Midland Funding v. Johnson (11th Circuit): The two issues to be
decided include: 1) whether the filing of an accurate proof of claim for an
unextinguished time-barred debt in a bankruptcy proceeding violates
the FDCPA, and 2) whether the Bankruptcy Code precludes the application of the FDCPA to the filing of an accurate proof of claim for an
unextinguished time-barred debt.
Outlook for 2017
Barring unforeseen developments, 2017 is shaping up to be a quiet year in the
world of bankruptcy.
• While not soaring, the overall U.S. economy is doing fairly well. After a
period of stagnation, incomes are rising and the national unemployment
rate is under 5%. Interest rates remain low. Mortgage delinquencies and
foreclosures continue to drop. Delinquent credit card debt is down slightly
over the last year, though delinquent auto debt is up.
• Student loan outstanding balances and delinquencies continue to increase,
but this debt is rarely dischargeable in bankruptcy.
• We do not expect to see a detectable change in bankruptcy activity in 2017
because of the 2016 elections.
• With all of the issues facing the incoming Donald Trump administration,
changes to the bankruptcy laws appear to be a low priority. Therefore, we
do not foresee any major legislative changes directly affecting bankruptcy
• Our projection is that total filings nationwide may increase very slightly
in 2017 after six years of decline. Filings of Chapter 13 cases will increase
slightly. Chapter 7 filings will be flat. No area of the country will see
particularly high increases or decreases in filings during the year. Chapter
11 filings by relatively large companies are likely to remain high for a
non-recession year, particularly those in the energy and retail sectors. abfj
SAMUEL J. GERDANO is executive director of the American Bankruptcy Institute, the
nation’s largest association of bankruptcy professionals. ED FLYNN is an ABI consultant.
Most Chapter 11 filings involve relatively small entities. Although the
total number of Chapter 11 filings have been fairly flat since 2014, there
has been a marked increase in the number of very large Chapter 11
4 In the first 11 months of 2016, there were 22 Chapter 11 filings
by publicly held companies with more than $1 billion in pre-petition
assets. This was the largest volume of such cases since 2009, but well
below the number filed during the two most recent recessions.
Large Case Filings by Sector
Most of the very large cases filed in 2016 involved companies in the
energy sector, including 13 oil and gas companies, t wo coal companies
and one renewable energy company. In the early 2000s, the largest
filings tended to be by companies in the healthcare, retail and telecommunications industries. Banking, finance and automotive cases were
highest during and after the Great Recession.
Chapter 11 Commission
The last major overhaul of Chapter 11 occurred in 1978. There is an
emerging consensus that Chapter 11 needs an updated toolkit to deal
with new types of lending and increasingly complex debt and capital
structures. The ABI Commission to Study the Reform of Chapter 11
issued its Final Report and Recommendations in December 2014.5 The
400-page report made more than 200 discrete proposals to modernize
the law. A number of courts have cited the report, and Congress is
expected to consider the proposals on small- and medium-sized enterprises during 2017.
The Supreme Court is asked to review between 7,000 and 8,000 cases
each year, but generally only accepts about 80 cases. The October
2016 term featured t wo bankruptcy cases that were accepted for argument. While these cases present important legal issues, their outcomes
are not likely to have much impact on future filing levels.
In re Jevic Holding Corp (3rd Circuit): The court will decide
whether bankruptcy courts can utilize so-called structured
dismissals where the case is dismissed and property is distributed in a settlement that violates the priorities contained in
11 U.S.C. §507.
District of Delaware or the Southern District of New York.
2000 2002 2004 2006 2008 2010 2012 2014 2016
1990 1995 2000 2005 2010 2015
Source of Data: New Genera?on Research
Chapter 11 Cases Filed – Over $1 Billion Assets
(Publicly Held Companies) 1987 - 2016