July 2013

I recently had an email exchange with a fellow bankruptcy attorney who was a little confused about something called the § 1111(b) election in a Chapter 11 bankruptcy.  Her confusion was easy to understand because there are some interesting wrinkles in the statutory language that are worth exploring.

Before we get into the somewhat arcane aspects of today’s topic, it might be worth defining a few important terms that we’ll be using, and then summarizing the salient features of Chapter 11 bankruptcy.
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If you’ve been following the news from Wall Street, you might assume that the economy is finally improving.  For example, in the July 11, 2013 issue of The Wall Street Journal’s Market Watch, Kate Gibson reported:

U.S. stocks leapt Thursday, with the S&P 500 up for a sixth day and setting a record finish, after Federal Reserve Chairman Ben Bernanke said the Fed would remain accommodative.

Whoopee Wall Street!

I.          Unemployment And Underemployment Are Growing

However, there are threatening clouds overshadowing the current economy.  One of them is the combination of growing unemployment and underemployment.  Indeed, in the very same Market Watch article Ms. Gibson reported:

Labor Department figures released Thursday showed first-time jobless claims rising last week by 16,000 to a two-month high of 360,000.

Moreover, in the May 3, 2013 issue of Market Watch Rex Nutting reported that although there were more jobs created, there were fewer hours worked:

The April employment report exceeded expectations, with 165,000 jobs created and a welcome drop in the unemployment rate to 7.5%.  But there was a dark side to the report:  Total hours worked fell sharply, and the total amount of money earned by U.S. workers actually declined from the month before.  “Aggregate weekly hours” is an obscure series of data in the jobs report, but it’s vital to understanding how strong the economy is performing. As the name implies, it measures the total number of hours worked, which is what matters for sizing up overall growth in the economy.

In fact, the reduction in hours worked translates into what is economically equivalent to a loss of 500,000 jobs.  As Mr. Nutting pointed out:
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