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James Douglas Uloth
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James Uloth’s Answers

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  • How are the statute of limitations effected if the company you have a claim against goes Chapter 11?

    I didn't file my law suit before the company went Chapter 11, but will file a proof of claim. Is it the date the company declares Chapter 11 or the date i file my proof of claim that is used to determine if the statute of limitations has run out ...

    James’s Answer

    To answer your specific question, the effect of the automatic stay on the statute of limitations is governed by Bankruptcy Code Section 108(c) (“Extension of Time”). If applicable law or an agreement establishes a deadline for filing or continuing a civil lawsuit, and that time has not expired when a bankruptcy case is filed, the deadline for filing suit does not expire until the later of: 1) 30 days after any applicable automatic stay in the bankruptcy case expires or is terminated; or 2) the expiration of the originally applicable non-bankruptcy limitations period.

    However, what you should probably be looking at is whether you should take any action before the tolling period ends. If your lawsuit was to enforce a payment obligation, such as an unpaid invoice, you would need to file a claim in the bankruptcy case prior to the claims bar date established for the case, and there may be no to pursue any lawsuit.

    If your lawsuit is based on a claim which could involve someone besides the debtor, such as a personal injury which might be covered by insurance, you would need to review whether to ask the bankruptcy court to modify the automatic stay so that you can proceed with a lawsuit against the company for purposes of triggering the third party’s obligation (such as the obligation of the debtor company’s insurer to defend, and possibly pay, the claim.) Under this second type of circumstance, you should also file a proof of claim, which would allow you to share with other creditors of your particular class. However, if insurance may be involved, and you have a valid claim, you will likely recover more by seeking authority to pursue a lawsuit. The debtor company could still try and bring your claim within the bankruptcy process for resolution, but this might be the only way to involve insurance.

    Additionally, in a Chapter 11 case, you need to watch the case to determine how the debtor intends to value and pay any claims as this could cut off any other rights you may have.

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  • My fiance is a sole proprietor (PA - professional association). Will I be liable in legal matters after we are married?

    I have secure assets and income for retirement and can provide both of us with a good life after she retires from her business. She has very little set aside for retirement. Obviously, I want to protect my resources for our eventual retirement....

    James’s Answer

    Since you specifically use the term PA, I assume that your fiancé is an attorney. The short answer is that the assets which you own as separate property at the time of your marriage will not be subject to a judgment against your spouse for professional negligence. However, although the answer is relatively simple, reaching that answer is at times a complex accounting and tracing question. The Texas Family Code Section 3.003 provides that property possessed by either spouse during marriage is presumed to be community property, with the burden being on you to show it is not. Thus, you must maintain the property separately, and avoid commingling your separate property with community property or your spouse’s separate property. Additionally, income from separate property may become community property. These are just a few of the considerations. As a result, it may be a good idea to consider a pre-marital agreement that will help define the division of your assets, and assist in proving that division.

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  • Ch 11 Bankruptcy

    I have a business and I have filed for ch 11 bankruptcy. Can I name myself as a creditor?

    James’s Answer

    It is not possible to give you a complete answer without considerably more information. Assuming that the business has filed bankruptcy, rather than you individually, in broad terms your role as an owner of a corporation or similar entity, such as a limited liability company, makes you an equity security holder. You may file a claim in that capacity but equity security holders are generally last in line to be paid in a bankruptcy.

    If you are additionally owed money by the business, either because you loaned money to the business that has not been repaid, or are owed unpaid salary, you may also be a creditor. Classification as a secured or unsecured creditor would depend on whether you obtained collateral for any loan. You should also be aware that although you may be a creditor, depending on how your claim came into existence, and what sort of documents you have to support your claim, other creditors may challenge your claim or seek to alter the priority of your claim.

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  • Does a Chapt 11 Filing Automatically result in NASDAQ de-listing? What is process, requirements & timing?

    Very unusual case. The common stock dropped from $11 to $1 per share and is currently trading between .85 and 1.25, closing above $1. Filing company gave no warning and holds valuable IP...but is severely restricted for portions of business due t...

    James’s Answer

    • Selected as best answer

    The NASD has considerable discretion regarding the decision to delist a company. NASD Manual, sec. 4300, states that "NASDAQ may . . . apply additional or more stringent criteria for the . . . continued inclusion of particular securities or suspend or terminate the inclusion of particular securities based on any event, condition, or circumstance which exists or occurs that makes initial or continued inclusion of the securities in NASDAQ inadvisable or unwarranted in the opinion of NASDAQ, even though the securities meet all enumerated criteria for initial or continued inclusion in NASDAQ.”
    Specifically, the NASD Manual outlines certain criteria which support delisting. The NASDAQ may suspend or terminate an issuer’s securities if the company files or announces that the board has authorized liquidation under any section of the bankruptcy laws unless it is determined that the public interest and the protection of investors would be served by continued listing (NASD Manual, sec. 4450(f). Delisting may also occur if certain criteria are not met by the listed company. The criteria which must be met depend on the type of security involved and largely establish minimum standards for number of shares, total shareholder’s equity, number of shareholders, value of the shares (over a set time period) and number of market makers (over a set time period). These are set out in the NASD Manual, sec. 4450 (a) “Quantitative Maintenance Criteria”).

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  • What can I do? My Small Claims case went to County Court. I am the plaintiff.

    An LLC filed a lawsuit against a roofer. 12/27 JP granted Default Judgement because defendant did not show. 7 days later defendants lawyers file a motion new trial. JP did not grant. On 1/29, defendants lawyers filed "Inability to pay" JP grants...

    James’s Answer

    Based on your factual summary, the defendant in the justice court case filed a sworn statement of inability to pay pursuant to Texas Rule of Civil Procedure 506.1 in connection with the appeal of the case from justice court. The purpose of such a statement is to allow the defendant to avoid posting a bond in connection with the appeal of the case to the county court. Rule 506.1(d)(2) provides that the statement of inability to pay “may be contested as provided in Rule 502.3(d) within 7 days after the opposing party receives notice that the statement was filed.” You might be able to argue that you did not receive notice until your tenant forwarded the statement to you, giving you seven days from that date to contest the statement. How successful you would be in making such an argument will depend on whether the rental house is a valid place where you can be given notice, which cannot be determined on the facts provided. If you are not allowed to contest the sworn statement, the matter will proceed to a new trial without the need for a bond to be posted. Being allowed to contest the sworn statement does not affect the appeal, unless the sworn statement is disallowed, bond is required, and not paid. Since your opposing party is now represented by an attorney, you will be at a disadvantage in continuing with the trial of this matter without hiring an attorney for the plaintiff LLC.

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  • Can I file a Wrongful Termination Suit after company emerges from Chapter 11 if my termination occurred before the bankruptcy?

    I did not file a suit at the time of termination 9 months ago because my brother is still employed by the company and I was afraid that if I did so, he would have been terminated as well. Now the company is planning on filing chapter 11. If the ...

    James’s Answer

    If you have a claim against a company entering bankruptcy, you will need to take action in the bankruptcy case to avoid losing your claim. The nature of the action required will depend on the factual and legal basis of your claim. As others have stated, you may be able to file a proof of claim, which will be treated in a like manner to other similar claims. However, you may be able to obtain different treatment by taking action other than simply filing a proof of claim. All of this depends on specific review of the facts giving rise to your belief that you have a grounds for a lawsuit.

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  • How long do we have to respond to a motion to dismiss pursuant to 11 U.S.C. Sec. 1112(b) in bankruptcy court?

    They are asking that the Chapter 11 case be dismissed as a bad faith filing.

    James’s Answer

    The time for response to a motion is determined with reference to the Federal Rules of Bankruptcy Procedure, as modified by the Local Rules for the Court in which the case is pending, a General Order of the court, or an order specific to the case. Federal Rule of Bankruptcy Procedure 2002(a)(4) requires 21 days notice of a hearing on a motion to dismiss a case under Chapter 11 (but this time can be reduced by the Court). The Local Rules for the Bankruptcy Court for the Southern District of Indiana are available on the Court's website which is linked to this answer. Upon brief review, the Local Rules do not appear to establish a response deadline for a motion to dismiss, but it is possible that one is stated by means of a motion in the notice itself (although the fact you are asking suggests it is not.)

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  • How to reject an executory contract in chapter 11

    My company is going to file chapter 11. Can I reject executory contracts with the filing of the petition?

    James’s Answer

    There are a lot of variables to the assumption or rejection of an executory contract. The first of which is whether the contract in issue is actually an executory contract. The Bankruptcy Code does not define the term “executory contract” and uses it as though the meaning is patently obvious. However, most bankruptcy courts define an executory contract as one which, as of the date of the case filing, requires some form of performance still be due of both parties to the contract such that the failure to complete performance would be a breach of contract. A contract is no longer executory when the only obligation one party has is an obligation to pay money.

    Assuming a contract is executory, its assumption or rejection is governed by Bankruptcy Code §365. Special assumption rules exist in Chapter 11 for the assumption of the lease of non-residential real estate that require action on the assumption, rejection or assignment within 120 days of the filing of the case (§ 365(d)(4)). This deadline can be extended if a motion is made to the court before the expiration of the 120 day period, and the motion is granted. As to all other contracts, Bankruptcy Code § 365(d)(2) does not require action on the assumption, rejection or assignment until the confirmation of his plan. However, a Debtor may act sooner to seek rejection of a contract, subject to court approval and creditor objection, and the non-debtor party to the contract may ask the court to compel the Debtor to act earlier than confirmation.

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  • Are judgments worth anything?

    I have a two contracts where the client is suppose to pay me for work. The contract is clear as day and still they default. I am only 25 years old woman so I think they don't take me seriously when they say I will sue for non-payment. I have a jud...

    James’s Answer

    Filing a lawsuit and pursuing it to a judgment is only the first step in seeking compensation for something such as a breach of contract. The judgment is in essence your fishing license. Without it, you can’t do much towards recovering a debt of claim. Having it however does not guaranty you will catch any fish, or in this case collect any money.

    Part of the question of collection, at least in Texas, depends on whether you are seeking to collect from a person, or a business entity such as a corporation or limited liability company. Texas law allows individuals to exempt from collection a substantial amount of property (including such things as a homestead residence, retirement accounts, certain types of insurance payments, and personal property such as cars, furniture, and clothing up to a certain limit). Businesses are not permitted to exempt property, but you can only collect from property that the business owns, which may be limited or subject to security interests or liens held by a bank or other lender that provided the money to purchase the businesses assets. As a result, the likelihood of collecting a judgment is determined by the facts of each case, and the identity and circumstances of the person or business from whom you are trying to collect.

    Based on the information you provide, the amount you seek to recover falls within the jurisdiction of the small claims court for the county in which you reside - which could be Collin, Dallas, or Denton based on your location. A suit in small claims court can generally be brought to trial much more quickly. The parties often represent themselves in small claims court because the rules of evidence are not applicable, and the judge generally allows each party to simply tell their story, and provide whatever documentation they wish. Of course, you, and your opponent may chose to hire a lawyer, but are not required to so do. If a party loses in small claims court and wishes to appeal, unless they prove to the court an inability to do so by filing what is called a pauper’s affidavit, they are usually required to post a bond that will assure you of recovery if you win on appeal. Without specific facts, I could not tell you much more.

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  • In a chapter 11 bankruptcy of a mall can a tenant with a long lease (10 yrs) have that lease taken away?

    What rights do tenants have in a chapter 11?

    James’s Answer

    A lease of non-residential real property is considered an executory contract in the bankruptcy of the landlord. (An executory contract is basically a contract where both parties still have obligations at the time the bankruptcy case is filed). Bankruptcy Code Section 365 allows a debtor in bankruptcy to make an election to assume executory contracts, such as leases, or reject them. If the lease is assumed, the debtor landlord must: 1) cure any defaults or provide assurance that the default will be promptly cured; 2) compensate or provide adequate assurance that the tenant will be compensated for actual losses resulting from the default; and 3) provide adequate assurance of proper performance under the lease. The landlord debtor and tenant can fight over these elements in the bankruptcy court, or reach agreement, but the tenant must agree to the treatment offered or the court must find the requirements meet if the lease is assumed. There are also special rules relating to leases in a mall found in Bankruptcy Code Section 365(b)(3) but they are essentially applicable where the tenant is in bankruptcy. The landlord debtor does not have to make a decision on assumption or rejection of a non-residential lease until the time of the hearing to consider confirmation of the landlord debtor’s plan unless the tenant asks the court to decide sooner.

    If the landlord debtor wishes to reject the lease, he is essentially breaching the lease and is liable for damages, although that liability is classified as an unsecured claim. However, the lease is not actually terminated and the tenant may accept the termination, or choose to remain in possession of the property under Bankruptcy Code Section 365(h). Bankruptcy Code Section 365(h) allows a tenant whose lease is rejected to remain in possession of the property through the term of its lease, including any extensions or renewal periods. Since the landlord is excused from performing his obligations under the lease, the tenant may deduct from the rent paid to the landlord the costs associated with performing obligations of the landlord that the landlord has stopped performing (such as providing power and water to the property).

    However, recently more debtors have opted to use Bankruptcy Code Section 363 to sell most of the assets of the bankruptcy free of claims. There is currently uncertainly between the courts as to whether the ability to sell property during a bankruptcy case under Bankruptcy Code Section 363 allows the debtor to escape the tenant’s right to remain in possession of the property under Bankruptcy Code Section 365(h). Some courts allow the use of Bankruptcy Code 363 to remove the tenant, some do not, and some allow removal but require the debtor to pay the loss incurred by the tenant in losing the lease. (Since you are in New York, I will note that one of the cases allowing a sale under Bankruptcy Code Section 363 to cut off rights under Bankruptcy Code Section 365(h) is in the Southern District of New York - In re Downtown Athletic Club of New York City, Inc., 2000 WL 744126 (S.D.N.Y. June 9, 2000). Recently, it seems to me that courts are tending to disapprove of efforts to completely dispossess tenants in circumvention of Bankruptcy Code 365(h), but there are some decisions indicating that they can do so by paying to the tenant the value of the remaining lease term to the tenant. A tenant whose landlord has filed a bankruptcy should consider filing a motion to compel assumption of the lease if they wish to remain in the property, and should remain watchful during the case for any effort to use Bankruptcy Code Section 363(f) to sell the property free and clear of liens and claims.

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