For over nine years, the co-authors of this column, both Chapter 11 business bankruptcy specialists, have reported myriad topics involving distressed businesses that utilize (or at least attempt to) the Bankruptcy Code to restructure or orderly wind up their affairs. In 2018, we examined bankruptcy topics such as the use of opt-out provisions in Chapter 11 plans related to substantive consolidation of debtor entities, whether a bankruptcy case should be dismissed because the debtor filed its bankruptcy petition in bad faith, and the scope of discovery allowed in bankruptcy cases under Federal Rule of Bankruptcy Procedure 2004. We also reported on cases where unusual situations had to be reconciled with bankruptcy law principles, including whether a television network should be allowed to keep millions in advertising revenue from a company utilized as a Ponzi scheme, whether a retired couple who grew marijuana, in compliance with legalization rules under Colorado law but still illegal under federal law, should be allowed to utilize federal bankruptcy law to obtain a discharge of debts, and whether the Philadelphia Parking Authority should be liable for emotional distress damages when it twice impounded a debtor’s car in violation of the automatic stay, once when the debtor was visiting his terminally ill mother-in-law in Puerto Rico.
Today we report on a case where a Chapter 7 trustee took the position that a 74-year-old man suffering from various illnesses, who was thrown in jail on a bench warrant and was told by deputy sheriffs “your body or your money,” voluntarily paid the bench warrant amount if the only other choice he was given was to remain in jail. In In re Schmitt, Case No. 18-21755, Bankruptcy Judge Beth E. Hanan of the U.S. Bankruptcy Court for the Eastern District of Wisconsin, in an 11-page decision, decided the answer was “no.”
‘I’m Stuck in Folsom Prison … And Time Keeps Draggin’ On’
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