Subchapter V

Congress enacted Subchapter V, intended to provide a streamlined and less expensive approach to Chapter 11, effective in February, 2020.  St. James obtained confirmation of what may have been the first Subchapter V Plan in the Northern District of California on May 14, 2020.  His thoughts and observations about Subchapter V are presented here.


Chapter 11

St. James and Robert Harris presented a program on “Secured Creditor Cram-Down and the Section 1111(b) Counter-Measure” for the Bar Association of San Francisco on February 10, 2015.  The program materials discuss the required components of confirmable cram-down treatment and the secured creditor’s leading strategies to defend against a cram-down.


Landlord Issues

St. James has published extensively on bankruptcy and insolvency issues affecting landlords. He has addressed issues regarding the choice of a cash security deposit or letters of credit in a number of articles.

St. James was a Panelist in a June 1, 2020 Bay Area Bankruptcy Program on “Beyond Assumption and Rejection: Advanced Issues in Landlord-Tenant Bankruptcies”  The program materials are presented here.


The Ninth Circuit issued a decision making it possible to sell real property free and clear of the rights of a tenant in possession, effectively evicting the tenant.  St. James’ article on that decision is Throwing Tenants Off Spanish Peaks.

What’s a Landlord to Do? Choosing Between Security Deposits and Letters of Credit Based on Tenant Insolvency Concerns is a practical discussion of the criteria for choosing between a cash security deposit and a letter of credit.

In Oldden, Letters of Credit and Section 502(b)(6), St. James asserts that letters of credit should not be applied to reduce the “Landlord’s Cap.” He argued that position on behalf of the landlord in AB Liquidating Corp., but the Ninth Circuit rejected that analysis. In Are Letters of Credit Covered by the Landlord’s Cap?, St. James canvasses the current state of the law on the subject across the country.

In Landlord Beware, St. James argues that unless the protections of certain California Civil Code sections governing security deposits were waived in the lease, a landlord might be unable to apply the security deposit against “prospective damages,” or losses a landlord will inevitably suffer after the lease is prematurely terminated. That analysis was approved and adopted by a California Court of Appeals in 250 LLC v. PhotoPoint, which favorably cited St. James’ article.

In Slicing and Dicing Executory Contracts, St. James presents a coherent analytical structure for evaluating when a single contract should be divided into multiple contracts, each of which may be separately assumed or rejected, and when multiple contracts should be aggregated into a single contract, all of which must be assumed or rejected together.

In Leasing to a Financially Weak Tenant, St. James provides practical advice about issues a landlord should consider when leasing to such a tenant and dealing with tenant insolvency.

Federal Tax Liens

In A Lien Like No Other, St. James explores the astonishing qualities of a federal tax lien.  Outside of bankruptcy, it can ttake priority over existing floating liens on operating business assets – inventory, accounts receivables and cash – and even a lender who engages in reasonable and prudent public record searches may miss it, but still be subordinated to it.   Although the federal tax lien retains much of its potency in a Chapter 11 reorganization, in a Chapter 7 bankruptcy liquidation the lien will be automatically subordinated to a number of creditors; even, for some purposes, general unsecured creditors, making it harder to achieve a successful Chapter 11 reorganization, if creditors would be better off in a straight liquidation.

Asset Protection

Previously, St. James wrote on asset protection strategies, but over the years, the law has become increasingly hostile to them. St. James’ overview from a recent collection-law program provides a useful general presentation of the law.

The use of the California retirement plan exemption as the basis for an asset-protection strategy remains potentially viable, but it has been called into serious doubt by In re Beverly, 374
B.R. 221 (BAP 9th Cir. 2007) aff’d and adopted, 551 F.3d 1092 (9th Cir. 2008), which can be read to avoid all strategies that are motivated by an intent to hinder or delay creditors.

In Terminating Transmutation: Is There an Alternative to Divorce When One Spouse Becomes Insolvent? (2004), St. James explores the law regarding the transmutation of community property into separate property in order to protect against one spouse’s insolvency.

Bankruptcy for Too-Big-to-Fail Companies

Prior to the Chrysler and GM bankruptcies, St. James and Professor George Kuney authored a proposal for an alternative to Chapter 11 to reorganize too-big-to-fail companies. The proposal, and the American Bankruptcy Institute press release about it, can be read here.


Venue Shopping

In Why Bad Things Happen in Large Chapter 11 Cases: Some Thoughts About Courting Failure, St. James discusses the common practice of filing large bankruptcy cases in Manhattan and Delaware, and the motivations and policies implicated by venue shopping.


Intellectual Property in Bankruptcy Cases

These materials, from a speech to the Silicon Valley Intellectual Property Law Association, discuss the issues that affect licensors and licensees of intellectual property when the other party files a bankruptcy case.

The Travelers Decision

These materials, from a program given by St. James, discuss the impact of the Supreme Court’s Travelers decision, which permitted claims for attorneys’ fees in bankruptcy cases.

Homestead Exemptions

St. James was a panelist at the 2013 California Bankruptcy Forum annual conference, discussing the impact of the recent Jacobson decision on the California homestead exemption. Program materials – CBF-Homestead Materials part 1 and CBF-Homestead Materials part 2 and the CBF PowerPoint used in the presentation, can be viewed here.

Law-Firm Practice and Economics

In this book review of Eat What You Kill, St. James discusses the motivations and incentives that resulted in John Gellene becoming the only bankruptcy attorney to be convicted and serve time in a federal prison for violating bankruptcy disclosure obligations, and why his conduct is consistent with current law-firm life.