Receipt Under Section 503(b)(9) Means Actual Physical Possession of Goods: A Victory for the Trade
The United States Court of Appeals for the 3rd Circuit, in In re World Imports Ltd., recently held that a debtor, World Imports, had received goods when the debtor or its agent physically received the goods, not when the goods were delivered to a common carrier for shipment. This decision was made in conjunction with determining the allowed amount of trade creditors’ Section 503(b)(9) administrative priority claims for goods purportedly received by World Imports within 20 days of its bankruptcy filing.
Pursuing Avoidance Power Claims Against Foreign Entities
A recent decision by the Delaware Bankruptcy Court, in In re FAH Liquidating Corp., addressed the issue of whether a transfer of a debtor’s assets that occurred outside of the United States can be avoided and recovered under the Bankruptcy Code. The Bankruptcy Court held that a trustee or debtor-in-possession can avoid and recover fraudulent conveyances (and, by extension, preferential transfers) that occurred outside of the U.S., following decisions by the Bankruptcy Court for the Southern District of New York and the U.S. Fourth Circuit Court of Appeals.
Change Orders Bill Introduced to Offer More Transparency to Federal Construction Jobs
A new proposed national law would provide greater transparency to subcontractors and suppliers with respect to change orders on federal construction jobs.
Dubbed the “Small Business Know-Before-You-Bid Construction Transparency Act of 2017” or H.R. 2350 and introduced by Rep. Don Bacon of Nebraska, the bill would provide more insight as to how long a particular federal agency takes to review, approve and pay for change orders; the validity of payment assurances, such as payment bonds; and the timeliness of monthly payments.
Potential Legislation in Florida Could Hit Construction Lien Law
A state lawmaker in Florida who has told the construction industry he believes homeowners should have no responsibility for payment to subs and suppliers and wants to eliminate their lien rights on most residential construction may introduce legislation detrimental to the industry this week in Florida’s House Commerce Committee.
That legislation, supported by Florida House Speaker Richard Corcoran, could be attached as an amendment to a building code-related bill called “An Act Relating to Construction” or HB 1021, as early as April 5, according to Deborah Lawson, a lobbyist with Lawson Governmental Affairs who is supporting Florida’s NACM Improved Construction Practices Committee (ICPC). The ICPC is a joint committee comprised of members from the NACM South Atlantic and NACM Tampa Affiliates.
Supreme Court Determines New York Credit Card Surcharge Ban Regulates Speech
On March 29, the United States Supreme Court issued its ruling in Expressions Hair Design et al. v. Schneiderman, in which a group of retailers challenged New York’s prohibition on credit card surcharges. The challenged New York statute, N.Y. General Business Law § 518, provides that “No seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check or similar means.”
Prior to 2013, Visa and MasterCard rules mostly prohibited U.S. merchants from imposing surcharges for credit card payments, rendering the New York statute essentially redundant. However, as a result of a massive 2013 antitrust settlement (which was recently overturned by the Second Circuit Court of Appeals and is in the process of being re-engineered), Visa and MasterCard amended their rules to permit merchants to surcharge credit card payments, bringing the New York statute and similar laws in a handful of other states back into the news—and in several instances, into court.
Supreme Court Ends Structured Dismissals in Bankruptcy Cases
Bankruptcy courts do not have the legal power to ignore the claims priority scheme in distributing settlement proceeds in connection with a Ch. 11 dismissal, the Supreme Court held Wednesday.
The 6-2 ruling in the case of Casimir Czyzewski, et al. v. Jevic Holding Corp., et al., found that the Third Circuit and the United States Bankruptcy Court for the District of Delaware incorrectly affirmed a structured settlement that skipped the claims of dissenting midpriority unsecured creditors, who were truck drivers of the trucking company Jevic.
“A distribution scheme ordered in connection with the dismissal of a Chapter 11 case cannot, without the consent of the affected parties, deviate from the basic priority rules that apply under the primary mechanisms the Code establishes for final distributions of estate value in business bankruptcies,” the Court’s opinion, delivered by Justice Stephen Breyer, stated. “Put somewhat more directly, we would expect to see some affirmative indication of intent if Congress actually meant to make structured dismissals a backdoor means to achieve the exact kind of nonconsensual priority-violating final distributions that the Code prohibits in Chapter 7 liquidations and Chapter 11 plans,” the Court said.
NACM Convenes Committee to Explore U.S. Bankruptcy Reform Recommendations
NACM, as part of its ongoing Government Affairs Committee, has gathered a group of nearly a dozen elite trade credit professionals as part of a committee tasked specifically with setting a course for the association’s effort to push reform of Chapter 11 in 2015. The committee aims to establish a strong NACM legislative platform, which will be brought to Capitol Hill this year. Among Bankruptcy Code areas being reviewed by the NACM committee are preferences, Section 503(b)(9), venue provisions, creditors’ committees, executory contracts and provisions for very small businesses.
At present, no existing proposals for deep reform of the U.S. Bankruptcy Code carry real momentum in either house of the U.S. Congress. However, given that the current makeup of the U.S. Congress includes some committee leadership that has been amenable to pushing past changes considered fair and friendly to B2B creditors, bankruptcy reform will very likely find its way onto the radar of top federal lawmakers within the next year.
NACM Joins Groups Urging Individual Surety Reform in U.S. Code
February 2015
The Honorable Anne Rung Administrator for Federal Procurement Policy Office of Management and Budget Eisenhower Executive Office Building – Room 263 1650 Pennsylvania Avenue, NW Washington, DC 20503
Dear Madam Administrator:
Pursuant to Sections 1302 and 1303 of Title 41, United States Code, we, on behalf of the members of the signatory associations, request that you initiate a modification to Part 28.203 (Acceptability of Individual Sureties) of the Federal Acquisition Regulation (FAR) to require that the assets pledged by an individual surety are real and readily available by requiring that such pledged assets meet the standards currently required by FAR Part 28.204.
The requirements of the Miller Act (41 USCA Section 3131 et seq) are designed to protect the interest of the federal contracting agencies, as stewards of taxpayer funds by requiring bid and performance bonds and the interests of subcontractors and suppliers by requiring payment bonds, which provide such downstream parties payment protection of last resort for work performed and supplies furnished.
The current coverage of the Government-wide Federal Acquisition Regulation (FAR) Subpart 28.2 (Sureties and Other Security for Bonds) provides the contracting officer guidance, but implementation can be compromised by the severe challenges faced by even the most seasoned construction contracting officer. A determined and unscrupulous individual surety can too readily pledge assets that provide only illusory or insufficient protection. The core challenge for the contracting officer relates to verifying the existence of and assessing the value of the assets being pledged by the individual surety in support of the surety bonds being furnished to the Government. Those assets deemed "acceptable" under FAR 28.203-2(b)(3) include stocks, bonds, and real property owned in fee simple. The contracting officer faces several challenges in determining if the "acceptable assets" actually exist and can be readily liquidated to pay valid claims against a payment bond.
NACM-National Joins NACM North Central in Supporting B2B Exemption For Unclaimed Property
February 10, 2015
Charles A. Trost, Esq. Waller Lansden Dortch & Davis, LLP Nashville City Center 511 Union St., Suite 2700 Nashville, TN 37219-1760
Dear Mr. Trost,
I am writing to you and the Uniform Law Commission today on behalf of the National Association of Credit Management and its more than 15,000 members in the trade credit industry. I understand the Commission is redrafting the 1995 Uniform Unclaimed Property Act (UUPA) and that a business-to-business (B2B) exemption for business associations involved in the ordinary course of business is being reviewed.
Our association urges the Commission to offer guidance and clarification in the UUPA that states should indeed adopt a B2B exemption as part of the updated UUPA. This is deeply important because the 1995 Act does not specifically exempt such transactions and fewer than one-third of all U.S. states have such an exemption in place. It is problematic because so many businesses face a host on onerous and inconsistent unclaimed property regulations in the present landscape.
