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As of the Petition Date, the Debtors owned and operated the largest private physician-owned for-profit healthcare network in the United States. Headquartered in Dallas, Texas, the Debtors’ operations on the Petition Date included 31 hospitals across eight states, approximately 400 facility locations, 4,500 primary and specialty care physicians, 3,600 staffed beds, and a company-wide workforce of nearly 30,000 employees that provide care to more than two million patients annually.

Amann Burnett has successfully defended a so-called Preference Target Letter by explaining that its client has valid defenses (ordinary course, contemporaneous exchange for new value, subsequent value) defenses.  The Trustee has “gone away”, hopefully for good as the applicable statute of limitations is fast approaching.  A “preference” is defined by Section 547 of Title 11 of the United States Code (the “Bankruptcy Code”).

The case includes the following list of debtors:

The post AMANN BURNETT defends Preference Claim……Successfully So Far-STEWARD HEALTHCARE SYSTEM, LLC, Bankr. S.D., Texas appeared first on Amann Burnett Law.

Click on the link above to read the Memorandum Decision.  Amann Burnett, PLLC specializes in Bankruptcy Litigation and Chapter 11 matters for creditors and debtors.

The post Amann Burnett wins $350,000 Dischargeability case in New Hampshire Bankruptcy Court appeared first on Amann Burnett Law.

As we enter the month of November, we invite you to remember your philanthropic duties and donate to non-profit organizations such as The Berkeley.

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The term “zombie mortgage” has recently gained notoriety as long-silent mortgage servicers have surfaced to attempt to collect old (or even ancient) second mortgages, many of which date back to the recession of the late 2000s. With many of the thousands of these zombie mortgages, borrowers have not received statements or any correspondence for years during which time interest has continued to accrue. A second mortgage that may have been $25,000 in 2009 might have a balance two or three times that amount some 15 years later in 2024, and where residential properties may have had little to no equity in the 2000s or early 2010s, those same properties have increased significantly in value – the perfect scenario for a second mortgage holder to foreclose.

If this sounds unfair or even illegal, it might be.

The Massachusetts Attorney General recently announced an unprecedented settlement with a mortgage servicer that was attempting to collect loans secured by zombie mortgages. The Attorney General alleged that the servicer, Franklin Credit Management Corporation, had failed to comply with numerous state and federal mortgage and debt collection regulations, all in violation of the Massachusetts Consumer Protection Act (G.L. c. 93A). According to the filings, Franklin Credit is prohibited from collecting anything from the 518 accounts that it was servicing (totaling roughly $10,000,000) and is further prohibited from transferring or selling the loans. In short, the loans are uncollectable and the mortgages will be discharged.

This is promising news for others who may be experiencing something similar. Although this is still very much a developing area, there may be options available to attempt to address a zombie mortgage or a threatened foreclosure. If you are one of the thousands of borrowers who have been affected, contact us to discuss those options.

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Automatic Homestead: All homeowners receive an automatic homestead exemption of $125,000 even if they have not recorded a declaration of homestead.

Declared Homestead: All homeowners who have recorded a declaration of homestead now receive an exemption of $1,000,000.

Elderly or Disabled: All homeowners who are over the age of 62 or who are disabled receive an exemption of $1,000,000. This exemption is doubled for a married couple who are co-owners ($1,000,000 each).

The Homestead Act is complicated. There are limited protections for dependents who live in the home. There are special protections for divorcing homeowners. There are limitations to the exemption for certain types of debts. It also has specific application and some possible limitations when asserted in connection with a bankruptcy case. It’s important to consult an attorney to understand the extent of the protection available to you before you record a declaration of homestead.

The post Massachusetts Homestead Exemption Increased to $1 Million appeared first on Amann Burnett Law.

The United States Court of Appeals for the First Circuit previously reviewed the case and certified a question to the Massachusetts Supreme Judicial Court (SJC) regarding whether the three-prong test for independent contractor status applies to franchise relationships. The SJC concluded that the test does apply but requires a case-specific examination of whether the individual performs any service for the alleged employer. The First Circuit then certified a second question to the SJC, asking whether the plaintiffs perform any service for 7-Eleven under the Massachusetts independent contractor statute, given their contractual obligations and the franchise fee structure.

The Massachusetts Supreme Judicial Court held that the plaintiffs do not perform any service for 7-Eleven within the meaning of the independent contractor statute. The court reasoned that the franchisees operate their stores independently and chose to use the 7-Eleven brand for its market benefits. The court emphasized that the franchisees’ compliance with 7-Eleven’s standards is necessary to maintain the brand’s integrity and does not indicate an employment relationship. Therefore, the court answered the certified question in the negative, concluding that the plaintiffs are not employees of 7-Eleven under the Massachusetts independent contractor statute.

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In each of the consolidated cases, the Chapter 13 debtors failed to disclose a pre-petition personal injury claim. From the record, it appears that each of these were an innocent nondisclosure and the claims may not have been known to exist at the time the bankruptcy cases were filed. Notwithstanding, the claims were pre-petition assets that should have been included in the bankruptcy estate.

The Court made the distinction between bankruptcy estate property in a Chapter 7 case in which estate property consists of “all legal or equitable interests” in property as of the date of filing (see 11 U.S.C. § 541(a)) and estate property in a Chapter 13 case, which consists of the same pre-petition assets plus any assets a debtor acquires until the case is “closed, dismissed, or converted.” (see 11 U.S.C. § 1306(a)). The Court made the further distinction between how estate property is treated in each kind of case. In a Chapter 7 case, non-exempt assets are generally liquidated and the proceeds distributed to creditors, whereas in a Chapter 13 case, debtors generally make distributions to creditors from post-petition income in an amount at least equal to the value of non-exempt assets. If these cases had been filed originally under Chapter 7, the undisclosed assets would have been subject to liquidation. Furthermore, notwithstanding the language at 11 U.S.C. § 544, which states that all property “scheduled” (i.e., listed) in the bankruptcy case remains property of the estate until abandoned, and 11 U.S.C. § 1327, which states that “all” assets vest with the debtor upon confirmation of a Chapter 13 plan, the local Chapter 13 plan as adopted in Massachusetts and the standard confirmation order contain language that states that assets remain property of the estate until the debtor receives a discharge.

Applying a strict interpretation of § 1327 and § 544, The Court stated: “Some courts have construed Section 1327 … to vest in the debtor only property of the estate that is “administered” or “dealt with” under the plan. Citation omitted. Courts have suggested that if an asset is not disclosed, it cannot be abandoned or administered. This ignores the plain text of both Section 1327 and Section 554. Unlike Section 554, Section 1327 does not say that “only property that is scheduled and administered” vests in the debtor. It instead provides that “all of the property of the estate” vests in the debtor. … When a debtor completes payments under a Chapter 13 plan and a discharge is entered, the case is fully administered. In these cases, as provided in the confirmation orders, all property of the estate, including any undisclosed assets, was administered and vested in the debtors upon entry of their discharges. As a result, there is no property of the estate to be administered if the cases were reopened and converted to cases under Chapter 7.”

Bankruptcy debtors should view this opinion for the narrow proposition for which it stands rather than as an invitation not to disclose assets. A wilful failure to disclose assets could lead to significant sanctions including the denial of an exemption, the denial of a discharge, or criminal prosecution for bankruptcy fraud.

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