.jpg)
CH 11 wages/contractor issue: Need answer for
Judge Pappas granted nearly everything I asked for on my first day motions.
FYI, despite the UST's objection to the payment of "contractors" under
507(a)(4)(A) instead of requiring them to qualify under 507(a)(4)(B), he
said he was not concerned with the employee/contractor designation, only
that the laborers who are paid make a commitment to stay with the company
in exchange for this priority, immediate payment. He did uphold the cap
under 507(a)(4)(A) despite my best efforts to argue for one of the workers
who was owed $17K.
Despite further objection by the UST, Judge Pappas also allowed
postpetitition unsecured revolving credit (so this trucking company can pay
for fuel on the road each day) by allowing the use of the principals' and
insiders of the principals' credit cards, to be paid as short term debt
within 30 days of the charges being incurred.
There was more, but these were the main concerns today and I'm so happy for
my client. We only have about 40 days before the final hearing on cash
collateral, so I hope they can prove themselves with the rope they've been
given.
Holly Roark
Certified Bankruptcy Specialist*
*and Sports Lawyer*
holly@roarklawoffices.com **primary email address**
www.roarklawoffices.com
*Central District of California & District of Idaho* - Consumer Bankruptcy
Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067
T (310) 553-2600; F (310) 553-2601
*By State Bar of California Board of Legal Specialization
On Wed, Oct 19, 2016 at 1:30 AM, Michael Avanesian michael@avanesianlaw.com
[cdcbaa] wrote:
>
>
> I am surprised FRBP 6003 is not mentioned in your P&A. It is a sneaky code
> section, I'll explain. FRBP 6003 says:
>
> "Except to the extent that relief is necessary to avoid immediate and
> irreparable harm, the court shall not, ... issue an order granting ... a
> motion to pay all or part of a claim that arose before the filing of the
> petition...."
>
> Most people think this is a limitation on what the Court can do. But it is
> prefaced with "except to the extent necessary to avoid immediate harm."
> This implies that, if the Court finds that there may be immediate harm, it
> is authorized to do things such as, grant a motion to pay all or part of a
> claim that arose before filing of the petition.
>
>
> Sincerely,
>
> *Michael Avanesian *
>
> *[image: avanesian-law-logo-modern]*
>
> 801 N. Brand Blvd., Suite #1130
> Glendale, CA 91203
>
> Tel: (818) 276-2477 | (818) 208-4550
>
> *Confidentiality**: *This electronic transmission and its contents are
> legally privileged and confidential information and intended solely for the
> use of the addressee. If the reader of this message is not the intended
> recipient, you are hereby notified that any dissemination, distribution,
> copying or other use of this message and its contents is strictly
> prohibited. If you have received this transmission in error, please reply
> to us immediately and delete this message from your directory.
>
>
> *IRS Circular 230 Disclosure:* To ensure compliance with requirements
> imposed by the IRS, please be advised that any U.S. federal tax advice
> contained in this communication (including any attachments) is not intended
> or written to be used or relied upon, and cannot be used or relied upon,
> for the purpose of (i) avoiding penalties under the Internal Revenue Code,
> or (ii) promoting, marketing or recommending to another party any
> transaction or matter addressed herein.
>
>
> On Tue, Oct 18, 2016 at 9:26 PM, Giovanni Orantes go@gobklaw.com [cdcbaa]
> wrote:
>
>>
>>
>> Here's authority I use:
>>
>> Section 105(a) of the United States Bankruptcy Code empowers the Court to
>> issue any order, process, or judgment that is necessary or appropriate to
>> carry out the provisions of the Bankruptcy Code. 11 U.S.C. 105. The
>> basic purpose of Section 105(a) is "to enable the court to do whatever is
>> necessary to aid in its jurisdiction, in anything arising in or relating to
>> a bankruptcy case." 2 *Collier on Bankruptcy* 105.02 at 105-4 (15th
>> ed. 1988). Essentially, Section 105(a) codifies the bankruptcy court's
>> inherent equitable powers. See, *In re Feit & Drexler, Inc.*, 760 F.2d
>> 406 (2d Cir. 1985).
>>
>> Section 507(a)(4) of the Bankruptcy Code provides, in pertinent part, as
>> follows:
>>
>> (a) The following expenses and claims have priority in the following
>> order:
>> (4) Fourth, allowed unsecured claims, but only to the extent of $12,475
>> for each individual earned within 180 days before the date of the filing
>> of the petition for--
>>
>> (A) wages, salaries, or commissions, including vacation, severance, and
>> sick leave pay earned by an individual;
>>
>> 11 U.S.C. 507(a)(3).
>>
>> As set forth above, Section 507(a)(4) affords priority status to
>> unsecured claims for wages, salaries or commissions, including vacation,
>> severance, and sick leave pay earned by an individual within 180 days
>> before the filing of a bankruptcy petition to the extent of $12,475.00 for
>> each such individual.
>>
>> Bankruptcy courts have authorized debtors to pay pre-petition priority
>> wage claims as a means of allowing debtors to maintain their work force and
>> thereby preserve the debtors ability to operate in the ordinary course,
>> without the disruption of employee defections.
>>
>> In the early days of this case, the court entered orders permitting the
>> post- petition payment of certain pre-petition wage and wage-related
>> claims. As is often the case in operating Chapter 11 cases, the court did
>> this for two reasons. First, it was necessary that Braniff pay its
>> employees for work performed pre-petition if the employees were to remain
>> on the job post- petition. The filing of a bankruptcy case presents many
>> uncertainties for employees. If their pay is interrupted, employees are
>> obviously not going to remain on the job despite the fact that their
>> continuation in place is vitally important for the debtor.
>>
>> Second, in any event, the pre-petition wages are subject to the priority
>> of Section 507(a)(3). Thus, in all but the direst of circumstances, the
>> debtor will ultimately pay the pre-petition wages because of their very
>> high priority. Accordingly, the court authorizes their payment early in the
>> case rather than requiring that the employees wait for payment at the end
>> of the case.
>>
>> *In re Braniff, Inc*., 218 B.R. 628, 633 (Bankr.M.D.Fla. 1998). *See
>> also* *Columbia Gas*, 171 B.R. 189, 191-92 (Bankr. D. Del. 1994); *In re
>> Lehigh & New England Ry. Co.*, 657 F. 2d 570, 581 (3rd Cir. 1981); *Ionosphere
>> Club*, 98 B.R. 175 (Bankr. S.D.N.Y. 1989). *In re Structurlite Plastics
>> Corp*., (*Structurlite I*) 86 Bankr. 922, 932 (Bankr. S.D. Ohio 1988),
>> *citing* *In re Chateaugay Corp*., 80 Bankr. 279, 287 (S.D.N.Y. 1987); *See
>> also* *In re Columbia Packing Co*., 35 Bankr. 447 (Bankr. D. Mass.
>> 1983).
>>
>> Because wages are priority claims, courts have often permitted debtors to
>> pay prepetition wage claims in the ordinary course in response to a motion
>> filed by a debtor in possession at the commencement of a chapter 11 case.
>> The ability to ensure that the employees receive their unpaid prepetition
>> salary and do not miss a paycheck is critical to obtaining the stability
>> necessary for the transition to operating as a debtor in possession.
>>
>> *Collier on Bankruptcy - 15th ed. Revised*, 507.05[1] (2000).
>>
>> The authority to make such payments was recognized by the Ninth Circuit
>> in *In re Adams Apple, Inc*., 829 F.2d 1484 (9th Cir. 1987):
>>
>> [A]nother "fundamental tenet"--rehabilitation of debtors, which may
>> supersede the policy of equal treatment. Cases have permitted unequal
>> treatment of pre-petition debts when necessary for rehabilitation, in such
>> contexts as (i) pre-petition wages to key employees; (ii) hospital
>> malpractice premiums incurred prior to filing; (iii) debts to providers of
>> unique and irreplaceable supplies; and (iv) peripheral benefits under labor
>> contracts. *See* Ordin, Case Comment, *In re Texlon Corporation*, 596
>> F.2d 1092 (2d Cir.1979): Finality of Order of Bankruptcy Court, 54
>> Amer.Bankr.L.J. 173, 177 (1980). t illustrates a Congressional
>> willingness to subordinate the interests of pre-petition creditors to the
>> goal of rehabilitation.
>>
>> *Adams** Apple*, 829 F.2d at 1490.
>>
>> In this case, without an order of this Court authorizing the Debtor to
>> pay the pre-petition Employee Compensation, there will be a severe risk
>> that employees will leave the Debtor, thereby jeopardizing the Debtor>> ability to maintain its operations and reorganize its financial affairs.
>>
>> On Tue, Oct 18, 2016 at 8:38 PM, Holly Roark hollyroark22@gmail.com
>> [cdcbaa] wrote:
>>
>>>
>>>
>>> How about "critical vendor"/"doctrine of necessity"? 363(b)?
>>>
>>> Holly Roark
>>> Certified Bankruptcy Specialist*
>>> *and Sports Lawyer*
>>> holly@roarklawoffices.com **primary email address**
>>> www.roarklawoffices.com
>>> *Central District of California & District of Idaho* - Consumer
>>> Bankruptcy Attorney
>>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>>> T (310) 553-2600; F (310) 553-2601
>>>
>>> *By State Bar of California Board of Legal Specialization
>>>
>>>
>>>
>>> On Tue, Oct 18, 2016 at 9:22 PM, Holly Roark
>>> wrote:
>>>
>>>> Is there any other authority to request immediate payment of
>>>> prepetition "wages" with my cash collateral motion other than under
>>>> 507(a)(4)(A), or (B)?
>>>>
>>>> This is an Idaho case:
>>>>
>>>> Debtor's 4 truck drivers may not fit neatly into statute but if not
>>>> paid on past due wages immediately, may walk!
>>>>
>>>> 3 drivers - declared employees by North Dakota for work comp purposes;
>>>> but actually 1099'd like independent contractors.
>>>> - "would" fit under 507(a)(4)(B) but for the fact that
>>>> they haven't worked solely for Debtor for last 12 months, so don't fit the
>>>> 75% rule, however, not working for anyone else since Aug/Sept this year.
>>>> Driving solely for Debtor now. Each owed @ $2K.
>>>>
>>>> 1 driver - important because he brings in business, works for multiple
>>>> companies; Debtor is likely not 75% of his income. BUT this driver brings
>>>> in the business and Debtor gets 10% of each contract. Driver owed $15K on
>>>> date of petition. Necessary to business. Can bring in contracts.
>>>>
>>>> What is my additional legal authority to get these guys paid ASAP with
>>>> this cash collateral motion tomorrow?
>>>>
>>>>
>>>>
>>>> Holly Roark
>>>> Certified Bankruptcy Specialist*
>>>> *and Sports Lawyer*
>>>> holly@roarklawoffices.com **primary email address**
>>>> www.roarklawoffices.com
>>>> *Central District of California & District of Idaho* - Consumer
>>>> Bankruptcy Attorney
>>>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>>>> T (310) 553-2600; F (310) 553-2601
>>>>
>>>> *By State Bar of California Board of Legal Specialization
>>>>
>>>>
>>>>
>>>
>>
>>
>> --
>> WE DO NOT ACCEPT SERVICE BY EMAIL UNLESS WE HAVE AGREED TO ACCEPT IT IN
>> WRITING.
>>
>> Giovanni Orantes, Esq.*
>> Orantes Law Firm, P.C.
>> 3435 Wilshire Blvd. Suite 2920
>> Los Angeles, CA 90010
>> Tel: (213) 389-4362
>> Fax: (877) 789-5776
>> e-mail: go@gobklaw.com
>> website: www.gobklaw.com
>>
>> **Certified Bankruptcy Specialist, State Bar of California, Board of
>> Legal Specialization*
>> *Board Certified - Business Bankruptcy Law - American Board of
>> Certification
>> *Board Certified - Consumer Bankruptcy Law - American Board of
>> Certification
>> Commercial Litigation
>> Estate Planning
>> Outside General Counsel
>>
>>
>>
>> WE ARE A "DEBT RELIEF AGENCY" AS DEFINED BY FEDERAL LAW.
>>
>> SERVING BAKERSFIELD, LOS ANGELES, ORANGE COUNTY, RIVERSIDE, SAN
>> BERNARDINO AND SANTA BARBARA AND THE WORLD FOR CHAPTER 11 AND 15 CASES.
>>
>> Note: The information in this e-mail message is not intended to be legal
>> advice and should not be relied upon as legal advice unless counsel
>> expressly contracted in writing to provide such advice. Furthermore, the
>> information contained in this e-mail message is confidential information
>> intended only for the use of the individual or entity named. If the reader
>> of this message is not the intended recipient or an agent responsible for
>> delivering it to the intended recipient, you are hereby notified that any
>> dissemination, distribution or copy of this communication is strictly
>> prohibited. If you have received this communication in error, please
>> immediately notify us by telephone or e-mail and delete the original e-mail
>> at (213) 389-4362 or (888) 619-8222.
>>
>>
>
>
Judge Pappas granted nearly everything I asked for on my first day motions. FYI, despite the UST's objection to the payment of "contractors" under 507(a)(4)(A) instead of requiring them to qualify under 507(a)(4)(B), he said he was not concerned with the employee/contractor designation, only that the laborers who are paid make a commitment to stay with the company in exchange for this priority, immediate payment. He did uphold the cap under 507(a)(4)(A) despite my best efforts to argue for one of the workers who was owed $17K.Despite further objection by the UST, Judge Pappas also allowed postpetitition unsecured revolving credit (so this trucking company can pay for fuel on the road each day) by allowing the use of the principals' and insiders of the principals' credit cards, to be paid as short term debt within 30 days of the charges being incurred.There was more, but these were the main concerns today and I'm so happy for my client. We only have about 40 days before the final hearing on cash collateral, so I hope they can prove themselves with the rope they've been given.Holly RoarkCertified Bankruptcy Specialist*and Sports Lawyer
holly@roarklawoffices.com**primary email address**
www.roarklawoffices.com
Central District of California & District of Idaho - Consumer Bankruptcy Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067T (310) 553-2600; F (310) 553-2601
The post was migrated from Yahoo.
I am surprised FRBP 6003 is not mentioned in your P&A. It is a sneaky code
section, I'll explain. FRBP 6003 says:
"Except to the extent that relief is necessary to avoid immediate and
irreparable harm, the court shall not, ... issue an order granting ... a
motion to pay all or part of a claim that arose before the filing of the
petition...."
Most people think this is a limitation on what the Court can do. But it is
prefaced with "except to the extent necessary to avoid immediate harm."
This implies that, if the Court finds that there may be immediate harm, it
is authorized to do things such as, grant a motion to pay all or part of a
claim that arose before filing of the petition.
Sincerely,
*Michael Avanesian *
*[image: avanesian-law-logo-modern]*
801 N. Brand Blvd., Suite #1130
Glendale, CA 91203
Tel: (818) 276-2477 | (818) 208-4550
*Confidentiality**: *This electronic transmission and its contents are
legally privileged and confidential information and intended solely for the
use of the addressee. If the reader of this message is not the intended
recipient, you are hereby notified that any dissemination, distribution,
copying or other use of this message and its contents is strictly
prohibited. If you have received this transmission in error, please reply
to us immediately and delete this message from your directory.
*IRS Circular 230 Disclosure:* To ensure compliance with requirements
imposed by the IRS, please be advised that any U.S. federal tax advice
contained in this communication (including any attachments) is not intended
or written to be used or relied upon, and cannot be used or relied upon,
for the purpose of (i) avoiding penalties under the Internal Revenue Code,
or (ii) promoting, marketing or recommending to another party any
transaction or matter addressed herein.
On Tue, Oct 18, 2016 at 9:26 PM, Giovanni Orantes go@gobklaw.com [cdcbaa] wrote:
>
>
> Here's authority I use:
>
> Section 105(a) of the United States Bankruptcy Code empowers the Court to
> issue any order, process, or judgment that is necessary or appropriate to
> carry out the provisions of the Bankruptcy Code. 11 U.S.C. 105. The
> basic purpose of Section 105(a) is "to enable the court to do whatever is
> necessary to aid in its jurisdiction, in anything arising in or relating to
> a bankruptcy case." 2 *Collier on Bankruptcy* 105.02 at 105-4 (15th
> ed. 1988). Essentially, Section 105(a) codifies the bankruptcy court's
> inherent equitable powers. See, *In re Feit & Drexler, Inc.*, 760 F.2d
> 406 (2d Cir. 1985).
>
> Section 507(a)(4) of the Bankruptcy Code provides, in pertinent part, as
> follows:
>
> (a) The following expenses and claims have priority in the following
> order:
> (4) Fourth, allowed unsecured claims, but only to the extent of $12,475
> for each individual earned within 180 days before the date of the filing
> of the petition for--
>
> (A) wages, salaries, or commissions, including vacation, severance, and
> sick leave pay earned by an individual;
>
> 11 U.S.C. 507(a)(3).
>
> As set forth above, Section 507(a)(4) affords priority status to unsecured
> claims for wages, salaries or commissions, including vacation, severance,
> and sick leave pay earned by an individual within 180 days before the
> filing of a bankruptcy petition to the extent of $12,475.00 for each such
> individual.
>
> Bankruptcy courts have authorized debtors to pay pre-petition priority
> wage claims as a means of allowing debtors to maintain their work force and
> thereby preserve the debtors ability to operate in the ordinary course,
> without the disruption of employee defections.
>
> In the early days of this case, the court entered orders permitting the
> post- petition payment of certain pre-petition wage and wage-related
> claims. As is often the case in operating Chapter 11 cases, the court did
> this for two reasons. First, it was necessary that Braniff pay its
> employees for work performed pre-petition if the employees were to remain
> on the job post- petition. The filing of a bankruptcy case presents many
> uncertainties for employees. If their pay is interrupted, employees are
> obviously not going to remain on the job despite the fact that their
> continuation in place is vitally important for the debtor.
>
> Second, in any event, the pre-petition wages are subject to the priority
> of Section 507(a)(3). Thus, in all but the direst of circumstances, the
> debtor will ultimately pay the pre-petition wages because of their very
> high priority. Accordingly, the court authorizes their payment early in the
> case rather than requiring that the employees wait for payment at the end
> of the case.
>
> *In re Braniff, Inc*., 218 B.R. 628, 633 (Bankr.M.D.Fla. 1998). *See
> also* *Columbia Gas*, 171 B.R. 189, 191-92 (Bankr. D. Del. 1994); *In re
> Lehigh & New England Ry. Co.*, 657 F. 2d 570, 581 (3rd Cir. 1981); *Ionosphere
> Club*, 98 B.R. 175 (Bankr. S.D.N.Y. 1989). *In re Structurlite Plastics
> Corp*., (*Structurlite I*) 86 Bankr. 922, 932 (Bankr. S.D. Ohio 1988),
> *citing* *In re Chateaugay Corp*., 80 Bankr. 279, 287 (S.D.N.Y. 1987); *See
> also* *In re Columbia Packing Co*., 35 Bankr. 447 (Bankr. D. Mass.
> 1983).
>
> Because wages are priority claims, courts have often permitted debtors to
> pay prepetition wage claims in the ordinary course in response to a motion
> filed by a debtor in possession at the commencement of a chapter 11 case.
> The ability to ensure that the employees receive their unpaid prepetition
> salary and do not miss a paycheck is critical to obtaining the stability
> necessary for the transition to operating as a debtor in possession.
>
> *Collier on Bankruptcy - 15th ed. Revised*, 507.05[1] (2000).
>
> The authority to make such payments was recognized by the Ninth Circuit in *In
> re Adams Apple, Inc*., 829 F.2d 1484 (9th Cir. 1987):
>
> [A]nother "fundamental tenet"--rehabilitation of debtors, which may
> supersede the policy of equal treatment. Cases have permitted unequal
> treatment of pre-petition debts when necessary for rehabilitation, in such
> contexts as (i) pre-petition wages to key employees; (ii) hospital
> malpractice premiums incurred prior to filing; (iii) debts to providers of
> unique and irreplaceable supplies; and (iv) peripheral benefits under labor
> contracts. *See* Ordin, Case Comment, *In re Texlon Corporation*, 596
> F.2d 1092 (2d Cir.1979): Finality of Order of Bankruptcy Court, 54
> Amer.Bankr.L.J. 173, 177 (1980). t illustrates a Congressional
> willingness to subordinate the interests of pre-petition creditors to the
> goal of rehabilitation.
>
> *Adams** Apple*, 829 F.2d at 1490.
>
> In this case, without an order of this Court authorizing the Debtor to pay
> the pre-petition Employee Compensation, there will be a severe risk that
> employees will leave the Debtor, thereby jeopardizing the Debtors ability
> to maintain its operations and reorganize its financial affairs.
>
> On Tue, Oct 18, 2016 at 8:38 PM, Holly Roark hollyroark22@gmail.com
> [cdcbaa] wrote:
>
>>
>>
>> How about "critical vendor"/"doctrine of necessity"? 363(b)?
>>
>> Holly Roark
>> Certified Bankruptcy Specialist*
>> *and Sports Lawyer*
>> holly@roarklawoffices.com **primary email address**
>> www.roarklawoffices.com
>> *Central District of California & District of Idaho* - Consumer
>> Bankruptcy Attorney
>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>> T (310) 553-2600; F (310) 553-2601
>>
>> *By State Bar of California Board of Legal Specialization
>>
>>
>>
>> On Tue, Oct 18, 2016 at 9:22 PM, Holly Roark
>> wrote:
>>
>>> Is there any other authority to request immediate payment of prepetition
>>> "wages" with my cash collateral motion other than under 507(a)(4)(A), or
>>> (B)?
>>>
>>> This is an Idaho case:
>>>
>>> Debtor's 4 truck drivers may not fit neatly into statute but if not paid
>>> on past due wages immediately, may walk!
>>>
>>> 3 drivers - declared employees by North Dakota for work comp purposes;
>>> but actually 1099'd like independent contractors.
>>> - "would" fit under 507(a)(4)(B) but for the fact that
>>> they haven't worked solely for Debtor for last 12 months, so don't fit the
>>> 75% rule, however, not working for anyone else since Aug/Sept this year.
>>> Driving solely for Debtor now. Each owed @ $2K.
>>>
>>> 1 driver - important because he brings in business, works for multiple
>>> companies; Debtor is likely not 75% of his income. BUT this driver brings
>>> in the business and Debtor gets 10% of each contract. Driver owed $15K on
>>> date of petition. Necessary to business. Can bring in contracts.
>>>
>>> What is my additional legal authority to get these guys paid ASAP with
>>> this cash collateral motion tomorrow?
>>>
>>>
>>>
>>> Holly Roark
>>> Certified Bankruptcy Specialist*
>>> *and Sports Lawyer*
>>> holly@roarklawoffices.com **primary email address**
>>> www.roarklawoffices.com
>>> *Central District of California & District of Idaho* - Consumer
>>> Bankruptcy Attorney
>>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>>> T (310) 553-2600; F (310) 553-2601
>>>
>>> *By State Bar of California Board of Legal Specialization
>>>
>>>
>>>
>>
>
>
> --
> WE DO NOT ACCEPT SERVICE BY EMAIL UNLESS WE HAVE AGREED TO ACCEPT IT IN
> WRITING.
>
> Giovanni Orantes, Esq.*
> Orantes Law Firm, P.C.
> 3435 Wilshire Blvd. Suite 2920
> Los Angeles, CA 90010
> Tel: (213) 389-4362
> Fax: (877) 789-5776
> e-mail: go@gobklaw.com
> website: www.gobklaw.com
>
> **Certified Bankruptcy Specialist, State Bar of California, Board of Legal
> Specialization*
> *Board Certified - Business Bankruptcy Law - American Board of
> Certification
> *Board Certified - Consumer Bankruptcy Law - American Board of
> Certification
> Commercial Litigation
> Estate Planning
> Outside General Counsel
>
>
>
> WE ARE A "DEBT RELIEF AGENCY" AS DEFINED BY FEDERAL LAW.
>
> SERVING BAKERSFIELD, LOS ANGELES, ORANGE COUNTY, RIVERSIDE, SAN BERNARDINO
> AND SANTA BARBARA AND THE WORLD FOR CHAPTER 11 AND 15 CASES.
>
> Note: The information in this e-mail message is not intended to be legal
> advice and should not be relied upon as legal advice unless counsel
> expressly contracted in writing to provide such advice. Furthermore, the
> information contained in this e-mail message is confidential information
> intended only for the use of the individual or entity named. If the reader
> of this message is not the intended recipient or an agent responsible for
> delivering it to the intended recipient, you are hereby notified that any
> dissemination, distribution or copy of this communication is strictly
> prohibited. If you have received this communication in error, please
> immediately notify us by telephone or e-mail and delete the original e-mail
> at (213) 389-4362 or (888) 619-8222.
>
>
>
I am surprised FRBP 6003 is not mentioned in your P&A. It is a sneaky code section, I'll explain. FRBP 6003 says:"Except to the extent that relief is necessary to avoid immediate and irreparable harm, the court shall not, ... issue an order granting ... a motion to pay all or part of a claim that arose before the filing of the petition...."Most people think this is a limitation on what the Court can do. But it is prefaced with "except to the extent necessary to avoid immediate harm." This implies that, if the Court finds that there may be immediate harm, it is authorized to do things such as, grant a motion to pay all or part of a claim that arose before filing of the petition.
The post was migrated from Yahoo.
Here's authority I use:
Section 105(a) of the United States Bankruptcy Code empowers the Court to
issue any order, process, or judgment that is necessary or appropriate to
carry out the provisions of the Bankruptcy Code. 11 U.S.C. 105. The
basic purpose of Section 105(a) is "to enable the court to do whatever is
necessary to aid in its jurisdiction, in anything arising in or relating to
a bankruptcy case." 2 *Collier on Bankruptcy* 105.02 at 105-4 (15th ed.
1988). Essentially, Section 105(a) codifies the bankruptcy court's
inherent equitable powers. See, *In re Feit & Drexler, Inc.*, 760 F.2d 406
(2d Cir. 1985).
Section 507(a)(4) of the Bankruptcy Code provides, in pertinent part, as
follows:
(a) The following expenses and claims have priority in the following order:(4) Fourth, allowed unsecured claims, but only to the extent of $12,475 for
each individual earned within 180 days before the date of the filing of
the petition for--
(A) wages, salaries, or commissions, including vacation, severance, and
sick leave pay earned by an individual;
11 U.S.C. 507(a)(3).
As set forth above, Section 507(a)(4) affords priority status to unsecured
claims for wages, salaries or commissions, including vacation, severance,
and sick leave pay earned by an individual within 180 days before the
filing of a bankruptcy petition to the extent of $12,475.00 for each such
individual.
Bankruptcy courts have authorized debtors to pay pre-petition priority wage
claims as a means of allowing debtors to maintain their work force and
thereby preserve the debtors ability to operate in the ordinary course,
without the disruption of employee defections.
In the early days of this case, the court entered orders permitting the
post- petition payment of certain pre-petition wage and wage-related
claims. As is often the case in operating Chapter 11 cases, the court did
this for two reasons. First, it was necessary that Braniff pay its
employees for work performed pre-petition if the employees were to remain
on the job post- petition. The filing of a bankruptcy case presents many
uncertainties for employees. If their pay is interrupted, employees are
obviously not going to remain on the job despite the fact that their
continuation in place is vitally important for the debtor.
Second, in any event, the pre-petition wages are subject to the priority
of Section 507(a)(3). Thus, in all but the direst of circumstances, the
debtor will ultimately pay the pre-petition wages because of their very
high priority. Accordingly, the court authorizes their payment early in the
case rather than requiring that the employees wait for payment at the end
of the case.
*In re Braniff, Inc*., 218 B.R. 628, 633 (Bankr.M.D.Fla. 1998). *See
also* *Columbia
Gas*, 171 B.R. 189, 191-92 (Bankr. D. Del. 1994); *In re Lehigh & New
England Ry. Co.*, 657 F. 2d 570, 581 (3rd Cir. 1981); *Ionosphere Club*, 98
B.R. 175 (Bankr. S.D.N.Y. 1989). *In re Structurlite Plastics Corp*.,
(*Structurlite
I*) 86 Bankr. 922, 932 (Bankr. S.D. Ohio 1988), *citing* *In re Chateaugay
Corp*., 80 Bankr. 279, 287 (S.D.N.Y. 1987); *See also* *In re Columbia
Packing Co*., 35 Bankr. 447 (Bankr. D. Mass. 1983).
Because wages are priority claims, courts have often permitted debtors to
pay prepetition wage claims in the ordinary course in response to a motion
filed by a debtor in possession at the commencement of a chapter 11 case.
The ability to ensure that the employees receive their unpaid prepetition
salary and do not miss a paycheck is critical to obtaining the stability
necessary for the transition to operating as a debtor in possession.
*Collier on Bankruptcy - 15th ed. Revised*, 507.05[1] (2000).
The authority to make such payments was recognized by the Ninth Circuit in *In
re Adams Apple, Inc*., 829 F.2d 1484 (9th Cir. 1987):
[A]nother "fundamental tenet"--rehabilitation of debtors, which may
supersede the policy of equal treatment. Cases have permitted unequal
treatment of pre-petition debts when necessary for rehabilitation, in such
contexts as (i) pre-petition wages to key employees; (ii) hospital
malpractice premiums incurred prior to filing; (iii) debts to providers of
unique and irreplaceable supplies; and (iv) peripheral benefits under labor
contracts. *See* Ordin, Case Comment, *In re Texlon Corporation*, 596 F.2d
1092 (2d Cir.1979): Finality of Order of Bankruptcy Court, 54
Amer.Bankr.L.J. 173, 177 (1980). t illustrates a Congressional
willingness to subordinate the interests of pre-petition creditors to the
goal of rehabilitation.
*Adams** Apple*, 829 F.2d at 1490.
In this case, without an order of this Court authorizing the Debtor to pay
the pre-petition Employee Compensation, there will be a severe risk that
employees will leave the Debtor, thereby jeopardizing the Debtors ability
to maintain its operations and reorganize its financial affairs.
On Tue, Oct 18, 2016 at 8:38 PM, Holly Roark hollyroark22@gmail.com
[cdcbaa] wrote:
>
>
> How about "critical vendor"/"doctrine of necessity"? 363(b)?
>
> Holly Roark
> Certified Bankruptcy Specialist*
> *and Sports Lawyer*
> holly@roarklawoffices.com **primary email address**
> www.roarklawoffices.com
> *Central District of California & District of Idaho* - Consumer
> Bankruptcy Attorney
> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
> T (310) 553-2600; F (310) 553-2601
>
> *By State Bar of California Board of Legal Specialization
>
>
>
> On Tue, Oct 18, 2016 at 9:22 PM, Holly Roark
> wrote:
>
>> Is there any other authority to request immediate payment of prepetition
>> "wages" with my cash collateral motion other than under 507(a)(4)(A), or
>> (B)?
>>
>> This is an Idaho case:
>>
>> Debtor's 4 truck drivers may not fit neatly into statute but if not paid
>> on past due wages immediately, may walk!
>>
>> 3 drivers - declared employees by North Dakota for work comp purposes;
>> but actually 1099'd like independent contractors.
>> - "would" fit under 507(a)(4)(B) but for the fact that
>> they haven't worked solely for Debtor for last 12 months, so don't fit the
>> 75% rule, however, not working for anyone else since Aug/Sept this year.
>> Driving solely for Debtor now. Each owed @ $2K.
>>
>> 1 driver - important because he brings in business, works for multiple
>> companies; Debtor is likely not 75% of his income. BUT this driver brings
>> in the business and Debtor gets 10% of each contract. Driver owed $15K on
>> date of petition. Necessary to business. Can bring in contracts.
>>
>> What is my additional legal authority to get these guys paid ASAP with
>> this cash collateral motion tomorrow?
>>
>>
>>
>> Holly Roark
>> Certified Bankruptcy Specialist*
>> *and Sports Lawyer*
>> holly@roarklawoffices.com **primary email address**
>> www.roarklawoffices.com
>> *Central District of California & District of Idaho* - Consumer
>> Bankruptcy Attorney
>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>> T (310) 553-2600; F (310) 553-2601
>>
>> *By State Bar of California Board of Legal Specialization
>>
>>
>>
>
>
WE DO NOT ACCEPT SERVICE BY EMAIL UNLESS WE HAVE AGREED TO ACCEPT IT IN
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Orantes Law Firm, P.C.
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Los Angeles, CA 90010
Tel: (213) 389-4362
Fax: (877) 789-5776
e-mail: go@gobklaw.com
website: www.gobklaw.com
**Certified Bankruptcy Specialist, State Bar of California, Board of Legal
Specialization*
*Board Certified - Business Bankruptcy Law - American Board of Certification
*Board Certified - Consumer Bankruptcy Law - American Board of Certification
Commercial Litigation
Estate Planning
Outside General Counsel
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Here's authority I use:Section 105(a) of the United States Bankruptcy Code
empowers the Court to issue any order, process, or judgment that is necessary
or appropriate to carry out the provisions of the Bankruptcy Code. 11 U.S.C. 105. The basic purpose of Section 105(a) is
"to enable the court to do whatever is necessary to aid in its
jurisdiction, in anything arising in or relating to a bankruptcy case." 2 Collier on Bankruptcy 105.02 at
105-4 (15th ed. 1988). Essentially, Section
105(a) codifies the bankruptcy court's inherent equitable powers. See, In re
Feit & Drexler, Inc., 760 F.2d 406 (2d Cir. 1985).
Section
507(a)(4) of the Bankruptcy Code provides, in pertinent part, as follows:
(a) The following expenses and claims have
priority in the following order:
(4) Fourth, allowed unsecured claims, but only to the extent of $12,475 for each individual earned
within 180 days before the date of the filing of the petition for
(A) wages, salaries, or commissions, including
vacation, severance, and sick leave pay earned by an individual;
11
U.S.C. 507(a)(3).
As set forth above,
Section 507(a)(4) affords priority status to unsecured claims for wages,
salaries or commissions, including vacation, severance, and sick leave pay earned
by an individual within 180 days before the filing of a bankruptcy petition to
the extent of $12,475.00 for
each such individual.
Bankruptcy courts have
authorized debtors to pay pre-petition priority wage claims as a means of
allowing debtors to maintain their work force and thereby preserve the debtors
ability to operate in the ordinary course, without the disruption of employee
defections.
In the early
days of this case, the court entered orders permitting the post- petition
payment of certain pre-petition wage and wage-related claims. As is often the
case in operating Chapter 11 cases, the court did this for two reasons. First,
it was necessary that Braniff pay its employees for work performed pre-petition
if the employees were to remain on the job post- petition. The filing of a
bankruptcy case presents many uncertainties for employees. If their pay is
interrupted, employees are obviously not going to remain on the job despite the
fact that their continuation in place is vitally important for the debtor.
Second, in any event, the pre-petition wages
are subject to the priority of Section 507(a)(3). Thus, in all but the direst
of circumstances, the debtor will ultimately pay the pre-petition wages because
of their very high priority. Accordingly, the court authorizes their payment
early in the case rather than requiring that the employees wait for payment at
the end of the case.
In re Braniff, Inc., 218 B.R. 628, 633 (Bankr.M.D.Fla. 1998). See also Columbia Gas, 171
B.R. 189, 191-92 (Bankr. D. Del. 1994); In re Lehigh & New England Ry.
Co., 657 F. 2d 570, 581 (3rd Cir. 1981); Ionosphere Club, 98 B.R.
175 (Bankr. S.D.N.Y. 1989). In re
Structurlite Plastics Corp., (Structurlite I) 86 Bankr. 922, 932
(Bankr. S.D. Ohio 1988), citing In re Chateaugay Corp., 80 Bankr.
279, 287 (S.D.N.Y. 1987); See also In re Columbia Packing Co., 35
Bankr. 447 (Bankr. D. Mass. 1983).
Because wages are priority claims, courts have
often permitted debtors to pay prepetition wage claims in the ordinary course
in response to a motion filed by a debtor in possession at the commencement of
a chapter 11 case. The ability to ensure that the employees receive their
unpaid prepetition salary and do not miss a paycheck is critical to obtaining
the stability necessary for the transition to operating as a debtor in
possession.
Collier on Bankruptcy - 15th ed. Revised,
507.05[1] (2000).
The authority to make such payments was recognized by the
Ninth Circuit in In re Adams Apple, Inc., 829 F.2d 1484 (9th
Cir. 1987):
[A]nother "fundamental
tenet"--rehabilitation of debtors, which may supersede the policy of equal
treatment. Cases have permitted unequal treatment of pre-petition debts when
necessary for rehabilitation, in such contexts as (i) pre-petition wages to key
employees; (ii) hospital malpractice premiums incurred prior to filing; (iii)
debts to providers of unique and irreplaceable supplies; and (iv) peripheral
benefits under labor contracts. See Ordin, Case Comment, In re Texlon Corporation, 596 F.2d
1092 (2d Cir.1979): Finality of Order of Bankruptcy Court, 54 Amer.Bankr.L.J.
173, 177 (1980). t illustrates a
Congressional willingness to subordinate the interests of pre-petition
creditors to the goal of rehabilitation.
Adams Apple, 829 F.2d at 1490.
In
this case, without an order of this Court authorizing the Debtor to pay the
pre-petition Employee Compensation, there will be a severe risk that employees
will leave the Debtor, thereby jeopardizing the Debtors ability to maintain
its operations and reorganize its financial affairs.On Tue, Oct 18, 2016 at 8:38 PM, Holly Roark hollyroark22@gmail.com [cdcbaa] <cdcbaa@yahoogroups.com> wrote:
How about "critical vendor"/"doctrine of necessity"? 363(b)?Holly RoarkCertified Bankruptcy Specialist*and Sports Lawyer
holly@roarklawoffices.com**primary email address**
www.roarklawoffices.com
Central District of California & District of Idaho - Consumer Bankruptcy Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067T (310) 553-2600; F (310) 553-2601
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