Bankruptcy Blogs

Recently, the American Financial Services Association posted a blurb on their website “Spotlight on Financial Services” noting a continuing “disconnect between rising foreclosures in the subprime mortgage market and the statistics on personal bankruptcy filings.” Personal bankruptcy filings in 2007 continue to poke along at rates a bit above the same period in 2006, but far below the rate of filings in 2002-2004.

Last week, an incident was reported in Above the Law, that most entertaining blawg which calls itself “A Legal Tabloid.” William P. Smith, head of the bankruptcy department at the huge international firm of McDermott, Will & Emery, appeared before Bankruptcy Judge Laurel Isicoff of the Southern District of Florida. Judge Isicoff appears to be newly appointed, but a veteran of 20 years of sophisticated insolvency practice.

On May 18, the Delaware Supreme Court issued a major ruling on so-called “deepening insolvency” liability of corporate officers and directors. For those of you who haven’t heard of this by now, “deepening insolvency” is shorthand for a question that presents itself in many forms, both before and after bankruptcy. In an insolvent company, the shareholders have no equity and nothing to lose. In the past, the law has told us that the responsibility of corporate officers and directors was to the shareholders only.

This will come as no surprise to practitioners in the trenches of consumer bankruptcy law, but . . . . the face of America’s debtor population is acquiring wrinkles. According to a study just released by the Administrative Office of the U.S. Courts, the average age of debtors in bankruptcy is increasing at a much faster rate than the age of the general population.

A little understood aspect of the automatic stay is the effect of a bankruptcy filing on a judgment debtor’s appeal rights. Contrary to what you might think, when a judgment is entered in a pre-bankruptcy action against the debtor, prosecution of the debtor’s appeal of that judgment is subject to the automatic stay. This is on the rationale that the appeal is a “continuation of an action” against the debtor. See, Parker v. Bain, 63 F.3d 1131, 1135-36 (9th Cir. 1995).