► In This Issue:

• The Gamble That’s Not Paying Off
• A Lease by Any Other Name: Section 365 and Oil and Gas Leases
• Too Much, Too Soon: Properly Timing a Chapter 11 Case’s Bad-Faith Dismissal
• If Student Debt Relief Spurs Rational Lending, Can For-Profit Universities Survive?
• Audio Journal Demo with ModioLegal this Thursday

The Gamble That’s Not Paying Off

Laura N. Coordes Arizona State University Sandra Day O’Connor College of Law Tempe, Ariz.

Atlantic City, N.J.’s pride has become its downfall. In the past few years, many of the city’s casinos have closed down or entered bankruptcy. Consequently, the city itself, which is heavily dependent on casino revenue, has taken a severe financial hit.

Atlantic City’s decline is due in part to the legalization of gambling and casino operations in neighboring states. Since the town’s chief draw for many years has been gambling, there is now less of a reason to visit Atlantic City if other cities with more diverse attractions (like Philadelphia and Baltimore) also offer luxurious casinos and good gambling opportunities. As a direct example of the impact other cities are having on Atlantic City, last summer gambling giant Caesars Entertainment Corp. closed its Showboat casino in Atlantic City within a month of opening a new casino in nearby Baltimore. From 2006-13, overall casino revenue in Atlantic City fell more than 40 percent from over $5 billion to just over $2.8 billion.   Read More

A Lease by Any Other Name: Section 365 and Oil and Gas Leases

Steve Golden St. John’s University Jamaica, N.Y. (LL.M. in Bankruptcy Candidate)

Words can sometimes be deceiving. This is one of the lessons learned by the debtor in the recent Tayfur decision. Although the case ultimately applied a different subsection of § 365 of the Bankruptcy Code, the Third Circuit underscored an important fact in oil and gas law: A mineral lease is not always a true lease. Thus, a mineral lease will not always fall within the ambit of § 365, and therefore it may not always be rejected in bankruptcy.

What Is § 365?
Section 365 of the Bankruptcy Code is entitled, “Executory contracts and unexpired leases,” and represents one of the most powerful provisions of the Code itself. Specifically, § 365(a) permits the trustee or debtor in possession to reject an executory contract or unexpired lease. In other words, a debtor has the unilateral ability to get out of an in-effect contract because it is burdensome, unfair or otherwise economically beneficial to do so—something it cannot do absent the Bankruptcy Code.   Read More

Too Much, Too Soon: Properly Timing a Chapter 11 Case’s Bad-Faith Dismissal

Amir Shachmurove U.S. District Court (S.D. Cal.) San Diego

Having just lost a state court suit to the tune of $1.5 million with the winner about to collect on the $1.5 million, a debtor with a substantial income files a skeletal chapter 11 petition. One creditor, the state court victor, holds more than 65 percent of the total debt, and the initial list of exempt assets is long and their value considerable. Within 69 days of the petition’s filing and with 51 days left for the debtor to propose a reorganization plan, even these verities are apparent from the skimpy record. On these facts, may the bankruptcy court dismiss the case on the basis of a “lack of good faith,” which is § 1112‌(b)’s implicit requirement?

In Sullivan v. Harnisch (In re Sullivan), the Ninth Circuit Bankruptcy Appellate Panel (BAP) reversed a bankruptcy court that had said “yes,” finding reversible error and an abuse of discretion in three related failings.    Read More

If Student Debt Relief Spurs Rational Lending, Can For-Profit Universities Survive?

April A. Wimberg Bingham Greenebaum Doll LLP Louisville, Ky.

Multiple bills have been introduced by Congress recently to address the student debt crisis, which has been consuming headlines for several years. One bill receiving significant attention, H.R. 449, proposes to reverse a 2005 law that prevents debtors from discharging private student loans in bankruptcy cases. In seeming support of the bill, the President recently requested that federal agencies explore this possibility as well. The goal of H.R. 449 is to provide many in need with the intended benefits of bankruptcy: a fresh start. But the relief will likely come to the detriment of many for-profit universities.

Students at For-Profit Universities Hold Substantially Higher Private Debt and Default Rates, but Substantially Less Hope for a Brighter Future Without Relief
Student debt is a major issue facing our country.    Read More

Audio Journal Demo with ModioLegal this Thursday

Please join us this Thursday, June 4, 2015 at 4 P.M. EST for a complimentary webinar with ModioLegal. We all know how important it is to stay informed in our area of expertise, but our hectic schedules can sometimes cause us to fall behind or neglect to keep up to date with our industry publications. ModioLegal has solved this problem by partnering with the ABI Journal to offer the exact same content as the print edition in a human-narrated, article-specific audio format that you can access away from your desk and on your smartphone at your convenience.

Hosted by the Young and New Members Committee, ModioLegal’s CEO will detail how ModioLegal helps attorneys maximize their time, and will conduct an interactive demonstration whereby participants will be able to try out the service on their smartphones. All participants will have the opportunity to sign-up for a free 1‑month trial at the webinar’s conclusion.

Register today to reserve your seat!