Cleveland Law Library Weblog

Employees Sue Columbus-Based Skybus Under WARN Act

Last week, former employees of Skybus, a Columbus-based airline company which recently shut down its operations, sued the company in bankruptcy court, alleging that Skybus violated the Worker Adjustment and Retraining Notification Act (aka The WARN Act). The WARN Act (contained in 29 U.S.C. sec. 2101 and 20 CFR Part 639) was designed to protect employee rights and requires companies with 100 or more employees to give 60 days advance notice of a closing or pay its employees 60 days of pay. This case was filed in Delaware Bankrupty court as a class action adversary proceeding in Case No. 08-50570-CSS, and the Court's docket can be found on PACER. Skybus' bankruptcy proceeding on PACER is Case No.08-10636-CSS. Click here for a fact sheet on WARN from the U.S. Department of Labor. 

2007 Bankruptcy Filings Were Up 38% in Federal Court

According to a report recently issued by the U.S. Courts, 2007 bankruptcy filings were up 38% in federal court. Of the 850,912 bankruptcies filed, regretably, Ohio ranked 6th for all filings, 3rd for Chapter 7 filings, and 10th for Chapter 13 filings. The Court has provided a succinct summary of all of the study's findings, and informational charts with per capita and date range figures can be found at the court's website.

Cleveland Athletic Club to File Chapter 11

Crain's reports that the membership of the Cleveland Athletic Club, in which many local attorneys have memberships, has voted to file for Chapter 11 reorganization. The Club, which is located in the Playhouse Square area, is 99 years old and hopes to remain in business with a financial plan to be approved by a bankruptcy court. The Club has apparently reached a tentative agreement with its new landlord, thus solving one of its most immediate concerns.

Bankruptcy Courts Streamline Information for Pro Se Filers

The U.S. Courts have developed a new page for individuals who want to file and handle their own bankruptcies. The new page is called Filing for Bankruptcy Without an Attorney and provides links to the United States Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, Approved Credit Counseling
and Debtor Education Course Providers, an interactive bankruptcy court map, forms and instructions, and a bankruptcy resources page.

Arter & Hadden Bankruptcy Settlement a Done Deal

The Plain Dealer reports that the Northern District of Ohio bankruptcy court has approved a settlement involving the former partners of the now defunct Cleveland law firm of Arter & Hadden. Under the terms of the settlement, about 180 lawyers will pay a combined $11 million to about 400 creditors, including court reporters, legal researchers, landlords, suppliers and retired partners. Despite the enormity of this settlement, there are still other suits pending against Arter & Hadden, which closed its doors in 2003.

Bad Faith Debtors Not Entitled to Conversion to Chapter 13

Per Lawyer's Weekly USA, Feb. 22, 2007: "A Chapter 7 debtor does not have an absolute right to convert to a Chapter 13 bankruptcy filing where the debtor engaged in "bad faith" conduct, the U.S. Supreme Court has ruled."  The case is Marrama v. Citizen's Bank of Mass. (Feb. 21, 2007), U.S. Supreme Court Case No. 05-996.  Also see:High Court Says Concealment of Assets Can Take Away Important Right in Bankruptcy by Pete Yost, Associated Press, Law.com, Feb. 22, 2007.

Bankruptcy Fraud Hotline

Members of the public can report suspected bankruptcy fraud via an Internet hotline.  Just go to the U.S. Trustee's Office Fraud Reporting Page.  You can send an email to the U.S. Department of Justice, or call or send mail to the U.S. Trustee's Office to report bankruptcy fraud. 

Disability Insurance Settlement Exempt from Bankruptcy Even If Invested

In re Alam (Dec. 29, 2006), Sixth Circuit Case No. 05-8091 held that a settlement payment made by a disability insurer is exempt from bankruptcy under ORC 2329.66.  ORC 2329.66 creates an exemption for benefits and lump sum payments under sickness and accident insurance policies, but does not specifically mention settlements.   The court also held that the settlement payments are still exempt from bankruptcy, even though the funds were reinvested in mutual funds and money market accounts.  However, the settlement payment may not be exempt in its entirety because ORC 3923.19 limits the exemption to the amount of a lump sum payment made under the insurance policy or $600 per month.  In Alam, the parties agreed that the settlement payment was not a lump sum payment made under the terms of the policy. 

New Fee Schedule for Federal Appellate and Bankruptcy Courts

Effective Jan. 1, 2007, the fees for various services provided by the federal appellate and bankruptcy courts are revised.  Source: Fees to Change In Appellate, Bankruptcy Courts by Nancy Stinson, Stark County Law Library Blog, Dec. 13, 2006, citing Fees to Change In Appellate, Bankruptcy Courts, BeSpacific, Dec. 12, 2006 (which has links to the fee changes). 

D. Minnesota Finds 2005 Bankruptcy Law Violates Attorney Free Speech

The District Court in Minneapolis held that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 violates the First Amendment rights of attorneys.  See In re Milavetz ( Dec. 7, 2006), District of Minnesota Case No. 05-CV-2626 (order denying the government's motion to dismiss) (Download milavetz.pdf ).  The Justice Department asserted that attorneys are "debt relief agencies" under the Act.  Thus, attorneys are required to tell their clients they can not incur more debt if they are considering filing bankruptcy.  Also attorney advertising is restricted.  The court held that applying these debt relief agency provisions to attorneys  violates attorneys' freedom of speech rights.  Judge Rules Against 2005 Bankruptcy Law by John Welbes, St. Paul Pioneer Press, Dec. 9, 2006; Restrictions on Attorney Speech Held Unconstitutional by Katie Porter, Credit Slips Blog, Dec. 9, 2006. 

See our prior post Bankruptcy Attorneys Challenge 2005 Bankruptcy Law, concerning a similar case filed in District of Connecticut, Connecticut Bar Assoc. v. U.S., 06-CV-00729. The District of Connecticut also held that the 2005 Act was, in part, unconstitutional (Download connbar.pdf ).  According to the Bankruptcy Lawyers' Blog, district courts in Texas and Oregon held the same way, while the Pennsylvania District Court granted the government's motion to dismiss for lack of standing.  See Third Court Finds Portions of BAPCPA Unconstitutional by Kevin Chern, Esq., Bankruptcy Lawyers' Blog, Nov. 14, 2006.