April 03, 2014

Are We Protecting Too Much? The Intersection of §§ 362(a)(5) and 554

Kayla Britton, an associate in Faegre Baker Daniels' finance & restructuring practice, was published in the most recent issue of the American Bankruptcy Institute's ABI Journal. Her article, "Are We Protecting Too Much? The Intersection of §§ 362(a)(5) and 554," explains how the Bankruptcy Code, which was intended to protect debtors and creditors by promoting equitable distribution, can do more harm than good in some cases.

Through the example of Gasprom Inc. v. Fateh (In re Gasprom Inc.), Britton illustrates how Bankruptcy Code, while well intended, can create headaches for both sides in bankruptcy cases. Britton concludes that the scope of § 362(a)(5) should be reconsidered, especially when the terms do not provide any benefit to the debtor or its estate. "While § 362(a)(5) may serve a legitimate purpose in individual debtor cases or with respect to property that was acquired after the filing of a case, it provides no benefit in corporate debtor cases or with respect to abandoned property of the estate," Britton said.
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