditions exist:

(i) the covered financial corporation has incurred losses that will deplete all or substantially all of the institution#39;s capital and there is no reasonable prospect for the institution to avoid such depletion;

(ii) the institution is insolvent;

(iii) the institution is not paying, or is unable to pay, its undisputed debts as they come due; or

(iv) the institution is likely to be in one of the conditions specified in (i)-(iii) soon such that the immediate commencement of a bankruptcy case is necessary to prevent serious adverse effects on financial stability in the United States.

In addition to one of the foregoing conditions, the Board also must establish that the commencement of a bankruptcy case is necessary to prevent serious adverse effects on financial stability in the United States.

Transfer of assets in a covered financial institution chapter 11

HR 5421 would facilitate the transfer of assets, contracts and licenses to a bridge company pursuant to an order of the bankruptcy court. The term bridge company is defined in the proposed legislation to mean a newly formed corporation to which property of the estate may be transferred under section 1185(a) and the equity securities of which may be transferred to a special trustee under section 1186(a). The special trustee would then distribute assets held in trust pursuant to a court-approved bankruptcy plan or, if the case converts to a chapter 7 liquidation, in accordance with chapter 7 of the Bankruptcy Code.

Proposed section 1185 sets forth the process and legal standards for the approval of such a transfer. These procedures require that not less than 24 hours notice of the request for a transfer be given to creditors and other affected parties, including governmental entities.

For a bankruptcy court to authorize a transfer, it would be required to make several legal and factual determinations, including that (i) the transfer is necessary to prevent serious adverse effects on financial stability in the United States; (ii) the transfer does not provide for the transfer of any unsecured debts, other than unsecured debts under a qualified financial contract; (iii) transferred property that is subject to a lien will remain subject to the lien following the transfer; (iv) the transfer does not include any equity of the debtor institution; (v) the bridge company is not likely to fail to meet any obligations it assumes pursuant to the transfer; and (vi) a special trustee will be appointed for the bridge company and will hold all equity interests in the bridge company.

Upon entry of a bankruptcy court order authorizing the transfer, the transferred property, executory contracts and licenses no longer would be property of the covered financial institution#39;s bankruptcy estate. Bankruptcy Code sections 363 and 365, which govern the sale of assets and assignment of executory contracts and leases of a debtor in all bankruptcy cases, would apply in a subchapter V chapter 11 case to the extent consistent with the other provisions of HR 5421.8

Covered financial institution#39;s ability to challenge the Board#39;s involuntary petition

If a covered financial institution does not consent to the Board#39;s chapter 11 petition, under the proposed legislation, the bankruptcy court would be required to conduct a hearing on the petition within 16 hours of the petition#39;s filing, with notice of the hearing given only to the covered financial institution, the FDIC, the Office of the Comptroller of the Currency and the Secretary of the Treasury. Only the covered financial institution, the Board, the FDIC, the OCC and the Secretary of the Treasury would be authorized to participate at the hearing on the petition, and there are provisions in the bill for the Board or trustee to ask the court to seal all pleadings, transcripts, hearings and orders in connection with the hearing if their disclosure could create financial instability in the United States. Moreover, HR 5421 would require the court either to grant the Board#39;s chapter 11 petition or to dismiss the chapter 11 bankruptcy case within 18 hours after the Board files a petition.

HR 5421 also contains procedures for expedited appeals of the decision to grant a chapter 11 petition filed by the Board.

Role of the special trustee for the bridge company

The appointment of a special trustee for the bridge company is a condition to the transfer of assets to a bridge company, and proposed section 1186 describes the selection and duties of a special trustee.9 The covered financial institution is required to give the Board consultation rights with respect to the selection of the special trustee and must report to the bankruptcy court on the result of its consultation with the Board. Once appointed, the special trustee has various obligations to prepare and file with the bankruptcy court periodic reports on the trust, and to provide notice of material changes in, or actions of, the bridge company.

The special trustee would hold all equity securities of the bridge company in trust for the benefit of the debtor institution#39;s bankruptcy estate, and would be permitted to dispose of the equity securities of the bridge company in accordance with the trust agreement. Upon a sale of the equity securities in the bridge company, the special trustee would be required to hold the sale proceeds in trust for the bankruptcy estate, to be distributed either under a bankruptcy plan or pursuant to chapter 7 of the Bankruptcy Code. HR 5421 provides that the office of the special trustee terminates as soon as practicable after the final distribution of assets is complete.

Stay of actions by creditors and counterparties to contracts with the financial institution debtor

HR 5421 would create, under new section 1187, an automatic stay prohibiting actions by creditors, as well as lease and contract counterparties.10 While the section 1187 stay is similar to the automatic stay that arises pursuant to section 362 of the Bankruptcy Code in other bankruptcy cases, there are some significant differences.

First, the section 1187 stay would extend to the covered financial institution that filed bankruptcyandto the institution#39;s affiliates. Under the relevant Bankruptcy Code definition, an affiliate would be (A) an entity that owns, controls or holds with voting power 20 percent or more of the debtor#39;s outstanding voting securities and (B) a corporation 20 percent or more of whose outstanding voting securities are owned, controlled or held with power to vote by (i) the debtor or (ii) by an entity that owns, controls or holds with voting power 20 percent or more of the debtor#39;s outstanding voting securities.11 Essentially, affiliates are parents, subsidiaries and sister companies.

In addition to limiting the ability of creditors to exercise remedies against the debtor and its affiliates, proposed section 1187 contains specific provisions for the assignment of contracts, leases and other agreements to the bridge company, and the bridge company#39;s corresponding obligations to cure defaults and provide counterparties with adequate assurance of future performance under the assigned agreements.

Finally, in keeping with the purpose of a speedy transfer of assets to a bridge company, the section 1187 stay would expire upon the earlier of the time that the bankruptcy court authorizes an asset transfer, denies an asset transfer, or 48 hours after the commencement of the bankruptcy case.

Stay of rights of a party to a securities, commodities, forward, repo or swap agreement to terminate, liquidate oraccelerate those contracts upon bankruptcy

New section 1188 would impose a 48-hour stay during which counterparties to securities, commodities, forward, repo or swap agreements (qualified financial contracts) are prohibited from exercising contractual rights to modify, terminate, liquidate or accelerate a qualified financial contract with the debtor or an affiliate.12 This stay extends to rights to offset or net out termination values and rights under security agreements or credit enhancements related to the qualified financial contract. The section 1188 stay would have the same limited life-span as the section 1187 stay: it expires upon the earlier of the time that the bankruptcy court authorizes an asset transfer, denies an asset transfer, or 48 hours after the commencement of the bankruptcy case.

Proposed section 1188 also contains protections for the non-debtor party. It requires the debtor or affiliate that is benefitting from the stay to continue to perform all of its payment and delivery obligations under the qualified financial contract during the pendency of the stay, or else the stay terminates as to that contract. In addition, proposed section 1188 prohibits the debtor from cherry picking contracts with a counterparty-if the debtor is going to assign a given counterparty#39;s qualified financial contract to the bridge company, it must transferallqualified financial contracts with that counterparty to the bridge company.

Bridge company#39;s legal rights and obligations after the transfer

Under proposed section 1189, the terms of the transfer may provide for the bridge company to assume all of the Federal, State or local licenses, permits and registrations that the debtor institution had prior to the transfer, and these rights would remain valid and vest in the bridge company. In addition, these licenses, permits and registrations could not be terminated on account of the debtor institution#39;s bankruptcy, insolvency or financial condition, or as a result of the transfer.

After a transfer to the special trustee, the special trustee is subject only to applicable non-bankruptcy law and the actions and conduct of the special trustee would no longer be subject to approval by the bankruptcy court.

Venue of financial institution bankruptcy cases

In the first instance, a case under proposed subchapter V would be heard under section 157 by a bankruptcy judge. HR 5421 would require the Chief Justice of the United States to designate at least ten experienced bankruptcy judges to hear subchapter V bankruptcy cases, and to designate at least three appellate court judges in at least four circuits to hear the expedited appeals of petitions to commence a subchapter V bankruptcy case.

Next steps for HR 5421

HR 5421 has been referred to the Senate Judiciary Committee. With the change in control of the Senate following the 2014 elections, Senator Chuck Grassley will assume the role of Chair of the Judiciary Committee, and this committee will play an instrumental role in the future prospects of HR 5421.

Vietnam legal update: new Law on Bankruptcy to take effect in January

Category: Bankruptcy Law
Published: Tuesday, 30 December 2014
Written by Admin

In brief:Vietnam#39;s new Law on Bankruptcy will take effect from 1 January 2015, bringing in a number of changes, including a new definition of #39;bankruptcy#39;. Partner Robert Fish(view CV)and Junior Associates Giang Quang Nguyen and Linh Nguyen look at the most significant features of the new law and note what will differ from the current regime.

  • Definition of bankruptcy
  • Filing a bankruptcy petition
  • Jurisdiction of courts
  • Asset management officers and asset management and liquidation firms
  • Bankruptcy procedures
  • Bankruptcy procedures of credit institutions
  • Addressing some deficiencies


The new Law on Bankruptcy (theNew Bankruptcy Law) provides for a new definition of #39;bankruptcy#39;. An enterprise is considered to have gone bankrupt if it meets both of the following conditions:

  • the enterprise is insolvent; and
  • the enterprise is declared by the court to have become bankrupt.

An enterprise is considered #39;insolvent#39; if it fails to meet any of its payment obligations within three months from the due date. Instead of waiting for a creditors#39; request to trigger the status of insolvency, under the New Bankruptcy Law an enterprise will automatically be deemed insolvent after the three-month period has lapsed.


There are three categories of person that have the right to file a bankruptcy petition:

  • creditors of unsecured or partly secured debts;
  • employees of the enterprise; and
  • the enterprise itself.

It is noteworthy that employees no longer have to file bankruptcy petitions through an elected representative or a union representative. If the enterprise does not pay an employee their salary and/or other payments due to him/her within three months from the due date, the employee can personally file a bankruptcy petition. This will place a greater burden on the enterprise, because any employee with any unpaid debt (whatever the amount is) can file a bankruptcy petition against the enterprise after the three-month time limit.


The issue of provincial courts being overloaded with bankruptcy cases has been addressed under the New Bankruptcy Law.

Under the current Bankruptcy Law, a provincial court has jurisdiction over the bankruptcy proceedings of all enterprises registered for business at the business registration office of the respective province. This has been amended under the New Bankruptcy Law, where district courts are to have jurisdiction over bankruptcy cases of enterprises that have headquarters in the district. Provincial courts will then only deal with complicated cases or cases that involve special elements such as offshore assets, a foreign party or branches or real estate property in different localities.


The New Bankruptcy Law introduces new concepts of #39;asset management officers#39; and #39;asset management and liquidation firms#39; to replace the complex #39;Committee for Management and Liquidation of Assets#39; in the current Bankruptcy Law. Asset management officers and asset management and liquidation firms are responsible for managing and liquidating assets during bankruptcy procedures.

An asset management officer is an individual who specialises in the management and liquidation of assets of an insolvent enterprise in the course of bankruptcy settlements. An asset management officer must have a degree in law, economics, accounting, finance, or banking and have at least five years#39; experience in such sector, or be a qualified lawyer or auditor. These persons must obtain a certificate to qualify as an asset management officer. Further details in relation to the procedures to obtain this certificate are to be stipulated in future regulations. An asset management and liquidation firm is an enterprise established by one or more asset management officer(s) and has the same function as an asset management officer.

An asset management officer and/or an asset management firm is responsible for conducting the bankruptcy procedures, including ascertaining the company#39;s assets, creditors and debtors and implementing measures to preserve and/or distribute the assets of the company and any decisions of the court in relation to the bankruptcy.


The bankruptcy procedures under the New Bankruptcy Law can be summarised in six steps as follows:

Step 1:Filing bankruptcy petition

Step 2:Commencement of bankruptcy proceedings (unless the petition is withdrawn)

Step 3:Appointment of asset management officer/firm

Step 4:Creation of creditors#39; list

Step 5:Creditors#39; meeting

Step 6:Rehabilitation or bankruptcy and liquidation of assets

After receipt of a valid bankruptcy petition, a time limit of three days is given to parties to initiate a negotiation session. The purpose of this session is to see if the debtor is able to repay the outstanding debts. If the negotiation is initiated, the court shall set a time limit for negotiation which must not exceed 20 days and, if the negotiation succeeds, the petition will be withdrawn and the case closed. If the negotiation fails or cannot be initiated or conducted, the court will announce the commencement of bankruptcy proceedings.

The bankruptcy proceedings start with a decision by the court on appointment of an asset management officer or firm to manage and liquidate the applicable assets (theBankruptcy Manager). Creditors have 30 days from the commencement of the bankruptcy procedures to submit their debt demands to the Bankruptcy Manager, who will compile a consolidated list of creditors.

The creditor meeting will then be held to decide on the future of the enterprise. This meeting can only be held if there are creditors present who hold at least 51 per cent of the unsecured debts. This quorum was previously the presence of creditors who represent two-thirds of the total unsecured debts of the enterprise by value. In the event that the quorum is not met, the creditors meeting will be postponed and reconvened within 30 days. If the quorum is still not achieved at the reconvened creditor meeting, the court then has the authority to issue a decision declaring the enterprise bankrupt without input from the creditor meeting.

Based on the result of the meeting (if applicable), the court will either issue a decision on rehabilitation of the enterprise or a declaration on bankruptcy of the enterprise.

If the enterprise is declared bankrupt, it is required to liquidate its assets and distribute the proceeds in the following order (after payments of secured debts):

  1. bankruptcy fees;
  2. unpaid salaries and other payments to employees;
  3. debts arising after the commencement of bankruptcy proceedings; and
  4. financial obligations to the State, unsecured debts (including secured debts that are unpaid because the value of the collateral was less than the debts).


The scope of the New Bankruptcy Law now extends to apply to credit institutions, but note that a bankruptcy petition can only be filed against a credit institution if the State Bank of Vietnam has first issued a decision on:

  • the removal of the status of special control; or
  • the termination of the application for solvency restoration measures; or
  • the non-application for solvency restoration measures,
  • and the credit institution concerned remains insolvent.

At that time, creditors, employees, shareholders and members of cooperatives will have the right to file a bankruptcy petition. Additionally, an insolvent credit institution has an obligation to file a bankruptcy petition, otherwise the State Bank of Vietnam will step in and make the filing on its behalf.


As has been well documented, the previous Law on Bankruptcy was largely a failure in providing a legal regime for the orderly dissolution of companies in Vietnam with very few formal bankruptcy cases being brought compared to the large number of business that simply ceased operating without undergoing any formal process. It is hoped that the New Bankruptcy Law will address some of the deficiencies in the existing law, for example, with the new definitions of #39;bankruptcy#39; and putting the management of proceedings in the hands of specialist insolvency practitioners. This will hopefully enhance creditors#39; ability to recover unpaid debts in a more orderly and transparent manner.

Millions of Student Records Sold in Bankruptcy Case

Category: Bankruptcy Law
Published: Tuesday, 30 December 2014
Written by Admin

When the education technology company ConnectEDU Inc. sought protection under Chapter 11 bankruptcy law earlier this year, 20 million student records hung in the balance, raising many questions for educators and parents alike.

What would happen to the data the company had amassed in its college- and career-ready technology platform for students from middle school through college? Who would own the records? How would they be secured?

Because of the bankruptcy court proceedings, the action played out on a public stage, revealing a transfer that usually goes on in a more private way when one company purchases another and data ...