Arbitration of Truth-in-Lending-Act Claims

In recent years, it has become increasingly common for lenders to include arbitration clauses in their consumer financing agreements. While federal law strongly supports the enforceability of arbitration provisions, there are a number of grounds on which their enforceability can be, and has been, challenged. This article summarizes the state of the law on a number of major issues which have arisen in the attempt to use arbitration clauses in consumer financing agreements, focusing on Truth-in-Lending Act claims, including an analysis of the Supreme Court\u27s recent decision in Green Tree Financial Corp. v. Randolph

Will Exploding Guaranties Bomb?

Springing and exploding guaranties - insider guaranties that will become due ifand when a borrower files for bankruptcy - have become popular as bankruptcy-proofing devices, yet there is little case law or literature on their enforceability. This article reviews the limited existing law on these bankruptcy-contingent guaranties and examines some of the arguments against their enforceabiltiy that can be expected to be made in the future

Does the Real Estate Settlement Procedures Act of 1974, Which Was Targeted Primarily at Kickbacks between Service Providers, Also Bar Charges for Undivided, Unearned Services (10-1042)

The Real Estate Settlement Procedures Act of 1974 provides that “[n]o person shall give and no person shall accept any portion, split, or percentage of any charge made or received … other than for services actually performed.” The Supreme Court must decide whether this language prohibits a party from charging for services not actually performed if the party retains the entire charge, without splitting it with any other party

Continuous maintenance and the future – Foundations and technological challenges

High value and long life products require continuous maintenance throughout their life cycle to achieve required performance with optimum through-life cost. This paper presents foundations and technologies required to offer the maintenance service. Component and system level degradation science, assessment and modelling along with life cycle ‘big data’ analytics are the two most important knowledge and skill base required for the continuous maintenance. Advanced computing and visualisation technologies will improve efficiency of the maintenance and reduce through-life cost of the product. Future of continuous maintenance within the Industry 4.0 context also identifies the role of IoT, standards and cyber security

Insider Guaranties in Bankruptcy: A Framework for Analysis

This article presents an economic analysis of insider guaranties in small business finance and bankruptcy, explaining their role in the panoply of legal and contractual devices used to control financial agency costs. It then uses this model to examine two areas of concern in the bankruptcy treatment of insider guaranties (the Deprizio preference problem and the enforceability of springing and exploding guaranties) and to explore some of the wider implications of insider guaranties for small business bankruptcy. Building on the fact that insider guaranties are typically used less to increase the assets available for repayment of the debt than to bond firm management to act in the best interest of the guarantied creditor, the article provides a new perspective on the insider preference dilemma, justifying the Deprizio doctrine (and critiquing amended Bankruptcy Code Section 550(c)) by focusing on the positive effects of insider liability rather than the purported negative effects of creditor leverage. This same perspective, however, argues against the enforceability of springing guaranties, which create disproportionate and therefore inefficient incentives to avoid bankruptcy. The article also demonstrates that insider guaranties play several underappreciated roles in the functioning of small business bankruptcies. First, insider guaranties, by reducing the value of the cramdown threat, can significantly alter bargaining power within the bankruptcy case and may be partly responsible for the large number of small business bankruptcy failures. Second, chapter 11 provides an identical bankruptcy regime for small and large businesses, but this reorganization-focused system is inappropriate for many smaller firms. Insider guaranties may in part be a market-generated corrective, a means of resegmenting business bankruptcy into separate schemes for smaller versus larger firms

What Is a Misrepresentation “With Respect to” a Debtor’s “Financial Condition” that Must Be in Writing to Render a Claim Nondischargeable?

A basic purpose of bankruptcy law is to provide a fresh start to the “honest but unfortunate” debtor. The bankruptcy discharge is therefore not generally available for debts incurred by “false pretenses, a false representation, or actual fraud.” However, if the false statement alleged by the creditor is one “respecting the debtor’s or an insider’s financial condition,” it is only nondischargeable if the creditor can show that it was in writing and that the creditor reasonably relied on it. The question in this case is whether a statement by the debtor regarding a single asset, rather than its overall net worth or solvency, is a statement respecting the debtor’s financial condition and, thus, subject to this higher standard for nondischargeability