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    The Lawletter Blog

    Anne B. Hemenway

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    BANKRUPTCY: Puerto Rico Debt Restructuring

    Posted by Anne B. Hemenway on Fri, Nov 11, 2016 @ 11:11 AM

    The Lawletter Vol 41 No 10

    Anne Hemenway, Senior Attorney, National Legal Research Group

         On June 13, 2016, in Commonwealth of Puerto Rico v. Franklin California Tax-Free Trust, 136 S. Ct. 1938 (2016), the United States Supreme Court was asked to decide whether the Commonwealth of Puerto Rico should remain a "state" for purposes of 11 U.S.C. § 903(a), the subsection of Chapter 9 of the United States Bankruptcy Code that states that "a State law prescribing a method of composition of indebtedness of such municipality may not bind any creditor that does not consent to such composition." This issue came to the Court on an injunction proceeding by bondholders suing the Puerto Rico government to enjoin the application of the Puerto Rico Corporation Debt Enforcement and Recovery Act (the "Puerto Rico Act"). Enacted by Puerto Rico in an effort to deal with its extraordinary financial crisis and, specifically, to create its own bankruptcy scheme to restructure the debt of its insolvent public utilities. The bondholder's issue was presented in federal court notwithstanding an amendment to the Code to exclude Puerto Rico from the definition of a "state." See 11 U.S.C. § 101(52).

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    Topics: bankruptcy, Anne B. Hemenway, restructuring, Puerto Rico debt, remains a state

    BANKRUPTCY: Rejection or Assumption of Executory Contracts Under 11 U.S.C. § 365

    Posted by Anne B. Hemenway on Mon, Jul 25, 2016 @ 14:07 PM

    The Lawletter Vol 41 No 7

    Anne Hemenway—Senior Attorney, National Legal Research Group

         A personal service contract, such as one between an artist and a manager or between a recording group and a record company, may be rejected or assumed under the U.S. Bankruptcy Code. Generally, such management or promotional agreements are considered to be executory contracts under 11 U.S.C. § 365(a). An executory contract under § 365 is not specifically defined, but the term commonly refers to a contract that has performance due from both the debtor and the contracting party. In re Gen. Datacomm Indus., 407 F.3d 616 (3d Cir. 2005). Professor Vern Countryman's definition in Executory Contracts in Bankruptcy: Part I, 57 Minn. L. Rev. 439, 460 (1973), is considered to be the definitive definition of an executory contract.

         A trustee or debtor-in-possession has a right to assume or reject executory contracts under § 365 within the time frames set forth in § 365(d), but the agreement remains in effect pending the actual act of assumption or rejection. In re Nat'l Steel Corp., 316 B.R. 287 (Bankr. N.D. Ill. 2004). If a personal service contract is rejected, it is considered breached under § 365(g) as of the date immediately preceding the date the bankruptcy petition was filed.

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    Topics: bankruptcy, contracts, Anne B. Hemenway, The Lawletter Vol 41 No 7, executory, personal service contract, performance by debtor and contracting party

    EMPLOYMENT LAW: Recent Equal Pay Developments

    Posted by Anne B. Hemenway on Wed, Jun 1, 2016 @ 09:06 AM

    The Lawletter Vol 41 No 5

    Anne Hemenway, Senior Attorney, National Legal Research Group

         Under the Equal Pay Act, 29 U.S.C. § 206(d), no covered employer shall discriminate on the basis of sex by paying wages to employees at a rate less than the rate paid to employees of the opposite sex for equal work. In Hesterberg v. Tyson Foods, Inc., Case No. 5:14-CV-05382, 2016 WL 483017 (W.D. Ark. signed Feb. 5, 2016), the court held that to establish a prima facie claim for damages under the Equal Pay Act, the complaining party must show by a preponderance of the evidence that "(1) she was paid less than a male employed in the same establishment, (2) for work on jobs requiring skill, effort and responsibility, (3) which were performed under similar working conditions." Id. at *5. The employer will be entitled to summary judgment and dismissal of the equal pay suit if it can show that any pay differential between the plaintiff and her male counterpart is explained by a statutory defense such as a merit system or some excuse other than sex.

         The plaintiff in the case alleged that her immediate supervisor, who was male, had total discretionary authority over the amount of bonuses paid and percentage raises given to her and her male counterparts and that his decisions regarding these forms of compensation were largely subjective. She argued that her comparatively lower bonuses and percentage raises in the years in question were the result of the males' being treated more favorably. Recognizing that employers can "easily circumvent the Equal Pay Act by relying substantially on bonuses to compensate employees," id. at *6, the court denied the employer's motion for summary judgment. Genuine issues of material fact existed as to whether the employer's merit system, on which the employer relied to justify the pay differential in this case, had been implemented at the company in a truly nondiscriminatory way.

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    Topics: employment law, Anne Hemenway, bonuses, Lawletter Vol 41 No 5, 29 U.S.C. § 206, equal pay, Equal Pay Act

    BANKRUPTCY: Reopening a Federal Bankruptcy Case

    Posted by Anne B. Hemenway on Tue, Dec 1, 2015 @ 16:12 PM

    The Lawletter Vol 40 No 11

    Anne Hemenway—Senior Attorney, National Legal Research Group

         There are a variety of reasons why a federal bankruptcy case may be reopened after the debtor has been discharged and the case closed. A debtor may discover a claim, not known at the time the case was pending, and seek to reopen the case to discharge the claim. More typically, a Chapter 7 trustee may seek to reopen a case after discovering potential bankruptcy estate assets that the debtor failed to schedule. The party seeking to reopen may find intense challenges to the motion to reopen, because the reopening can result in a major redistribution of assets. Under the Bankruptcy Code, the bankruptcy court has broad discretionary authority to reopen a case "to administer assets, to accord relief to the debtor, or for other cause." 11 U.S.C. § 350(b).

         Recently, in In re Ludvigsen, BAP No. MB 14-039, Bankr. No. 13-12232-WCH, 2015 WL 3733193 (B.A.P. 1st Cir. Jan. 16, 2015) (not for publication), the First Circuit Appellate Panel stated that a bankruptcy court properly exercises its discretionary authority to reopen a closed bankruptcy case when it does so to determine a substantive dispute on its merits, but does not exercise proper discretionary authority when only technical defects with the closed case are at issue. Further, when determining whether to exercise its discretionary authority, the court should look at each § 350(b) motion on a fact-by-fact basis. Id. at *4 (citing In re Dalezios, 507 B.R. 54, 58 (Bankr. D. Mass. 2014).

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    Topics: bankruptcy, Anne Hemenway, bankruptcy court, Chapter 7 trustee

    WORKERS' COMPENSATION: Collection and Jurisdiction in Multistate Workers' Compensation Cases

    Posted by Anne B. Hemenway on Wed, Jul 8, 2015 @ 13:07 PM

    The Lawletter Vol 40 No 5

    Anne Hemenway, Senior Attorney, National Legal Research Group

         Workers' compensation claims are often straightforward where the worker has suffered a clear work-related injury in the jurisdiction in which the employer is located. Where a worker has been injured in a work-related accident while traveling in a different state for work, however, different jurisdictions impose specific jurisdictional restrictions notwithstanding the workers' compensation insurance contract. See McIlvaine Trucking, Inc. v. Workers' Comp. Appeal Bd. (States), 810 A.2d 1280 (Pa. 2002) (holding that where a worker who regularly traveled to other states for work was injured in Pennsylvania, the parties' agreement to be bound only by the West Virginia Workers' Compensation Act was unenforceable as against Pennsylvania public policy, which requires in-state workers' injuries to be governed only by the Pennsylvania workers' compensation laws).

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    Topics: jurisdiction, Anne B. Hemenway, workers' compensation, jurisdictional restrictions, claims

    BANKING LAW: Credit Card Issuer Prevails in Class Action Brought Under Credit CARD Act of 2009

    Posted by Anne B. Hemenway on Wed, Mar 25, 2015 @ 12:03 PM

    The Lawletter Vol 40 No 1

    Anne Hemenway, Senior Attorney, National Legal Research Group

         The Credit Card Accountability Responsibility and Disclosure Act of 2009 (the "Credit CARD Act of 2009"), Pub. L. No. 111-24, 123 Stat. 1734, H.R. 627 (2009), amended the Federal Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq., by specifically requiring banks to make additional disclosures to consumers regarding their credit cards. These included disclosures prior to renewal of a credit card, 15 U.S.C. § 1637(d)(1), and disclosures when the creditor makes changes to the terms and notices, as well as advertising disclosures. Additional consumer regulations were later promulgated under the Credit CARD Act of 2009. In August 2010, regulations became effective that provided that if a card issuer prospectively changes the annual percentage rate ("APR") on the card based on certain factors, the card issuer must also apply the same factors to determine whether a reduction in the APR is proper. See 12 C.F.R. §§ 226.52(b), 226.59. Importantly, these regulations also require that a card issuer can assess penalty fees for late payments only in such a way as represents a "reasonable proportion of the total costs incurred by the card issuer." Id. § 226.52(b)(1)(i).

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    Topics: credit card, banking law, Credit CARD Act of 2009, disclosures to consumers, Cred CARD Act of 2009

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