News

U.S. Says Bankrupt Tennessee Nursing Home Chain Must Transfer Liability

The U.S. government has objected to a plan by Orianna Health Systems nursing home chain to protect companies that would acquire facilities through its restructuring from successor liability, Reuters reports. Filed on April 9, the motion contends that the ultimate control over the legal issues surrounding the transfer of Medicare provider agreements, not a bankruptcy court — and that Orianna cannot expect a new operator to assume control over the properties without also dealing with its existing liabilities. The Nashville based company, which operates skilled nursing facilities in seven states, with around 4,500 beds and 5,000 employees, initially revealed its bankruptcy plan last month after falling behind on rent payments to landlord Omega Healthcare Investors. 
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Online CLE Credit Available

Did you miss the Creditors Practice Forum this year? Do you need some online CLE hours? Want to learn about the Telephone Consumer Protection Act and creditors practice in estate claims? If so, then click here to access all of the TBA's online resources.

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10 Essential Documents for Your Practice

Instructions and rules for client file retention, list of current curse and copy of bank’s form for IOLTA access are three of the top 10 documents attorneys need for succession planning and practice management. Learn more in this 3-hour dual credit workshop with attorney Timothy Takacs.

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Toys 'R' Us Founder Dies as Company is Set to Begin Liquidation

In an unlikely sequence of events, the founder of Toys 'R’ Us has passed away just as the beleaguered retailer was set to begin its liquidation, The New York Times reports. Charles Lazarus opened the first Toys R’ Us in 1957 and led the company for several prosperous decades prior to stepping down as chief executive officer in 1994.

Lazarus’s death comes one week after Toys 'R' Us announced that it would start liquidating its stores in the United States. The company filed for bankruptcy last September and announced last Thursday that the company planned to close or sell all of its stores in the United States. That could result in more than 30,000 employees losing their jobs.

“There have been many sad moments for Toys 'R' Us in recent weeks, and none more heartbreaking than today’s news about the passing of our beloved founder, Charles Lazarus,” Toys “R’ Us said in its statement on Thursday afternoon. “We will forever be grateful for his positive energy, passion for the customer and love for children everywhere.” Lazarus was 94.

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Remington Declines to Say if Bankruptcy Will Put Existing Settlement at Risk

Remington, America's oldest gun manufacturer, filed Chapter 11 bankruptcy on Monday, sparking questions on how this will affect an agreement to repair millions of allegedly defective guns that resulted in a lawsuit. The suit began in 2010 when CNBC investigated allegations that for decades Remington covered up a deadly design defect that allows the guns to fire without the trigger being pulled. To this day, Remington denies the allegations and maintains the guns are safe.
 
The company said it was settling the case to avoid protracted litigation. An attorney for Remington refused to say whether the plan by America's oldest gun manufacturer to file for Chapter 11 bankruptcy protection will affect an agreement to repair millions of allegedly defective guns. "It is the company's position not to comment," said John Sherk, attorney for Remington.
 
An attorney representing plaintiffs in the case, J. Robert Ates, says the bankruptcy filing should be of no moment in terms of the class action case, particularly because the suit also named as a defendant E.I. du Pont de Nemours and Company, which owned Remington when the original trigger mechanism was developed. The company, which merged with Dow Chemical last year to form DowDuPont, recorded $24 billion in revenues 2016.
 
Under the proposed settlement - which Remington and plaintiffs have claimed could be worth upwards of $500 million - DuPont would fund only a tiny amount, covering product vouchers being offered to owners of some of the oldest Remington models. DuPont has also continuously maintained that the guns are safe.
 
Neither Remington nor its attorneys have indicated whether the company intends to abide by the agreement considering the bankruptcy filing. While the settlement includes a guarantee that the company will meet its financial obligations under the agreement, it does not address the possibility of a bankruptcy. The settlement is currently under appeal in the Eighth U.S. Circuit Court of Appeals.
 
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TBA Gears Up for 2018 Mock Trial Tournament

The Tennessee Bar Association will host the upcoming Tennessee High School Mock Trial Tournament on March 23 and 24 in Nashville. The Mock Trial is a two-day, single-elimination bracket-style competition where 16 high schools face-off against each other in the Davidson County Courthouse. Each team is scored on their trial preparation and skills. 

We need TBA volunteers to help be bailiffs and jurors (scorers) for the event. After signing up, we will send you a Volunteer Memo with all the information you need for competition including; parking, hotel, downtown map, courthouse rules, and reimbursement information. Come be a part of the Young Lawyers Divisions’ March Madness! Feel free to contact YLD Director Stephanie Vonnahme with any questions.

To volunteer for this event, click here.

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15th Annual Bankruptcy Forum in Gatlinburg

The 15th Annual Tennessee Bar Association Bankruptcy Forum will take place April 27-29, 2018, at the Hilton Garden Inn in scenic Gatlinburg. This event offers 10 hours of CLE credit including 3 hours of ethics.
 
This high-quality program will begin on Friday with presentations on recent bankruptcy case developments in the Sixth Circuit and around the country. A faculty of prominent bankruptcy judges will be present, encouraging participants to analyze, discuss, and argue different approaches to relevant case studies.
 
Make plans to join us in this wonderful and relaxing setting for unique and informative presentations, while networking with attorneys of an associated practice. 
 
Speakers and producers include:
  • Joel Giddens, Wilson & Assoc PLLC, Memphis 
  • Lawrence Ahern III, Brown & Ahern, Nashville 
  • Paul Bonapfel, United States Bankruptcy Court - North District of GA, Atlanta 
  • James Croom, United States Bankruptcy Court for the Western District of Tennessee, Jackson
  • Laura Ketcham, Miller Martin PLLC, Chattanooga
  • Randal Mashburn, U.S. Bankruptcy Court, Middle District of Tennessee, Nashville
  • Michael McCormick, McCalla Raymer Leibert Pierce, LLC, Roswell
  • Shelley Rucker, U.S. Bankruptcy Courts for the Eastern District of TN, Chattanooga
  • Kara West, Chapter 13 Trustee, Chattanooga

For more information and to register for this event, click here.

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Memphis Landlord Trying to Save Shuttering Toys 'R' Us Location

A Memphis Toys R Us is among as many as 182 stores likely to close as part of its bankruptcy reorganization plan, but a local shopping center owner will try negotiating to keep it open. The beleaguered company announced its filing of Chapter 11 bankruptcy filing last September, acknowledging that it needed to revamp its long-term debt totaling more than $5 billion.
 
"I was a little surprised,'' Michael Lightman said of learning that the Toys R Us made the closure list. "I thought that store was doing just fine. I'm still trying to reach the right people at Toys R Us to find out more detail,'' he said.
 
The company noted that some closings may be avoided if it is able to negotiate more favorable lease terms. But most of the stores listed in the documents are expected to close as Toys R Us tries to reinvent itself as a leaner, smarter retailer. "The reinvention of our brands requires that we make tough decisions about our priorities and focus," Toys R Us chief executive Dave Brandon said in a letter posted on the company's website.
 
Toys R Us will shrink its store fleet by about 20 percent if all planned 182 stores are closed. Lightman's location is among two planned Tennessee closures for the company. Babies R Us on Nolensville Road in Nashville is also planned for closure. A complete list of closing stores can be found here.
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Director of Consumer Financial Protection Bureau Comes Under Fire After Closing Payday Lending Investigations

Mick Mulvany, director of the Consumer Financial Protection Bureau, has recently closed investigations of payday lending companies in Kansas and South Carolina, causing concerns that the Trump administration is taking a lax approach to regulations on this polemic industry.
 
The CFPB, formed in 2011 amidst the aftermath of the Great Recession, is tasked with making sure banks, lenders, and other financial companies treat citizens fairly. In a memo released by Mulvany, he announced a new direction for the bureau stating "We don't just work for the government, we work for the people. And that means everyone: those who use credit cards, and those who provide those cards; those who take loans, and those who make them; those who buy cars, and those who sell them. All of those people are part of what makes this country great. And all of them deserve to be treated fairly by their government. There is a reason that Lady Justice wears a blindfold and carries a balance, along with her sword."
 
The move has been met with consternation from critics who believe Mulvaney may have a conflict of interest due to receiving campaign contributions from a number of payday loan companies. Payday lenders gave $31,700 in 2015-16 federal campaign cycle contributions to Mulvaney, ranking him ninth among all congressional recipients from the sector, according to data analyzed by the Center for Responsive Politics. When asked whether the contributions influenced his position on the rule and could pose a conflict of interest, Mulvaney said, "I don't think so, because I am not in elected office anymore."
 
Tennessee, who is among 25 states the US have already passed serious legislation to regulate the functioning of payday loans, has most predatory lenders in the U.S. according to a recent report. The same report found people without 4-year college degrees, home renters, African-Americans, and those earning less than $40,000 a year are most likely to use a payday loan.
 
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Don't Forget: Winter CLE Blast Tomorrow!

Need CLE hours fast? We can help! The annual Winter CLE Blast is less than a day away. With this program, you can complete up to 11 hours of Dual CLE credit on your own time. Our registration desk will be open from 7 a.m. to 6:45 p.m. on Feb. 21, providing you the flexibility to create your own schedule and take as many or as few hours as you need. Payment will be determined at checkout depending on the number of hours you attend. 

Highlights

  • Flexible to your schedule
  • Up to 11 Hours of CLE
  • Ethics Credits
  • Compliance CLE
  • Live Credit Hours

When: Feb. 21, registration begins at 7 a.m., CST

Where: Tennessee Bar Center, 221 4th Ave N., Nashville, TN 37219

 

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Court Clarifies Law When Bank Sells Loan Collateral Without Proper Notice

The Tennessee Supreme Court today issued guidance on the steps courts should follow when a creditor sells collateral used to obtain a loan, but does not provide the required notice of the sale. The case involved a bank loan that was used to purchase an airplane, with the plane itself and additional guarantors securing the transaction. When the debtor failed to maintain insurance, the bank, Regions Bank, placed the loan in default, and the resulting accelerated payments were not made. The bank filed suit against the guarantors. While that action was pending, Regions also repossessed the plane and spent money to make it flightworthy and marketable. Regions then ultimately sold the plane at a private sale for less than the amount owed to Regions. The Court concluded that resolution of this issue was a fact question for the trier of fact, in this case the trial court, to decide. The court expressly rejected the Court of Appeals’ evidentiary requirement regarding proof negating a debtor’s or guarantor’s ability or motivation to redeem or purchase the collateral. The court then spelled out the proper procedures for a trial court to utilize to resolve this issue.

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Creditors Practice Annual Forum 2017

Make plans to join us for this year's exciting forum. The TBA's Creditors Practice Section offers current developments in this area of the law. This year's program will provide new information on creditors practice in estate claims and an update on the Telephone Consumer Protection Act. Other topics include a crash course in bankruptcy and an ethics session about the Consumer Financial Protection Bureau. Click here to sign up today.

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Item of Interest

Below is an article that was published in the the Disability Section Connect. We thought it had information that would be of interest to those of you in this section as well.  

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U.S. Agency Opens Door for Class-Action Lawsuits Against Financial Firms

The Consumer Financial Protection Bureau adopted a rule today that would see banks and credit card companies lose the power to force customers into arbitration and block them from banding together to file a class-action suit. The New York Times reports that the change could cost financial firms billions of dollars. In the past, consumer who were prevented from banding together for a class-action suit often abandoned their claims.
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Turn Your Expertise into a Magazine Article

It’s no surprise that some of the best articles in the Tennessee Bar Journal have come from TBA section members. Your membership in this section shows that you have a keen interest in trends, developments and case law in this practice area. Sharing this knowledge with your colleagues is one of the best traits of the profession.

How can you become a Journal author? Think of and refine your topic. It should be of interest to Tennessee lawyers, which is a broad criteria. This could mean you might explain a new state law, explain a complicated area of law, or take a larger issue and connect it to what it means for Tennessee attorneys and the justice system. Find a global issue within your particular experience or knowledge and tell about it and how it affects Tennessee law. Then take a look at the writer’s guidelines at http://www.tba.org/submit-an-article, which will tell you about length, notes and other details. Once it’s in the proper format, send it in! It goes to the editor, Suzanne Craig Robertson, who will then get it to the seven members of the Editorial Board for review.

If you are published, you may apply for CLE credit for your work under Supreme Court Rule 21 Section 4.07(b). For details on claiming the credit, check with the Commission on CLE & Specialization at http://www.cletn.com/.

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TBA Convention in Kingsport is Just Around the Corner

Registration is open for the 2017 TBA Annual Convention. This years programming offers plenty of opportunities to make new friends and renew acquaintances with colleagues from across the state. The highlight comes Thursday night with the Kingsport Karnival at the downtown Farmers Market. Along with fabulous food and drink, there will be live music from two bands, an aerialist, juggler, magician, body and face painters, caricaturist and more. Plus, you'll have access to the fabulous Kingsport Carousel, the delightful project of community artisans. Special thanks to Eastman for support of this event! 

This years convention also offers 12 hours of CLE programming, highlighted by sessions on the Hatfields and McCoys, The Neuroscience of Decision-Making, and the popular Better Right Now wellness program. It is all set at the beautiful MeadowView Marriott Conference Resort & Convention Center. To receive the TBA $129 room rate, you must book your reservation by May 23. Book your room online now or call 423-578-6600.

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Reported Check Scam Appears in Tennessee

Tennessee attorneys should be on the lookout for an email check scam that at least one Nashville firm has reported encountering. The deception involves an overseas caller or emailer claiming to be a real person and asking about a breach of contract issue. A preliminary web search about the "client" would likely return real results, creating the appearance of validity. The North Carolina Bar Association has more information and examples of materials likely used by the scammer. The NCBA advises caution when dealing with any debt collection case initiated by an overseas “client.”
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Filing Deadline Changed for Certain State Tax Returns

The due date for certain Tennessee franchise and excise tax returns, business tax returns and Hall income tax returns will be April 18, instead of April 15, to be consistent with the Internal Revenue Service federal income tax filing deadline, the state Department of Revenue says. For more information, please see the department's website.

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TBA Mashup and Mini Legal Hackathon this Friday

In conjunction with the Law Tech UnConference CLE this Friday, the TBA is also offering a variety of free events and programs for lawyers we’re calling a Mashup. One program will teach you about Legal Hackathons and see one in action. A Legal Hackathon is a collaborative effort of experts in the legal profession collaborating with a computer programmer to find a technology assisted solution to a problem in the legal industry. Join the TBA Special Committee on the Evolving Legal Market for a mini legal hackathon that will demonstrate the power of collaborative minds at work. We will have tasty beverages and snacks to help you get your collaborative juices flowing.  
 
Other programs that will be a part of the Mashup include Pro Bono In Action which will show you various pro bono programs you can participate in to help your fellow Tennesseans and Member Benefit Programs that will provide you information on  Fastcase 7, health insurance options for small firms, ABA retirement funds and professional liability insurance.
 
Please sign up now to let us know you are coming.

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Settlement Requires Western Union to Develop Anti-Fraud Program

Tennessee Attorney General Herbert H. Slatery III announced today a multistate settlement with the Western Union Company, following an investigation which focused on complaints from consumers who used Western Union’s services to send money to third parties involved in schemes to defraud consumers. The settlement requires Western Union to develop and put into action an anti-fraud program. Forty-eight states and the District of Columbia participated in this settlement. Read more here.
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Credit Reporting Companies Settle Federal Case

Credit reporting companies Equifax and TransUnion have agreed to pay more than $23 million to resolve claims they misled consumers and lured them into paying monthly fees for credit-related products, the ABA Journal reports. The federal Consumer Financial Protection Bureau announced the settlement this week. According to regulators, the companies touted free or $1 credit scores while enrolling people in automatic renewal programs that cost $16 or more a month, and falsely portrayed the credit scores marketed to consumers as the same scores used by lenders for credit decisions. In reality, lenders use a variety of credit scores, which can vary by provider and target industry.

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Have You Heard About the TBA Mashup?

Interested in observing a legal hackathon or getting a hands-on demonstration of the new Fastcase 7 platform? Both will be part of the first TBA Mashup, a full-day of activities and free programming set for Feb. 17 at the Tennessee Bar Center in conjunction with the annual TBA Law Tech UnConference CLE program.

In addition to the hackathon and Fastcase 7 demo, the TBA Mashup will feature sessions on: 

  • Current State of Health Insurance for the Small Firms
  • Professional Liability Insurance - What to look for in YOUR Policy
  • A Demo of Fastcase TopForm, a powerful bankruptcy filing software
  • Retirement Planning Guidance from the ABA Retirement Funds
  • Pro Bono in Action: How to help with pro bono events and how to take part in online options

At the annual TBA Law Tech UnConference CLE program, you can take as many or as few hours as you need. Registration will be open all day. Payment will be determined at checkout based on the hours you need. Topics will include: 

  • Bill & Phil Tech Show
  • Ethical Considerations for Cyber Security in Law
  • Evolution of the Legal Marketplace
  • Making e-Discovery Affordable 
  • Drone Law
  • Encryption for Lawyers

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BancorpSouth Fined for ‘Redlining’ in Memphis

The U.S. Department of Justice and the Consumer Financial Protection Bureau have fined Mississippi-based BancorpSouth $10.6 million for deliberately discriminating against minorities in its lending practices. The action alleges the bank avoided construction of branches in minority neighborhoods in Memphis and charged higher interest rates on loans made to minorities than to non-minorities. The Daily Times has more from the AP.

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Senate, House Pass Bill on Continuing 6-Month Garnishments

Continuing six-month garnishments will now reach individuals who are paid by commission or otherwise, and will be treated as employer garnishments under TBA-sponsored legislation. The measure – SB1969 / HB1775 by Shelbyville Republicans Sen. Jim Tracy and Rep. Pat Marsh – as amended today passed the Senate with a 32-0 vote and the House with a vote of 91-0. Read the amendment that makes the bill.

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