In the aftermath of recent municipal bankruptcies in which issuers proposed and/or implemented bankruptcy plans involving partial discharges of the issuer’s payment obligation on insured bonds, there has been increased focus on whether municipal bond interest paid by a bond insurer after the bankruptcy plan’s effective date continues to be tax-exempt.Market confusion as to the treatment of bond insurance payments in the discharged issuer context is at least partially attributable to an incomplete understanding of why bond insurer payments of municipal bond interest are deemed tax-exempt in other contexts. Although the IRS has not specifically addressed the tax status of bond insurer payments following the issuer’s partial (or full) discharge in bankruptcy, review of IRS rulings on bond insurance suggests that, in ordinary circumstances, interest on the insured bond continues to be tax-exempt notwithstanding that the only source of payment is the bond insurance.The … [Read more...] about Municipal Bond Interest Paid By a Bond Insurer After an Issuer’s Bankruptcy Discharge Can Remain Tax-Exempt
Bankruptcy who pays debt
According to Wisconsin bankruptcy judges, the money in inherited individual retirement accounts is subject to collection by creditors and not protected by Wisconsin or federal exemption laws.Federal bankruptcy laws and state law permit individuals to claim certain property as exempt from the reach of their creditors. Many types of retirement accounts and benefits are protected by these exemptions. In his May 10, 2011 decision in In re Clark, Case No. 10-18035, Bankruptcy Judge Robert D. Martin concluded that an inherited individual retirement account can be reached by the heir’s creditors, and that neither federal nor state exemptions protect the monies in an inherited IRA.Under federal bankruptcy law, for a retirement account to be safe from creditors, (1) the monies must be “retirement funds” and (2) those retirement funds must be in an account exempt from taxation under one of various provisions of the Internal Revenue Code. Judge Martin concluded that the … [Read more...] about Inherited IRAs Can Be Reached by Creditors to Pay Debts
On May 3, 2017, the Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”), acting on behalf of the cash-strapped Commonwealth of Puerto Rico (the “Commonwealth”), filed for bankruptcy protection in the District Court for the District of Puerto Rico. The Commonwealth’s Title III Petition for Covered Territory or Covered Instrumentality (the “Petition”) was filed in accordance with Title III of the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”), codified at 48 U.S.C. § 2161, et seq. The Petition follows unsuccessful negotiations with bondholders regarding the Commonwealth’s massive debt load that ended with a series of legal actions filed against the Commonwealth and others initiated the moment the legal stay provisions of PROMESA expired on May 1, 2017. The Commonwealth’s petition marks the first time in history that a United States … [Read more...] about A Territory in Uncharted Territory, the Commonwealth of Puerto Rico Files for Bankruptcy Protection
IntroductionThe Insolvency & Bankruptcy Code, 2016 (“the Code”) has been one of the most path-breaking laws promulgated in the country in recent times. There has been a paradigm shift in the debt recovery scenario in the country, consequent to the implementation of the Code. It is undoubtedly a welcome overhaul of the framework that had been in existence in the past, thereby consolidating all the laws pertaining to insolvency and debt recovery that had been scattered into a number of legislations, into a single legislation, under a unified Code. The Code offers a uniform, comprehensive insolvency legislation encompassing all companies, partnership firms, individuals, and lays down consistent and coherent provisions for the stakeholders who have been affected by business failure or inability to pay debt and aims to attain swift and effective bankruptcy resolution, in times to come, unlike the never-ending process that used to be prevalent earlier.The insolvency matters … [Read more...] about Natural Justice vis-a-vis The Insolvency & Bankruptcy Code, 2016- Audi alteram partem : An Unravelled Mystery!
The Finance Minister Shri Arun Jaitley, in his Budget Speech 2015-16, had identified Bankruptcy Law Reform as a key priority for improving the ease of doing business and had announced that a comprehensive Bankruptcy Code, meeting global standards and providing necessary judicial capacity, will be brought in fiscal 2015-16.The Government had constituted a Bankruptcy Law Reform Committee under the Chairmanship of Dr. T. K. Viswanathan, former Law Secretary to look into various Bankruptcy related issues and give its report along with a draft Bill on the subject to the Government.Dr. Viswanathan submitted the Report of the Committee to the Finance Minister Shri Arun Jaitley in his office here today. The Report is in two parts: Volume I – titled “Rationale and Design” and Volume II – titled “Draft Insolvency and Bankruptcy Bill”. The Report, along with a brief summary of the recommendations, has been placed on the website of the Ministry of Finance … [Read more...] about Bankruptcy Law Reforms Committee (BLRC) submits draft Bill on Insolvency