Monday, August 13, 2012

Fifth Circuit Holds State Agency Proceedings Exempt from Automatic Stay Pursuant to Section 362(b)(4) of the Bankruptcy Code

On June 18, 2012, the Fifth Circuit issued its opinion in Halo Wireless, Inc. v. Alenco Communications, Inc., et al., unanimously affirming an order by the Eastern District of Texas Bankruptcy Court that various state public utility commission proceedings initiated against Halo could proceed despite Halo’s subsequent Chapter 11 bankruptcy under the exception to the automatic stay provided by section 362(b)(4) of the Bankruptcy Code.  See Case No. 12-40122, 2012 WL 2212429 (5th Cir. June 18, 2012). Section 362(b)(4) is commonly known as the “police power exemption” and excepts from the automatic stay “the commencement or continuation of an action or proceeding by a governmental unit . . . to enforce such governmental unit’s or organization’s police and regulatory power . . . .” 11 U.S.C. § 362(b)(4).

Friday, August 3, 2012

BAPCPA Fails to Live Up to Its Advance Billing

Let’s call a spade a spade.  No matter how you look at it, the Bankruptcy Abuse Prevention and Consumer Protection Act, or BAPCPA, has been a spectacular failure.  With an acronym like that, it’s no wonder.  Passed in 2005, the law has not prevented bankruptcy abuse – and certainly has not protected consumers.  BAPCPA was supposed to accomplish several goals in connection with consumer bankruptcies:

  • It was supposed to reduce the number of people filing bankruptcy; 
  • It was supposed to force more people into Chapter 13 (repayment plan) rather than have them file a Chapter 7 (liquidation) bankruptcy; and
  • It was supposed to provide for more payment to unsecured creditors.