Writing on behalf of the Third Circuit Court of Appeals, Judge Thomas L. Ambro recently issued an opinion which found that a retirement plan that is governed by ERISA and that is not tax-qualified is protected by ERISA’s “anti-alienation bar” and is not property of the bankruptcy estate and is not subject to creditors’ claims.

In this case (In re Gilbert, No. 23-2944 (3d Cir. 2024)), a Chapter 7 Debtor disclosed ERISA trusts of $1.6 million and claimed them as exempt from the bankruptcy estate under 11 U.S.C. Section 541(c)(2).  It should be noted that 541(c)(2) excludes from the bankruptcy estate and protects Debtor’s “beneficial interest in a trust that is subject to a ‘restriction on…transfer…enforceable under applicable non-bankruptcy law,’ known as the ‘anti-alienation’ provision.” The Chapter 7 trustee took issue with this characterization and filed a complaint alleging that there were operations of the trust that violated both ERISA and the Internal Revenue Code and therefore these assets should be deemed property of the bankruptcy estate. Judge Kathryn C. Fergusen of the Bankruptcy Court for the District of NJ dismissed trustee’s action and found that under 11 USC Section 541(c)(2) they were not property of the estate even if they were operating inconsistently with ERISA and the Internal Revenue Code. The Trustee appealed this ruling, the District Court affirmed the ruling and agreed that ERISA’s anti-alienation provision applied regardless of any alleged violations and the Trustee appealed this decision to the Third Circuit.

Judge Ambro affirmed the lower courts’ decisions and characterized Bankruptcy Judge Ferguson as having “dismissed [the trustee’s complaint] because ‘a plain meaning reading of § 541(c)(2) excluded the retirement plans from the bankruptcy estate even if they were operated contrary to ERISA and the IRC.’” Recognizing that even though there is a split in the circuits on this issue, Judge Ambro felt there was no statutory or other authority to suggest that ERISA’s “anti-alienation” bar fails to protect a “misbehaving ERISA Plan administrator.”

To discuss the issues raised here or any other issues involving creditors rights and bankruptcy, please contact Leslie Beth Baskin, Esquire at 215-241-8926 or at lbaskin@sgrvlaw.com.

Spector Gadon Rosen Vinci P.C. Of Counsel Brooke C. Madonna has secured the dismissal of a lawsuit filed by Keller Williams Black Label and the Condo Shop against her clients, Andrea Desy Edrei, founder and operating partner of Serhant, Societe Select, Michael Skokowski, head of operations and Kailey Bondiskey, head of creative, ending a more than an 18-month dispute between the two Philadelphia luxury real estate brokerages. Judge Paula A. Patrick ruled in favor of her clientson Tuesday, October 29, 2024, in the Philadelphia Court of Common Pleas, granting summary judgment, dismissing all claims with prejudice before it went to trial.

In April 2023, shortly after Serhant entered the Philadelphia market, Black Label and the Condo Shop sued our clients as well as Serhant Pennsylvania and Ryan Serhant individually, claiming that herclients “looted Black Label, by plundering its clients, intellectual property, confidential information, and personnel, while crippling its ability to operate” before leaving to launch Serhant’s Philadelphia brokerage.

Ms. Madonna will be featured in The Philadelphia Inquirer regarding her success for her client in addition to already having been featured and quoted in Philadelphia Business Journal (subscription required). She expressed to both publications,

“After a year and seven months of defaming my clients in and out of the real estate community, pursuing a frivolous lawsuit and improperly attempting to interfere with their business relationship with Serhant, my clients have finally been vindicated. The Court found that KWBlack Label could not produce any evidence to support a single claim alleged in the Complaint, and they could not point to any damages sustained, let alone the 10 million plus dollars of damages they claim to have incurred. I am very happy that justice was served and that every single claim was dismissed with prejudice.  Now my clients can get back to doing what they do best – selling real estate”.

As Of Counsel at the firm, Brooke C. Madonna has gained experience in trial and appellate work in both state and federal courts in Pennsylvania, New Jersey and Florida. Ms. Madonna practices commercial litigation with a primary focus in employment law including sexual harassment, Family Medical Leave Act, Americans with Disabilities Act and all forms of discrimination. Ms. Madonna also regularly represents individuals and businesses in cases involving real estate, construction, fraud, collection and casualty defense.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

A three-judge panel for the Third Circuit affirmed in part and reversed in part Delaware Bankruptcy Judge Mary F. Walrath’s decisions denying the Debtor, Hertz’s, noteholders’ post-petition claims for interest at the contract rate and make-whole premiums. Writing for the majority, Judge Thomas L. Ambro found that the noteholders had a right to contractual post-petition interest and make-whole premiums as a result of Hertz being “solvent.” Unless overturned on appeal, Hertz must now pay its noteholders more than $270 million in premiums and post-petition interest. The decision follows similar rulings from the Fifth Circuit in Ultra Petroleum and the Ninth Circuit in PG&E, supporting the pre-Bankruptcy Code “solvent-debtor exception” to the general prohibition on unmatured interest.

In the Bankruptcy Court in Delaware, Judge Walrath found in favor of Hertz on the interest rate issue and determined that as an unimpaired class of creditors to a solvent debtor, they were entitled to the post-petition legal rate of interest pursuant to Sections 1129 (a)(7)(A)(ii) and 726(a)(5) of the Bankruptcy Code. She also found that the “economic substance” of the make-whole was interest, and therefore would be disallowed per Section 502(b)(2).

Judge Ambro’s majority opinion, which was joined by Judge Cheryl A. Krause (in a three-judge panel), focused on whether the Bankruptcy Code gave debtors “leverage to deny their unsecured noteholders more than a quarter billion dollars of interest they promised to pay pre-bankruptcy” while “giving lower priority equity holders four times that amount” under their Chapter 11 plan. The Court here felt that although the make-whole claims would be disallowed as the “economic equivalent” of interest under section 502(b)(2) of the Bankruptcy Code in an insolvent case, the absolute priority rule required debtors to pay contractual post-petition interest and make whole claims in full before making distributions to equity holders in a solvent case.

Judge Ambro noted that if Hertz was allowed to “cancel more than a quarter billion dollars” of obligations owed to the noteholders and distribute a “massive gift” to shareholders, that would “impermissibly ‘depart’” from the Bankruptcy Code’s “basic priority rules,” citing the U.S. Supreme Court’s 2017 Jevic decision. Judge Ambro also cited the opinions issued in Ultra and PG&E as support for this conclusion. The Fifth Circuit required the debtors to pay make-whole premiums and contract-rate post-petition interest (including default interest) in order to be classified as unimpaired, and the Ninth Circuit ruled that unimpaired creditors were entitled to post-petition interest at the contractual or default state law rate. Despite the fact that Judge Ambro disagreed with Judge Walrath on the “solvent debtor” exception, he agreed that the 2022/2024 early redemption premium was not triggered because the notes matured by their terms when Hertz filed bankruptcy. Although the ruling allows Hertz to redeem the notes without a fee well before their stated maturity, Judge Ambro suggests that this result is “not absurd” and the “commercially sophisticated” noteholders agreed to the terms that “compel” the result.

Judge Ambro also affirmed the bankruptcy court’s determination that the 2026/2028 notes redemption premiums are subject to disallowance under section 502(b)(2). The majority opinion traces the “two common” make whole analyses and concludes that the make-whole claims are unmatured interest under “both” of the “definitional” and economic equivalency tests. Nevertheless, Judge Ambro invoked the absolute priority rule to conclude that the debtors must pay the 2026/2028 premiums despite section 502(b)(2) and post-petition interest at the contract rate. Prior to Jevic, Judge Ambro explains, the Third Circuit “saw the absolute priority rule as a procedural protection that applied only when § 1129(b) is invoked,” but in Jevic the Supreme Court extended the absolute priority rule to apply “everywhere.” Consequently, Judge Ambro concluded that the Bankruptcy Code “entitles every creditor—not just the dissenting impaired creditors who can invoke § 1129(b)—to treatment consistent with absolute priority absent a clear statement to the contrary.”  The majority says this result flows from Jevic’s “condemnation of ‘backdoor means’ to defeat the absolute priority rule.” The Court refused to leave a “back door wide open” in solvent debtor cases that would allow plan proponents to “force creditors to accept a ‘priority-violating’ distribution.”

Judge Ambro concludes that full payment of post-petition interest at contract rates is the appropriate remedy to satisfy the absolute priority rule, even though the rule only “imposes” post-petition interest at an “equitable rate.” Although the appellate court would ordinarily remand the matter to the bankruptcy court to evaluate equitable considerations and set the post-petition interest rate, Judge Ambro felt that it would be “profoundly unfair to scrimp” after junior equity holders already received more substantial distributions “more than three years ago.”

In the dissent, Judge David J. Porter aligned himself with the dissenting opinions in the Ultra and PG&E cases, which recognized that the Bankruptcy Code “plainly disallows” claims for unmatured interest—including post-petition interest and make whole premiums—despite the fact Hertz was solvent. Judge Porter rejects the majority’s reliance on Jevic because Section 502(b)(2) “expressly disempowers” courts from allowing claims for post-petition interest and make whole premiums.

Caveat: As the Third Circuit made clear, payment of the contract rate of interest is not guaranteed, as equitable considerations may weigh against awarding an unsecured creditor its contract rate of interest.

To discuss the issues raised here or any other issues involving creditors’ rights and bankruptcy, please contact Leslie Beth Baskin, Esquire at 215-241-8926 or at lbaskin@sgrvlaw.com.

On August 16, 2024, Spector Gadon Rosen Vinci P.C. won an appeal on the highly disputed issue of when a statute of limitations accrues in copyright cases. In Michael Grecco Prods., Inc. v. RADesign, Inc., 23-1078 (2d Cir. Aug. 16, 2024), SGRV and its attorney, Senior Litigation Counsel Bruce Bellingham, represented the fashion and celebrity photographer, Michael Grecco. The case turned on efforts to undermine the rule that, due to the difficulty of monitoring the universe of publications, the three-year statute of limitations for copyright claims accrues when an author discovers, or should have discovered, an infringement (the “discovery rule”). But, over the last five years, some federal district courts have sought to rein in artists’ claims against commercial infringers by presuming that “sophisticated” authors – those who have previously sued to enforce their copyrights – “should have” discovered any unlicensed copying within three years of its occurrence. In effect, the “injury rule” of claim accrual was applied.

Grecco alleged that the Ruthie Davis brand of women’s footwear (priced from $300-$900 per pair), pirated on its website Grecco’s images of the model Amber Rose wearing Ruthie Davis shoes. The images, published by Inked magazine in August 2017, were republished within days by Ruthie Davis without a license. Grecco pleaded that he discovered the infringement in January 2021 and sued in October 2021, more than four years after the infringement, but less than one year after discovery. A district court in the Southern District of New York granted Ruthie Davis’s motion to dismiss finding that it was “not credible” that Grecco could not have discovered the infringement within three years of the occurrence because his Complaint alleged that he actively enforces his copyrights. The Second Circuit Court of Appeals reversed. It reaffirmed that the “discovery rule” was the only rule of accrual in copyright cases; holding that the sophistication of the plaintiff was irrelevant at the pleading stage; and it stressed that, to state a claim, a copyright plaintiff need not anticipate and rebut any potential affirmative defense including the statute of limitations. It also held that the time when a copyright plaintiff “should have” discovered an infringement was a question of fact not subject to any presumption because the defendant must prove that defense.

For two decades, Spector Gadon Rosen Vinci P.C. has actively assisted artists by offering pro bono legal services to clients referred by the Philadelphia Volunteer Lawyers for the Arts.

Bruce Bellingham’s legal work is divided between commercial litigation with an emphasis on dispositive motions and appellate advocacy; copyright infringement work and representation of artists, arts organizations, and content creators; and business advice and contract work generally for small to medium sized firms and individuals. He has been elected a Super Lawyer by his peers in the field of intellectual property (copyright) in the years 2015-2024.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

Spector Gadon Rosen Vinci P.C. Employment Law Group Chair  Alan B. Epstein, Employment Law Group Member Jennifer Myers Chalal, and Environmental Law Group Chair Kermit Rader have been selected to the 31^st Edition of The Best Lawyers in America list for the year 2025. Epstein was selected for his professional excellence in individual employment litigation, and both he and Chalal were selected regarding their professional excellence in labor and employment litigation. Rader was selected regarding his professional excellence in Environmental Law.

As the oldest and most respected peer-review publication in the legal profession, clients and legal professionals widely regard recognition in Best Lawyers in America as a significant honor. For over forty years, Best Lawyers in America has gained a reputation as a truly unbiased source of legal referrals. Epstein, Chalal, and Rader were chosen for this honor following an exhaustive peer review process in which the nation’s leading lawyers confidentially evaluate their professional peers.

Alan B. Epstein, Chair of the Employment Law Group of Spector Gadon Rosen Vinci P.C., has been selected as one of the 500 Leading Plaintiff Employment and Civil Rights Lawyers by Lawdragon in its 2024 list of the nation’s best plaintiff employment and civil rights attorneys.

In response to new developments regarding the ongoing litigation being handled by Shareholder and Director George M. Vinci Jr. and Senior Litigation Counsel David B. Picker, Law 360 has recently published an article regarding Mr. Vinci’s appearance before the full Delaware Supreme Court in the Margolis Edelstein/GMG Insurance Agency case, in which Spector Gadon Rosen Vinci P.C. represents Margolis Edelstein.

Mr. Vinci’s argument before the high court was quoted extensively in the article regarding his perspective on the ongoing litigation. He argued that GMG Insurance’s purported negligence wasn’t the reason they settled an underlying dispute for $1.2 million, and therefore, the malpractice suit against Margolis Edelstein should not be revived.

During oral arguments before the full high court, Mr. Vinci informed the justices that the idea that the firm’s representation was the proximate cause of the settlement was not demonstrated by GMG Insurance Agency.

Vinci remarked, “My whole argument is based upon causation, because as Your Honors know, negligence alone doesn’t establish liability… You need to establish causation, that is, that the negligence of the defendant was the proximate cause of the injury. What was the injury in this case? The injury in this case is the settlement.”

The case centers around legal services Margolis Edelstein provided to GMG and its former employee, Howard Wilson. GMG argued that Wilson was left in a vulnerable litigation position causing him to agree to an unfavorable $1.2 million settlement.

Last year, a Delaware Superior Court ruled that GMG did not prove Margolis Edelstein was at fault for the insurer’s settlement. GMG appealed this decision to the Delaware Supreme Court, asserting that a jury was the proper body to determine the fault of Margolis in Wilson’s interpretation of and actions based on the testimony provided by Margolis Edelstein.

On June 10, 2024, the United States District Court for the Eastern District of Pennsylvania granted a motion by Spector Gadon Rosen Vinci P.C. of Counsel Brooke C. Madonna and Senior Litigation Counsel Bruce Bellingham, awarding summary judgment in favor of their client in the case styled Tammaro v. County of Chester, Pocopson Home, 2:21-cv-03811 (2021). The case concerned Federal Nursing Home Reform Amendment claims against Pocopson Home, a municipal skilled nursing facility in which a resident suffering from dementia-related food disorder died after choking on soft food. Despite a Department of Health investigation finding that a negligence complaint against Pocopson was unsubstantiated, the decedent’s executor brought suit under 42 U.S. C. § 1983, claiming that the County Commissioners, as “final policymakers,” deprived the decedent of her civil rights “under color of state law” by deliberate indifference to a custom or policy of failing to train the Pocopson staff. The plaintiff executor moved to amend her complaint to name the Pocopson’s Administrator and Nursing Director as “final policy makers” after the depositions had been taken. Pocopson opposed the motion to amend, and the Court denied plaintiff’s motion.

Hon. Judge Kai Scott granted summary judgment in favor of the County Commissioners because the plaintiff had no evidence that the Commissioners were on notice of any alleged deficiencies in the training of Pocopson’s staff. The Court agreed with the County’s argument that the plaintiff had no evidence that the Commissioners were aware of, or indifferent to, alleged unconstitutional practices at Pocopson. He also found that the plaintiff’s fallback argument that Pocopson’s managers were the true “final policymakers” was made too late and was precluded by a prior ruling that amendment would be futile as, under Pennsylvania law, the managers of a municipal facility reported to the County Commissioners who were the true final policymakers. The upshot was that all claims against Pocopson failed.

As Of Counsel at the firm, Brooke C. Madonna has gained experience in trial and appellate work in both state and federal courts in Pennsylvania, New Jersey and Florida. Ms. Madonna practices commercial litigation with a primary focus in employment law including sexual harassment, Family Medical Leave Act, Americans with Disabilities Act and all forms of discrimination. Ms. Madonna also regularly represents individuals and businesses in cases involving real estate, construction, fraud, collection and casualty defense.

Bruce Bellingham’s legal work is divided between commercial litigation with an emphasis on dispositive motions and appellate advocacy; copyright infringement work and representation of artists, arts organizations, and content creators; and business advice and contract work generally for small to medium sized firms and individuals. He has been elected a Super Lawyer by his peers in the field of intellectual property (copyright) in the years 2015-2024.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

SGRV Shareholder and Director George M. Vinci, Jr. and Senior Litigation Counsel David B. Picker were provided excellent coverage by Law360 regarding their ongoing work in the notable Margolis Edelstein/GMG Insurance Agency case in addition to being featured in biographical profiles.

In anticipation of an upcoming oral argument before the Delaware Supreme Court scheduled for July, Law360 published a short feature covering the basics of the ongoing case which sees Margolis Edelstein, our client, defending themselves against accusations of malpractice from GMG Insurance Agency.

The case centers around legal services Margolis Edelstein provided to GMG and its former employee, Howard Wilson. GMG argued that Wilson was left in a vulnerable litigation position causing him to agree to an unfavorable $1.2 million settlement.

Last year, a Delaware Superior Court ruled that GMG did not prove Margolis Edelstein was at fault for the insurer’s settlement. GMG appealed this decision to the Delaware Supreme Court, asserting that a jury was the proper body to determine the fault of Margolis in Wilson’s interpretation of and actions based on the testimony provided by Margolis Edelstein.

Spector Gadon Rosen Vinci P.C. Employment Law Member Alan B. Epstein recently received coverage by Law360 for a notable case against the University of Pennsylvania, which he has been handling with assistance from Associate Adam A. Filbert.

The article provides an overview of the important facts with regards to the ongoing case. We provided an overview of the latest developments in a recent post on our website.

Epstein was featured in the article as refuting the University of Pennsylvania’s motion to reconsider a late PA federal judge’s recent ruling allowing the defamation case of our client, a former Penn professor, against the school to move forward. Epstein and Filbert represent former University of Pennsylvania Professor Janet Monge.

Alan B. Epstein is the Chair of Spector Gadon Rosen Vinci’s Employment Law Practice Group and concentrates his practice in civil litigation representation in the areas of employment rights, civil rights, and constitutional torts and the provision of transactional advice in all areas of corporate governance, including personalized advice to corporate officers, Boards and Board Members regarding adherence to state and federal regulations. He is frequently called upon to provide transactional advice to, negotiate employment contracts and severance agreements on behalf of, and litigate matters for, corporate entities, corporate officers and Directors, and licensed professionals (and their entities), including lawyers, doctors, bankers, accountants, pharmacists, and architects, as well as insurance, real estate, and security brokers.

Adam A. Filbert focuses his practice primarily on Employment Law and Commercial litigation. He has accumulated a diverse array of experiences, including those from his time spent with SGRV previously through Drexel University’s Thomas R. Kline School of Law’s Co-Op program.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

In addition to being selected as a 2024 Pennsylvania Super Lawyer, another consecutive year in which she was named to the annual list, Spector Gadon Rosen Vinci Employment Law Group Member Jennifer Myers Chalal received the honors of being listed as one of the Top 50 Women in the practice of law in Pennsylvania.

While a Super Lawyers’ listing alone is an achievement worthy of praise (no more than five percent of the lawyers in Pennsylvania are selected by Super Lawyers), to be specially ranked within the distinction of Top 50 Women is a coveted accolade. The list is assembled from the women lawyers who ranked at the top of the 2024 PA Super Lawyers listings.

Jennifer Myers Chalal concentrates her practice in the area of employment law handling all types of employment law matters including discrimination claims under Title VII, the ADA, the ADEA, the PHRA, and the NJ Law Against Discrimination, retaliation claims, wrongful discharge claims, wage and hour claims, FMLA claims, ERISA claims, breach of contract claims, non-compete claims, and claims involving workplace torts. She also handles ADA accessibility suits and denials of public accommodations for businesses especially in the hospitality industry. She provides advice to businesses regarding employment matters, conducts workplace investigations for businesses presented with complaints of sexual harassment or other forms of discrimination, prepares employment handbooks, and provides workplace seminars regarding discrimination laws. Her litigation practice extends throughout Pennsylvania and New Jersey in both Federal and State Court.

Super Lawyers, part of Thomson Reuters, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates, and peer reviews by practice area. The result is a credible, comprehensive, and diverse listing of exceptional attorneys.

The Super Lawyers lists are published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country. Super Lawyers Magazines also feature editorial profiles of attorneys who embody excellence in their practice of law. For more information about Super Lawyers, go to SuperLawyers.com.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security, and telecommunications.

The firm’s practice areas include high-stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

Spector Gadon Rosen Vinci P.C. Employment Law Chair Alan B. Epstein and Associate Adam Filbert secured a favorable ruling in the U.S. District Court for the Eastern District of Pennsylvania on May 14, allowing the defamation case of our client, a former University of Pennsylvania professor, against the school to move forward. The decision was met with excellent coverage provided by both Law360 and The Legal Intelligencer.

Judge Gene E. K. Pratter said Penn leaders embraced “cancel culture” when they chastised then-anthropology professor Janet Monge for handling remains from the 1985 MOVE house bombing in Philadelphia.

Judge Pratter’s remarks came in her ruling greenlighting Monge’s claims that former Penn President Amy Gutmann and former Provost Wendell Pritchett defamed her by emailing a statement criticizing her for using the remains in an online anthropology course. The judge denied Penn’s motion to dismiss the claims that it defamed Monge through its reaction to accusations that she acted unethically in her handling of remains.

Judge Pratter ruled that Monge made plausible allegations that Penn acted out of actual malice when it issued the statement.

Alan B. Epstein is the Chair of Spector Gadon Rosen Vinci’s Employment Law Practice Group and concentrates his practice in civil litigation representation in the areas of employment rights, civil rights, and constitutional torts and the provision of transactional advice in all areas of corporate governance, including personalized advice to corporate officers, Boards and Board Members regarding adherence to state and federal regulations. He is frequently called upon to provide transactional advice to, negotiate employment contracts and severance agreements on behalf of, and litigate matters for, corporate entities, corporate officers and Directors, and licensed professionals (and their entities), including lawyers, doctors, bankers, accountants, pharmacists, and architects, as well as insurance, real estate, and security brokers.

Adam A. Filbert focuses his practice primarily on Employment Law and Commercial litigation. He has accumulated a diverse array of experiences, including those from his time spent with SGRV previously through Drexel University’s Thomas R. Kline School of Law’s Co-Op program.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

Spector Gadon Rosen Vinci P.C. is proud to announce that 12 of the firm’s attorneys have been selected to the 2024 Pennsylvania Super Lawyers list, including one named to the Top 50 Women Pennsylvania Super Lawyers List, and one named to the Pennsylvania Rising Stars list.

Super Lawyers is an annual list of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. Selection for Super Lawyers includes peer nominations, a blue-ribbon panel review process, and independent research on candidates. Super Lawyers selects no more than five percent of the lawyers in Pennsylvania. The recipients are Chairman Paul R. Rosen; Shareholder and Director George M. Vinci Jr.; Managing Member Daniel J. Dugan; Employment Law Group Chair Alan B. Epstein; Estates & Trusts Group Chair Alan J. Mittelman; Bankruptcy & Creditors Rights Group Chair Leslie Beth Baskin; Employment Law Group Member Jennifer Myers Chalal (Top 50 Women Pennsylvania Lawyers); Corporate Law Group Member Stanley P. Jaskiewicz; Commercial Litigation and Real Estate & Real Estate Litigation Group Member Andrew J. DeFalco; Commercial Litigation Group Member Neal R. Troum; Senior Litigation Counsel Bruce Bellingham; and Employment Law Group and Commercial Litigation Associate Adam Filbert (Rising Star).

The Rising Stars list consists of the state’s top young lawyers. Candidates must be 40 years old or younger or have practiced for 10 years or less.

Super Lawyers, part of Thomson Reuters, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates, and peer reviews by practice area. The result is a credible, comprehensive, and diverse listing of exceptional attorneys.

The Super Lawyers lists are published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country. Super Lawyers Magazines also feature editorial profiles of attorneys who embody excellence in their practice of law. For more information about Super Lawyers, go to SuperLawyers.com.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security, and telecommunications.

The firm’s practice areas include high-stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

The Federal Trade Commission has issued a proposed final rule that would ban most new noncompete clauses in employment agreements and would make all existing noncompete clauses in employment agreements unenforceable except for those made in connection with the bona fide sale of a business and those covering senior executives.

The FTC defines “senior executive” as an employee who earns more than $151,164 annually and who is in a “policy-making position.” The rule defines a “noncompete clause” as any contractual provision that prohibits an employee or former employee from working for a competing employer or starting a competing business within a certain geographic area and period of time after the employee’s employment ends.

The rule also invalidates agreements that require employees to pay back the employer for training costs if the employee’s employment terminates within a specified period of time.

The final rule does not explicitly invalidate other covenants, including non-solicitation, non-servicing, non-recruitment, and nondisclosure clauses. In addition, the rule only preempts state laws that are less protective of employee rights than the federal law.

The rule is scheduled to go into effect 120 days following its publication in the Federal Register but could be blocked by expected legal challenges. The U.S. Chamber of Commerce has already said that it would sue the FTC to block the rule. If the rule does go into effect, only those noncompete agreements that are entered into as part of the sale of a business would remain enforceable.

If you need assistance reviewing existing employee agreements for your business, or if you have any questions regarding this new rule, please contact Nancy Abrams at nabrams@sgrvlaw.com or Jennifer Myers Chalal at jmyers@sgrvlaw.com.

Spector Gadon Rosen Vinci P.C. Member Jennifer Myers Chalal has been appointed as a Hearing Committee Member serving the Disciplinary Board of the Supreme Court of Pennsylvania for a three-year term beginning July 1, 2024.

Hearing Committee Members serve the Board as volunteers in their respective districts to conduct hearings and act as a formal reviewing body to determine if a case might move forward in pursuit of a particular course of discipline.

Chalal concentrates her practice in the area of employment law handling all types of employment law matters including discrimination claims under Title VII, the ADA, the ADEA, the PHRA, and the NJ Law Against Discrimination, retaliation claims, wrongful discharge claims, wage and hour claims, FMLA claims, breach of contract claims, non-compete claims, and claims involving workplace torts. She also handles ADA accessibility suits and denials of public accommodations for businesses, especially in the hospitality industry. She provides advice to businesses regarding employment matters, conducts workplace investigations for businesses presented with complaints of sexual harassment or other forms of discrimination, prepares employment handbooks, and provides workplace seminars regarding discrimination laws. Her litigation practice extends throughout Pennsylvania and New Jersey in both Federal and State Court.

Chalal received a J.D. with honors from Temple University School of Law. She is a Phi Beta Kappa graduate from Hofstra University where she received a B.A. degree, magna cum laude, with High Honors in Speech Communication. Following graduation from Temple University School of Law, she served as a Judicial Law Clerk for the Honorable Sandra Mazer Moss (ret) of the Court of Common Pleas of Philadelphia.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

Spector Gadon Rosen Vinci P.C. Attorney Brooke C. Madonna secured a favorable ruling for her clients, winning an injunction hearing in the ongoing case The CondoShop LLC and TCS Black Label Realty LLC v. Ryan Serhant, Serhant Pennsylvania LLC, Andrea Desy Edrei, Michael Skokowski and Kailey Bondiskey. Ms. Maddona represented Defendants Edrei, Skokowski and Bondiskey.

In March of 2023, Edrei ceased to be an agent with TCS Black Label Realty LLC, although she remained an owner in Black Label. As the TCS Black Label Realty LLC Operating Agreement expressly permitted, Edrei was entitled to open a competing venture. She opened Societe Select LLC, and in April 2023 she and her team consisting of Skowkowski, Bondiskey, and former Black Label agents, who too were dissatisfied with Black Label, followed Edrei to work with Serhant. In April 2023, the Plaintiffs filed a Complaint seeking $10 million along with an Emergency Motion for Injunctive Relief against the Defendants, claiming that Ryan Serhant, along with Andrea Desy Edrei, entered into a scheme to “plunder its clients, intellectual property, confidential information, and personnel while crippling its ability to operate.”  The Plaintiffs sought limited discovery, including depositions of the parties.

The Plaintiffs were seeking, inter alia, the return of their alleged confidential and proprietary documents including client lists and marketing material and to enforce noncompetition agreements against Skokowski and Bondiskey. On February 21, 2023, a hearing seeking injunctive relief was argued before the Honorable Paula A. Patrick. The Court denied the Plaintiffs’ Motion after argument of counsel without requiring any additional witness testimony.

Brooke C. Madonna has been with Spector Gadon Rosen Vinci P.C. since 1992. As Of Counsel at the firm, Ms. Madonna has gained experience in trial and appellate work in both state and federal courts in Pennsylvania, New Jersey and Florida. Ms. Madonna practices commercial litigation with a primary focus in employment law including sexual harassment, Family Medical Leave Act, Americans with Disabilities Act and all forms of discrimination. Ms. Madonna also regularly represents individuals and businesses in cases involving real estate, construction, fraud, collection and casualty defense.

SGRV Attorney David Picker’s client, JP Oil Group, was granted Summary Judgment in the recent  Supreme Court of the State of New York, Appellate Division of the Fourth Judicial Department case of JP Oil Group V. Sadruddin M. Lakhani and Amir Perani.

Mr. Picker’s client, a motor fuel wholesaler, sued the individual guarantors of a fuel supply agreement on which the guarantors’ company had defaulted. On a motion to dismiss, he first dismissed the counterclaims and affirmative defenses of fraudulent inducement and mutual mistake. Then, Mr. Picker moved for summary judgment. Despite the defendants’ repeated attempts to relitigate the matter, the trial court in New York granted Mr. Picker’s motion last May, awarding his client a significant sum. The defendants then took an appeal to the Appellate Division, Fourth Department, which Mr. Picker opposed and argued over Zoom on December 5, 2023. On February 9, 2024, the five-justice panel of the Appellate Division unanimously affirmed the trial court’s summary judgment in his client’s favor.

Combining careful analysis with clarity and forcefulness of expression, while never losing sight of clients’ practical needs, David B. Picker has broad experience representing plaintiffs and defendants in both trial and appellate courts in a wide range of commercial litigation matters, including contracts, commercial fraud, creditors’ rights, bankruptcy, professional malpractice, real estate, letter of credit, copyright, trademark, unfair competition, and trust and estate matters. Mr. Picker regularly serves as an arbitrator for the Court of Common Pleas of Philadelphia.

Several SGRV staff gathered on January 15, 2024 to honor the legacy of Dr. Martin Luther King, Jr. through a day of service. Executive Director of Administration Mark Tarasiewicz, Communications Associate Michael Vinci, IT Director Stan Tyszka, Paralegal Alex Caramuche, and Receptionist Oliver Trout came together on a frigid January morning to joyously serve their community.

The group partook in a cleanup of the Wissahickon Valley Park in Philadelphia, a vital watershed and recreational space for the city. The activity was sponsored by the nonprofit Friends of the Wissahickon, which is committed to the maintenance and upkeep of the park. There, they took up their clippers and saws and went to work clearing out some overgrowth of invasive plant species. It was a valiant effort indeed, and everyone was pleasantly surprised at the amount of overgrowth that managed to be cleared out and the profound difference it made in the park’s appearance.

In addition to those that went to help clean up the park, a number of SGRV staff participated in MLK Day through their own service activities in addition to educational discussions and program viewings with friends and family regarding Dr. King’s legacy.

The SGRV Florida office held an MLK service activity working with the Ali Spears Foundation to raise money for pediatric cancer by hosting a luminary fundraiser. Participants honored loved ones with a personalized message that was displayed on a luminary bag in St. Petersburg’s First Central Tower lobby.

The MLK Day of Service is a nationwide effort taken up by Americans annually to give back to their communities in the spirit of Dr. King’s commitment to service. As Dr. King once stated, “Not everybody can be famous but everybody can be great, because greatness is determined by service.”

Instead of a day off, Many companies and firms across America, including SGRV, approach MLK day as a “day on,” allowing employees to give back to their communities for a day in lieu of just coming into the office.

As we reflect on the importance of days like this, we remember to continue teaching the lessons of Dr. King through our words and actions for not just one day, but throughout the year.

Formerly a Member of Spector Gadon Rosen Vinci LLP, Hon. Cory L. Chandler was recently inducted into the 13th Judicial Court of Hillsborough County as a judge. In attendance at the ceremony were Members of the firm based out of SGRV’s Florida offices alongside Executive Committee Members.

Hon. Chandler brings with him a wealth of legal experience garnered over a distinguished career. During his time with SGRV, Hon. Chandler focused his practice on civil litigation and federal criminal defense. He represented nursing homes and healthcare providers in complex abuse allegations, represented insurance companies and businesses in labor and employment issues, and defended individuals against allegations of white-collar crime.

His recent accomplishments include obtaining acquittals of a client on a federal indictment. Hon. Chandler has extensive trial experience, having served as lead attorney in more than 60 civil and criminal jury trials. He has represented some of the nation’s largest insurance companies in automobile, products liability, and premises liability cases.

Hon. Chandler was selected by the Magistrate Judges of the United States District Court for the Middle District of Florida to the Criminal Justice Act Panel from which he was routinely appointed to represent individuals charged with federal crimes. He formerly worked in the Office of the State Attorney as a felony prosecutor where he honed his trial skills.

He graduated from the South Texas College of Law where he was a Langdell Scholar and earned his undergraduate degree from the Florida State University.

Spector Gadon Rosen Vinci P.C. Member Neal R. Troum was elevated to his new position with much fanfare during the firm’s annual holiday celebrations. The firm’s Executive Committee collectively reached and agreed upon this decision and joyfully announced it before SGRV attorneys and staff. Such an important elevation of an attorney to this position should not come as a surprise to those who are familiar with the outstanding work Mr. Troum has performed alongside SGRV’s top litigators in various high-profile cases.

Mr. Troum has provided unprecedented assistance to the firm and its endeavors since joining SGRV originally as Counsel. As a result of numerous successful verdicts and settlements made in favor of his clients, in addition to having claimed the title of a Pennsylvania Super Lawyer, Mr. Troum has proven himself to be an attorney worthy of the title of Member, and a valuable asset to the firm. SGRV looks forward to the victories and prestige his efforts will continue to bring to the firm.

One of Mr. Troum’s recent successes with SGRV came out of the case of Jones v. 21st Century Insurance Company, et al., No. 16-CA-7089, 13th Judicial Circuit, Hillsborough County, Florida, in which SGRV Shareholder and Director George M. Vinci, Jr. and Mr. Troum‘s diligence and tireless work ethic helped secure the entrance of the court into summary judgment for Defendants Jessica Lanifero and Kubicki Draper, P.A., granting the motion filed by Vinci and Troum.

Another of Mr. Troum’s triumphs was also made alongside SGRV Shareholder and Director George M. Vinci, Jr. The two obtained an amazing result for their clients in the adversary bankruptcy litigation proceeding Lightsway Litigation Services LLC v. Wimar Tahoe Corporation, et al., Bankr. D.Del. Adv No. 10-50289. Filed in 2010, the Lightsway adversary action did not go to trial for twelve years. The case was tried before the Hon. Mary Walrath, United States Bankruptcy Judge, over ten days in November and December 2022. On August 17, 2023, Judge Walrath issued her Opinion and Order soundly rejecting Plaintiff’s claims of mismanagement. the Court entered judgment in favor of the Defendants and against Plaintiff. In a case where the stakes could not have been higher, Messrs. Vinci and Troum successfully defended their clients against complicated commercial claims and obtained defense judgments in this long-suffering litigation.

For the third year in a row, the attorneys and staff of Spector Gadon Rosen Vinci P.C. were eager to help bring the spirit of the holidays to two families in need through the Philadelphia Ronald McDonald House’s “Family to Family” program. Thanks to this generous program, the Ronald McDonald House has helped countless families experience the joy of the season.

The holidays can be an unnecessarily stressful time for families facing difficulties like childhood illness. The Ronald McDonald House’s “Family to Family” program seeks to ease this stress and provide their resident families with the holiday cheer they deserve. The program pairs families staying at the house with individuals, groups, and businesses to supply the families with everything on their wish lists and more for the holiday season.

Member Heather Eichenbaum, accompanied by Communications Associate Michael Vinci, played Santa for the day and dropped off two large bags full of presents of all kinds — toys, clothes, gift cards, and so much more.

Many staff and attorneys selflessly contributed to brightening the holidays for the families, with Ms. Eichenbaum providing for one of them completely on her own. Thanks to them, we were able to make this holiday season another one to remember for these local families in need.

You can learn more about the Ronald McDonald House and the incredible things they do for families in need here.

Spector Gadon Rosen Vinci P.C. Executive Committee Member Daniel J. Dugan, with the help of Member Leslie Beth Baskin and Associate Adam A. Filbert, secured a favorable ruling for their client, Edward S. Baim in a November 16, 2023 decision by the U.S. Third Circuit Court of Appeals.

The three-judge panel upheld the favorable ruling from the trial court declaring that Mr. Baim had acted entirely properly in refusing to sell four Mcdonalds restaurants in Pennsylvania to the defendants, Joel and Michael Dukart pursuant to an agreement of sale Baim had entered into with them.

Baim had previously given Grant and George Skylass a right of first refusal permitting them to match any bona fide offer to Baim for the four McDonalds restaurants. Mr. Baim was contractually bound to sell to the Skylasses once they matched Dukart’s offer, and he did so.

After the Dukarts challenged the sale, claiming it violated their agreement with him—and threatened to sue Baim in Delaware—Dugan, Baskin, and Filbert immediately filed a complaint in the Eastern District of Pennsylvania seeking a declaratory judgment that he had acted entirely properly. Both the trial court and the appeals court agreed.

U.S. Circuit Judge Stephanos Bibas wrote in his opinion that,

“The parties wanted an agreement firm enough that the Dukarts would buy the four Philadelphia McDonalds’s if the Skylasses did not. But they also wanted an escape hatch from the Dukarts’ contract if the Skylasses exercised their right of first refusal…”

The Third Circuit confirmed the merits of Baim’s position in all respects, as did the trial court, and rejected Dukarts’ arguments that Bahad had somehow acted improperly.

Daniel J. Dugan has been in practice since 1977, with the firm since 1982, and a member of the firm since 1987. He is a managing partner and also a member of the firm’s Executive Committee. He concentrates his practice in trials and appeals involving all manner of commercial and business disputes, and he has extensive experience litigating before state and federal courts nationwide, including bankruptcy courts and Orphans court.

Mr. Dugan regularly represents individuals, families, and businesses in all types of disputes. In addition to the sampling of cases described above, he has advised clients on and litigated cases involving intellectual property, breaches of contract, lender liability, commercial real estate matters (lease violations, title disputes, and mortgage foreclosures), construction disputes, employment (such as wrongful termination, age, sex and race discrimination claims and enforcement of restrictive covenants), civil rights, bankruptcy litigation, estate litigation, unfair competition, and securities law fraud. He has been regularly selected as a Super Lawyer since 2010.

Leslie Beth Baskin has handled a wide array of commercial, transactional, and bankruptcy-related matters including several high-profile cases in the region. She has also represented a diverse group of clients, including banks, real estate enterprises, healthcare providers, small businesses, and individuals experiencing financial problems. Ms. Baskin also served as a Chapter 7 Trustee on the Panel of Interim Trustees for the US Bankruptcy Court for the Eastern District of Pennsylvania.

Ms. Baskin is currently on the Board of Directors of the Consumer Bankruptcy Assistance Project (CBAP) and was its Chair for two years. She was Chair of the Eastern District of Pennsylvania Bankruptcy Conference. Her peers have elected her as a Pennsylvania Super Lawyer for many years and also won the 2005 Award for Outstanding Volunteer for CBAP. She is also one of the founding members of the Greater Philadelphia Chapter of the International Women’s Insolvency and Restructuring Confederation (IWIRC) and was its chair for a two-year term. She is currently serving as secretary.

Spector Gadon Rosen Vinci P.C. (SGRV) has been selected to the first-annual Watch List, a new supplement created by The Legal Intelligencer highlighting a list of small to midsized Pennsylvania law firms composed of less than 250 attorneys, that should, in The Legal’s opinion, be on everybody’s radar. SGRV was selected this year under the category of “Notable Clients/Verdicts.” The listing reads:

“On Our Watch List due to the significance and implications of the summary judgment granted on behalf of Client, effectively dismissing a years’ old malpractice suit.

Spector Gadon Rosen Vinci P.C is proud of its significant state trial court decision recently accomplished through the joint efforts of the firm’s Shareholder and Director George M. Vinci Jr. and Senior Litigation Counsel David B. Picker, who obtained an award of Summary Judgment on behalf of their client, dismissing a legal malpractice case filed against them by an insurance agency in the Superior Court of Delaware. This marks yet another landmark decision reached by the attorneys of SGRV, a firm that has a history of obtaining notable verdicts in favor of their clients, such as a $100 million verdict garnered by Mr. Vinci in 2019 in a fraud case against Grant Thorton, one of the highest verdicts in Kentucky history. SGRV’s approach is distinctive, employing creative strategies and tactics designed to achieve the client’s ultimate objectives. SGRV not only practices the art of law, but they also support the arts and artists through the Spector Gadon Rosen Vinci Foundation (SGRVF). Recipients of the SGRVF’s ATTY award include author Harper Lee and actor Richard Prosky. As the firm enters its 50^th year, we look forward to continued strategic growth and excellence in client service.”

View The Legal Intelligencer’s 2023 Watch List here

Alan B. Epstein, Chair of the Employment Law Group of Spector Gadon Rosen Vinci P.C., has been selected to the 29^th Edition of The Best Lawyers in America list for the year 2024. Epstein was selected regarding his professional excellence in individual employment law and labor and employment litigation.

As the oldest and most respected peer-review publication in the legal profession, clients and legal professionals widely regard recognition in Best Lawyers as a significant honor. For over forty years, Best Lawyers has gained a reputation as a truly unbiased source of legal referrals. Epstein was chosen for this honor following an exhaustive peer review process in which the nation’s leading lawyers confidentially evaluate their professional peers.

Alan B. Epstein, Chair of the Employment Law Group of Spector Gadon Rosen Vinci P.C., has been selected as one of the 500 Leading Plaintiff Employment and Civil Rights Lawyers by Lawdragon in its 2023 list of the nation’s best plaintiff employment and civil rights attorneys.

The Pregnancy Workers Fairness Act (PWFA), signed into law last December went into effect on June 27, 2023. Pursuant to the PWFA, employers with 15 or more employees must grant a “reasonable accommodation” for an employee’s known limitations related to pregnancy, childbirth, or related medical conditions, unless the employer can show that the accommodation will cause the employer an “undue hardship.”

While the full scope of what a “reasonable accommodation” can include has not been defined, the Equal Employment Opportunity Commission (EEOC) notes that it could include the ability to sit during a work shift; drink water at the workstation; receive appropriately sized uniforms and safety apparel; receive additional break time to use the bathroom, eat and rest; take leave or time off for medical appointments or to recover from childbirth; and be excused from strenuous activities and/or activities that involve exposure to compounds that are not safe for a pregnant woman. Unlike a reasonable accommodation under the Americans with Disabilities Act (ADA), an employer could be required to eliminate an essential function of the employee’s job temporarily.

The PWFA also prohibits covered employers from:

• Requiring an employee to accept an accommodation without a discussion about the accommodation between the employee and the employer.
• Denying a job or other employment opportunity to a qualified employee or applicant based on the person’s need for a reasonable accommodation.
• Requiring an employee to take leave if another reasonable accommodation can be provided that would allow the employee to continue working.
• Retaliating against an individual for reporting or opposing unlawful discrimination under the PWFA or participating in a proceeding relating to the PWFA.
• Otherwise interfering with any individual’s rights under the PWFA.

Complaints that an employer has violated the PWFA will be received and processed by the EEOC. A violation will carry the same penalties as a violation of the ADA.

If you have any questions regarding how the PWFA applies to your business, or if you have any questions regarding the requirements of the PWFA, please contact Nancy Abrams at nabrams@sgrvlaw.com or Jennifer Chalal at jchalal@sgrvlaw.com.

On May 25, 2023, the U.S. Supreme Court unanimously ruled that if a state seizes and sells real property to recoup unpaid taxes and then retains more proceeds than the taxes which were owed, this action violates the Takings Clause of the Fifth Amendment.

This decision resolves a split in the Circuits and reverses a holding from the Eighth Circuit. Now, when a municipality forecloses on real estate and receives more than the taxes which are due, the excess must be remitted to the taxpayer.

In this case, a 94-year-old woman failed to pay her taxes when she moved from her home to an assisted living facility. At the time, she owed approximately $15,000 in taxes ($2,000 in actual taxes and $13,000 in interest and penalty). The property sold for $40,000 and the excess over the taxes due and owing was not remitted to the taxpayer. The basis for the state’s keeping the excess funds was supposedly grounded in state (Minnesota) law.

In his Opinion, Chief Justice Roberts opined that “history and precedent” said otherwise. He further stated that the fact that the government cannot take more than they are owed traces back to “Runnymede in 1215” as a result of King John precluding the taking of such excess. This decision was also grounded in the fact that the Takings Clause was enacted to preclude the government from forcing people alone to “bear public burdens, which, in all fairness and justice would be borne by the public as a whole.” Chief Justice Roberts reversed the Eighth Circuit, stating that the homeowner “plausibly” alleged a taking under the Fifth Amendment since the state made “an exception for itself, and only for taxes on real property”.

The state may not extinguish a property interest that it recognizes everywhere else to avoid paying just compensation when it is the one doing the taking. Further, Chief Justice Roberts stated that “the taxpayer must render unto Caesar what is Caesar’s, but no more”.

Justices Gorsuch and Jackson authored a concurring opinion that discusses a separate basis for the ruling based upon the Eighth Amendment’s prohibition against excessive fines.

To discuss the issues raised here or any other issues involving creditors’ rights and bankruptcy, please contact Leslie Beth Baskin, Esquire at 215-241-8926 or at lbaskin@sgrvlaw.com.

Spector Gadon Rosen Vinci attorney Jennifer Myers Chalal has received three notable distinctions from Super Lawyers.

In addition to her selection as a 2023 Pennsylvania Super Lawyer, another consecutive year in which she was named to the annual list, Ms. Chalal received the honors of being listed as one of the Top 100 Attorneys in the city of Philadelphia, and as one of the Top 50 Women in the practice of law in Pennsylvania.

While a Super Lawyers’ listing alone is an achievement worthy of praise (no more than five percent of the lawyers in Pennsylvania are selected by Super Lawyers), to receive three in a single year is a coveted accolade.

Jennifer Myers Chalal concentrates her practice in the area of employment law handling all types of employment law matters including discrimination claims under Title VII, the ADA, the ADEA, the PHRA, and the NJ Law Against Discrimination, retaliation claims, wrongful discharge claims, wage and hour claims, FMLA claims, ERISA claims, breach of contract claims, non-compete claims, and claims involving workplace torts. She also handles ADA accessibility suits and denials of public accommodations for businesses especially in the hospitality industry. She provides advice to businesses regarding employment matters, conducts workplace investigations for businesses presented with complaints of sexual harassment or other forms of discrimination, prepares employment handbooks, and provides workplace seminars regarding discrimination laws. Her litigation practice extends throughout Pennsylvania and New Jersey in both Federal and State Court.

Super Lawyers, part of Thomson Reuters, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates, and peer reviews by practice area. The result is a credible, comprehensive, and diverse listing of exceptional attorneys.

The Super Lawyers lists are published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country. Super Lawyers Magazines also feature editorial profiles of attorneys who embody excellence in their practice of law. For more information about Super Lawyers, go to SuperLawyers.com.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security, and telecommunications.

The firm’s practice areas include high-stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

Florida Gov. Ron DeSantis has appointed Spector Gadon Rosen Vinci P.C. Attorney Cory Chandler to serve as a Judge on the Hillsborough County Court.

“We are proud and excited to learn that Cory Chandler has been appointed by Governor Ron DeSantis to serve as a judge on the Hillsborough County Court.”, said SGRV Shareholder and Director George M. Vinci, Jr. “I can think of no one more deserving of this honor. The Hillsborough County Court will be adding a judge to the bench with the legal acumen, good judgment, and sense of fairness that will benefit all citizens of the state of Florida.”

Mr. Chandler brings with him a wealth of legal experience garnered over a distinguished career, including a J.D. from the South Texas College of Law. Mr. Chandler has an extensive professional background, having served in various legal roles. At SGRV, Mr. Chandler focuses his practice in civil litigation and federal criminal defense. He represents nursing homes and healthcare providers in complex abuse allegations, represents insurance companies and businesses in labor and employment issues, and defends individuals against allegations of white-collar crime. His recent accomplishments include obtaining acquittals of a client on a federal indictment. Mr. Chandler has extensive trial experience having served as lead attorney in more than 60 civil and criminal jury trials. He has represented some of the nation’s largest insurance companies in automobile, products liability, and premises liability cases.

SGRV Associate Adam A. Filbert, Esq., has been selected by ALM as a “Lawyer on the Fast Track” as part of the 2023 Pennsylvania Legal Awards.

The category “Lawyers on the Fast Track” honors the next generation of leading lawyers in the Pennsylvania legal industry, recognizing the freshest faces making waves in their respective practices.

Since joining SGRV in 2021, Mr. Filbert has become an invaluable asset to the firm. Under the guidance of our leading attorneys and through his own personal efforts, he has proven to hold a passion for his work, as evidenced by him receiving this prized accolade.

Adam, alongside his fellow recipients, is to be recognized at a celebration hosted by ALM on June 14, 2023, at the Loews Hotel in Philadelphia, located at 1200 Market St. More information on the event is available at the event site.

Each year, The Pennsylvania Legal Awards allow attorneys statewide to showcase their mastery over their practices, celebrating their achievements and excellence, and honoring those who have left a profound mark on the legal community in both Pennsylvania and beyond through their steadfast dedication to the profession.

Mr. Filbert focuses his practice primarily on Employment Law and Commercial litigation. He has accumulated a diverse array of experiences, including those from his time spent with SGRV previously through Drexel University’s Thomas R. Kline School of Law’s Co-Op program.

Some of Mr. Filbert’s previous work experiences outside of SGRV include time spent as a Legal Intern for Chief Judge Juan R. Sanchez of the Eastern District of Pennsylvania, and as a Legal Intern with the Pennsylvania Attorney General Bureau of Consumer Protection, where he primarily worked on large multi-state litigation cases and investigations.

A number of SGRV attorneys and staff gathered on January 16, 2023 to honor the legacy of Dr. Martin Luther King, Jr. through a day of service. Executive Director of Administration Mark Tarasiewicz, Communications Associate Michael Vinci, attorneys Joseph Devine and David Picker, IT Director Stan Tyszka, and Drexel Co-Op Jacob Jaeger came together on a cold, but pleasant and sunny January morning to joyously serve their community.

The group partook in a cleanup of the Wissahickon Valley Park in Philadelphia, a vital watershed and recreational space for the city. The activity was sponsored by the nonprofit Friends of the Wissahickon, which is committed to the maintenance and upkeep of the park. There, they took up their trash pickers and went to work cleaning up some of the park’s most littered areas, restoring them to their pristine, natural state. It was a valiant effort indeed, and everyone was pleasantly surprised at the amount of litter that managed to be collected and the profound difference it made on the appearance of the park.

In addition to those that went to help clean up the park, a number of SGRV staff participated in MLK Day through their own service activities in addition to educational discussions and program viewings with friends and family regarding Dr. King’s legacy.

The MLK Day of Service is a nationwide effort taken up by Americans every year to give back to their communities in the spirit of Dr. King’s commitment to service. As Dr. King once stated, “Not everybody can be famous but everybody can be great, because greatness is determined by service.”

Instead of a day off, Many companies and firms across America, including SGRV, approach MLK day as a “day on,” allowing employees to give back to their communities for a day in lieu of just coming into the office.

As we reflect on the importance of days like this, we remember to continue teaching the lessons of Dr. King through our words and actions for not just one day, but throughout the year.

For the second year in a row, the attorneys and staff of Spector Gadon Rosen Vinci P.C. were eager to help bring the spirit of the holidays to a family in need through the Philadelphia Ronald McDonald House’s “Family to Family” program. Thanks to this generous program, the Ronald McDonald house has helped countless families experience the joy of the season.

The holidays can be a unnecessarily stressful time for families facing difficulties like childhood illness. The Ronald McDonald House’s “Family to Family” program seeks to ease this stress and provide their resident families with the holiday cheer they deserve. The program pairs families staying at the house with individuals, groups, and businesses to supply the families with everything on their wish lists and more for the holiday season.

Member Jennifer Myers Chalal and Associate Adam A. Filbert, accompanied by Communications Associate Michael Vinci played Santa for the day and dropped off three large bags full of presents of all kinds — toys, clothes, gift cards, and so much more.

Many staff and attorneys selflessly contributed to brightening the holidays for the family. Thanks to them, we were able to make this holiday season another one to remember for a local family in need.

You can learn more about the Ronald McDonald house and the incredible things they do for families in need here.

Alan B. Epstein, Chair of the Employment Law Group of the Philadelphia-based law firm of Spector Gadon Rosen Vinci P.C., has been selected as a Benchmark Litigation Labor and Employment Star for 2022. Benchmark Litigation provides analysis of commercial and financial litigators and law firms in the United States. Epstein was chosen based on factors including recent representative cases, philanthropic work, involvement in professional organizations, and work background.

Focused exclusively on the U.S. litigation market, Benchmark Litigation identifies leading U.S. attorneys and firms at the local and national levels. Rankings and editorials are based on interviews with the nation’s leading private practice lawyers and in-house counsel. Firms and individuals cannot pay to be recommended in the guide.

Epstein concentrates his practice in civil litigation representation in the areas of employment rights, civil rights, and constitutional torts and the provision of transactional advice in all areas of corporate governance, including personalized advice to corporate officers, Boards and Board Members regarding adherence to state and federal regulations.  He is frequently called upon to provide transactional advice to, negotiate employment contracts and severance agreements on behalf of, and litigate matters for corporate entities, corporate officers and Directors, and licensed professionals (and their entities), including lawyers, doctors, bankers, accountants, pharmacists, and architects, as well as insurance, real estate and security brokers.

Epstein has received a number of recent accolades. He was named in 2019 as an Influencer of Law by the Philadelphia Inquirer. He has been named a top 100 Superlawyer™ in Philadelphia and Pennsylvania and has also been selected as one of the nation’s 500 Leading Plaintiff Employment Lawyers (2018), 500 Leading Lawyers (2010), Top 500 Plaintiff’s Lawyers (2009), and Top 500 Litigators (2006) by Lawdragon™. He is an active member of the National Employment Lawyers Association, and has served as a volunteer mentor and Panel Coordinator for the Employment Litigation Panel of the United States District Court for the Eastern District of Pennsylvania and as a national leader and Inn President in the American Inns of Court movement.  Epstein was most recently selected as a 2020 Pennsylvania Super Lawyer.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security and telecommunications.

The firm’s practice areas include high stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

Alan B. Epstein, Chair of the Employment Law Group of Spector Gadon Rosen Vinci P.C., has been selected to the 29^th Edition of The Best Lawyers in America^© list for the year 2023. Epstein was selected regarding his professional excellence in individual employment law and labor and employment litigation.

As the oldest and most respected peer review publication in the legal profession, recognition in Best Lawyers is widely regarded by both clients and legal professionals as a significant honor. For over forty years, Best Lawyers has gained a reputation as a truly unbiased source of legal referrals. Epstein was chosen for this honor following an exhaustive peer review process in which the nation’s leading lawyers confidentially evaluate their professional peers.

Spector Gadon Rosen Vinci P.C. attorney Alan B. Epstein has been featured on the front page of a recent issue of the Legal Intelligencer for coverage of a high-profile defamation lawsuit filed by the anthropologist and former Penn Museum curator Janet Monge against the University of Pennsylvania and some 20+ other defendants. Monge was the subject of media reports alleging she mishandled the remains of 1985 MOVE bombing victims.

Epstein represents Monge, and he is quoted extensively in the story. The case was recently removed to Federal Court.

Alan B. Epstein, Chair of the Employment Law Group at the Philadelphia-based law firm of Spector Gadon Rosen Vinci P.C. (SGRV), has been selected to the Lawdragon™ Hall of Fame, the firm has announced. The distinction, whose recent members include the late U.S. Supreme Court Associate Justice Ruth Bader Ginsburg, Associate Justice Stephen G. Breyer, and U.S. Attorney General Merrick B. Garland, and local, leading luminaries, including attorney Tom Kline, recognizes past members of the Lawdragon 500 and other outstanding lawyers who have made remarkable contributions as leaders, litigators, dealmakers, power brokers, judges and innovators.

The Lawdragon™ Hall of Fame listings are chosen through a thorough selection process of the nation’s greatest corporate litigators, plaintiff powerhouses, and innovators with unsurpassed dedication to their legal practice. Only the best of the best are given the honor of a place in the Hall of Fame. While the list is ever growing since its creation in 2015, rarely do more than 100 lawyers nationwide annually receive the accolade of a Hall of Fame position.

In addition to his Hall of Fame selection, Mr. Epstein was selected as a 2022 Lawdragon™ 500 Leading Plaintiff Employment & Civil Rights Lawyer. Epstein has been selected for this honor for the past five years, since the category was created in 2018. The 500 honorees are chosen in Lawdragon™’s research-driven, journalistic process that vets the views of peers and competitors, and recognizes large wins. Practitioners who were recognized have been securing positive results for workers for 10 years to more than 50 years. Epstein was one of only 11 Philadelphia lawyers chosen for this nationwide distinction. He also has in the past been selected by Lawdragon™ as one of the nation’s Leading Lawyers and also as a Lawdragon™ Leading Litigation Lawyer.

“Alan continues to push the boundaries of what it means to be an Employment and Civil Rights attorney. His accolades have raised our firm to the next level,” noted SGRV Chairman Paul R. Rosen.

SGRV Shareholder and Director George M. Vinci Jr. added that “Alan’s dedication to his craft is an inspiration for us all. Few things can make me more proud than to have him as a member of SGRV.”

Epstein concentrates his practice in civil litigation representation in the areas of employment rights, civil rights and constitutional torts and the provision of transactional advice in all areas of corporate governance, including personalized advice to corporate officers, boards and board members regarding adherence to state and federal regulations. He is frequently called upon to provide transactional advice to, negotiate employment contracts and severance agreements on behalf of, and litigate matters for, corporate entities, corporate officers and directors, and licensed professionals (and their entities), including lawyers, doctors, bankers, accountants, pharmacists and architects, as well as insurance, real estate and security brokers.

Epstein has litigated complex claims before courts throughout the United States and has been admitted to practice in cases pending before numerous state and federal trial and appellate courts and administrative agencies in Pennsylvania, California, Delaware, Illinois, Louisiana, Maryland, New Jersey, New York, Texas and Washington as well as the United States Supreme Court. He is a frequent lecturer in his areas of concentration across the United States, and has served as an expert witness in state and federal courts regarding employment law and the professional and ethical responsibilities of lawyers.

He is a Fellow in the prestigious international College of Labor and Employment Lawyers and has served on its Board of Governors as an officer (Secretary, Treasurer, Vice President and then President) since 2011. He continues to serve on the College’s Board as a Past President of that organization.  He holds an AV rating from Martindale Hubbell™, has been named as one of the Best Lawyers in America™ in the publication of that name for more than 10 years. He has been awarded Lifetime Achievement Awards by the Philadelphia’s The Legal Intelligencer and Marquis Who’s Who. He has been named a top 100 Superlawyer™ in Philadelphia and Pennsylvania. He has served as a volunteer mentor and Panel Coordinator for the Employment Litigation Panel of the United States District Court for the Eastern District of Pennsylvania, and as a national leader and Inn President in the American Inns of Court movement.

In the context of significant litigation in the employment law area, Epstein is well known for his participation in high-profile litigation for individuals and corporate entities (including his representation of a young, HIV-positive attorney against a prestigious Philadelphia law firm that received national attention because of the daily televising of the trial by Court TV and CNN and the award-winning film “Philadelphia” starring Tom Hanks and Denzel Washington) and for his frequent representation of local and national sports figures, broadcast personalities, and officers and directors of large national corporations.

Epstein was also the founder and President/CEO of JUDICATE, The National Private Court System, a publicly held company coordinating private dispute resolution services through approximately 700 former judges throughout the United States and its territories. In the area of alternative dispute resolution, he has additionally lectured and served as a mediator and arbitrator by private appointment and through certification by state and federal courts.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security and telecommunications.

The firm’s practice areas include high stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

Every year, Spector Gadon Rosen Vinci P.C. is proud to congratulate a number of our best attorneys for receiving the honor of being a Super Lawyer, and 2022 is no different.

Ten attorneys from SGRV have been selected to the prestigious 2022 Pennsylvania Super Lawyers list. No more than five percent of the lawyers in Pennsylvania are selected by Super Lawyers.

The recipients are Chairman Paul R. Rosen; Shareholder and Director George M. Vinci Jr.; Managing Member Daniel J. Dugan; Employment Law Group Chair Alan B. Epstein; Estates & Trusts Group Chair Alan J. Mittleman; Bankruptcy and Creditors Rights Group Chair Leslie Beth Baskin; Corporate Law Group Member Stanley P. Jaskiewicz; Employment Law Group Member Jennifer Myers Chalal; Commercial Litigation, Health Care Law & Litigation and Insurance Coverage & Casualty Litigation Group Member Matthew R. Shindell; and Senior Litigation Counsel Bruce Bellingham.

Super Lawyers, part of Thomson Reuters, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates and peer reviews by practice area. The result is a credible, comprehensive and diverse listing of exceptional attorneys.

The Super Lawyers lists are published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country. Super Lawyers Magazines also feature editorial profiles of attorneys who embody excellence in their practice of law. For more information about Super Lawyers, go to SuperLawyers.com.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security and telecommunications.

The firm’s practice areas include high stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

Effective April 1, 2022, certain dollar amounts will be adjusted under the Bankruptcy Code to reflect the changes in the Consumer Price Index. In many instances, these adjustments are very important as they can make a difference between whether a Debtor can preserve its assets or not. Some of the changes are as follows:

Pursuant to 11 USC Section 522: under 522(d)(1), the aggregate amount which a debtor can exempt in value of its residence has increased from $25,150 to $27,900; under 522(d)(2), the aggregate amount which each debtor can exempt in a motor vehicle has increased from $4,000 to $4,450; under 522(d)(3), the aggregate amount a debtor can exempt in household goods furnishings, etc. has increased from $13,400 to $14,875; under 522(d)(4), the aggregate amount a debtor can exempt in jewelry has increased from $1,700 to $1,875; under 522(d)(5), the aggregate amount a debtor can exempt in any property of $1,325, plus up to $12,575 of any unused portion of allowed exemption of the residence under (d)(1) has increased to $1,475 and $13,950 respectively; under 522(d)(6), the aggregate amount which a debtor can exempt for tools of a trade, books, etc. has increased from $2,525 to $2,800; under 522(d)(8), the aggregate amount which a debtor can exempt for accrued dividend or interest or loan value in any unmatured life insurance contract has increased from $13,400 to $14,875; and under 522(d)(11)(D), the aggregate amount of debtor’s interest on account of personal bodily injury has increased from $25,150 to $27,900.

Further, other Bankruptcy Code Sections have been adjusted as follows: the maximum aggregate value of assets of the debtor in an individual retirement account has increased from $1,362,800 to $1,512,350 (Section 522(n)); the state homestead exemption, limit for interest acquired less than or equal to 1,215 days before filing has increased from $170,350 to $189,050 (Section 522(p)); and the state homestead exemption, limit under certain circumstances has also increased from $170,350 to $189,050 (Section 522(q)).

Finally, under Chapter 13 cases, some of the adjustments are as follows: under Sections 1322 (b) and (d), each time $750 appears, the sum has been adjusted to $825; and under Section 1326 (b)(3) the payments to a Chapter 7 trustee has been adjusted to a flat $25 only.

Again, please note that the above represents a non-exclusive list of adjustments which become effective as of April 1, 2022. To discuss these adjustments or any other issues regarding creditors rights and bankruptcy, please contact Leslie Beth Baskin, Esquire at lbaskin@sgrvlaw.com or 215-241-8926.

On January 14 2022, Judge Silverstein of the Bankruptcy Court for the District of Delaware issued a very thoughtful opinion, Wolfson v. DeVos, et al. (In re Wolfson), 19-11618, LSS (Adv. No. 19-50717), regarding the dischargeability of student loans for a disabled debtor who relied on the financial assistance of his parents. Debtor commenced his Chapter 7 in 2019 and brought an adversary proceeding to determine if his student loans were dischargeable pursuant to 11 U.S.C Section 523(a)(8), as imposing an “undue hardship” to repay. The adversary proceeding trial (“Trial”) was held on December 7, 2020. Contrary to counterarguments of the Defendants, the Court found that Debtor met his burden as required under the Brunner case (U.S. v. Brunner, 831 F2d 395 (2d Cir.1987)), which holding was later adopted by the Third Circuit. Note that there is a clear split in the Circuits as to the fairness of the Brunner standard.

The specific facts regarding Debtor were critical to the Court’s determination. Debtor was in his mid-thirties, not married and had no children. He had epilepsy. He graduated from Penn State in 2010 and held down part-time jobs while in college. From 2010-2016, Debtor had 30 job interviews with no real success. From 2014-2016, he was the full-time caretaker for his grandmother and then sporadically worked thereafter. In 2017, while working for a home renovation company he also did part time work as a driver. In August 2019, while working as a driver (Uber/Lyft), he suffered a grand mal seizure and totaled his car. Since then, he has been unemployable. He applied for more than 200 jobs over the next 10 months post- car accident with no success. Debtor moved back in with his father thereafter. He relied upon his father for financial support and had no health insurance for years.

In 2005, Debtor signed, inter alia, two Master Promissory Notes to finance college and then obtained a Federal Family Educational Loan which provided for repayment over a 10-year period after a 6-month grace period after graduation from college. As of the date of the Trial, the loan was due and owing. Other educational loans were also due and owing as of the date of the Trial (totaling almost $100,000.00). With the above history of illness and inability to work, he had a poor credit rating and could not repay the loan debt. Although his father made some of the minimum payments allowed under the loan, he could no longer do so.

The harsh three prong test for debtors under Brunner to allow for discharge are: (1) that the debtor cannot maintain a minimal standard of living for himself and dependents if forced to repay the loans based upon current income and expenses; (2) that the debtor’s financial situation is likely to remain the same for a large part of the repayment period; and (3) that the debtor has made a good faith effort to repay the student loans. The Court herein determined that it would not consider the parental support (referenced as the “third party charity”) as income for Brunner income testing purposes as there was no guarantee that debtor could rely upon receiving these voluntary gifts of funds from his father. Further, the Court found that Debtor’s long-standing, expansive and largely futile efforts since graduation in trying to find a job (1-2 hours per day on internet job boards) were important considerations weighing in his favor.

Defendants herein contended that the Debtor had not met his burden on any of the three Brunner elements. For example, they contended that only spending 1-2 hours per day looking for jobs was “barely looking for work.” The Court responded to this argument by saying that it was clear that Debtor was not avoiding work and that he was not “holding out” for a job. In fact, Debtor testified that he would take any job and that this has been “his way for about 5 years.” The record also showed that he had personally never made a payment on the student loans as he was never in a position to do so, and this convinced the Court that his continual search for gainful employment was enough to demonstrate his good faith. The Court noted the split in the jurisdictions as to the strict standards imposed upon a debtor as to proving “undue hardship” under by Brunner. The Court found the following as critical factors in concluding that this debt was dischargeable: Debtor was substantially supported by his family for his entire adult life (father gave him $1000-$2000/month) and that even without repaying these loans, his income was not sufficient to maintain a minimal standard of living, and more importantly since his family had no obligation to give him any money, this “support” is NOT income but rather “familial charity” which could cease at any moment. Based upon the foregoing, the first prong of Brunner is met. Brunner’s second prong as to whether his inability to pay will persist during the repayment period was clearly net. Herein, the repayment period had expired. This prong also requires an analysis as to whether “additional circumstances” exist indicating that Debtor cannot maintain a minimal standard of living if forced to repay the loans during the repayment period. The Court concluded that Debtor met the second test (also noting a paucity of caselaw on the issue of ability to repay when the repayment period has run). Finally, the third prong (good faith effort to repay the loans) encompasses the standard that Debtor did not willfully or negligently cause his own default, and that the default is due to factors outside of his control. Herein, Debtor has never been in a position to make loan payments and has shown good faith efforts to maximize his income and reduce expenses. The record at Trial made it clear that his low income will most likely be persistent for his lifetime, for which he cannot be faulted.

The Court went on to discuss the “policy considerations” of her decision. The “fresh start” policy behind discharging debts was a fairly strong factor. Debtor continues to struggle to make ends meet and has tried to turn the situation around, but to no avail or as the Court put it, this was “not for want of a work ethic.” Therefore, the Court determined that Debtor meets the burden that this debt should be discharged based upon the undue hardship upon him.

To discuss the issues raised here or any other issues involving creditors rights and bankruptcy, please contact Leslie Beth Baskin, Esquire at 215-241-8926 or at lbaskin@sgrvlaw.com.

The Martin Luther King Jr. Day of Service is a Time-honored tradition cherished by many across the country, from students to CEO’s. Helping our local communities grow and flourish to the best of their abilities has the power to open one’s heart and see the world and its people as the late Martin Luther King Jr. saw them, with compassion.

SGRV is no stranger to service and community engagement, so many of our staff were eager to get out and make a difference on this past day of service. While the Philadelphia office had planned an outing to Bartram’s Garden, a community garden in Southwest Philadelphia, this was unfortunately cancelled due to inclement weather. The attorneys and staff of the Philadelphia office instead partook in their own personal service projects.

The weather situation fared much better in sunny Florida, where SGRV attorneys and staff gathered together at the Trinity Café in Tampa. Trinity Café is a free, full service restaurant for those in need of a healthy and hearty meal. 365 days a year, chefs prepare fresh, nutritious dishes for guests. SGRV assumed the roles of restaurant “wait staff”, and enjoyed their time waiting, hosting, and busing tables in addition other various tasks. They also assisted in their drive-thru meal service for guests.

We thank everyone who took part this year, and look forward to an even more involved 2023!

SGRV’s Leslie Beth Baskin will speak at the upcoming Tenth Annual International Women’s Insolvency and Restructuring Confederation’s At The Shore Conference, taking place at the Hard Rock Hotel & Casino in Atlantic City, NJ, from March 3-4, 2022.

Since the 1990s the Exemption from Federal Gift and Estate Tax has increased steadily. At one point the Exemption only was $675,000 and you had to either use it at death or lose it. Over the years, the Exemption has jumped periodically until it reached its current level of $11.7 Million and it is scheduled to increase to $12.07 Million on January 1, 2022. Also, we no longer have a “use it or lose it” Exemption. Now the surviving spouse gets to use the “unused” Exemption of the first spouse to die. These changes created new paradigms in estate planning. In fact, many taxpayers with over $20 Million in assets no longer feel they have to do estate tax planning.

In addition to the high Exemption, a number of very powerful estate planning tools are available to taxpayers. GRATs, gifts of non-controlling interests in family partnerships and LLCs at a discount, sales of businesses and other assets to grantor trusts that are exempt from the capital gains tax, gifts to grantor trusts and SLATs (spousal limited access trusts) have made it possible to shift wealth and income tax efficiently to children and grandchildren. But now Congress has threatened to eliminate most of this planning and lower the Exemption dramatically.

Not surprisingly this threat from Congress created a rush to modify estate plans and take action before the proposed changes in the tax law became effective. In the tax bills still being debated by Congress, it was announced that the bill would include the following:

1. Lower the Exemption to around $6 Million from $11.7 Million
2. Change the rules for Grantor Trusts with the result that the value of new Grantor Trusts would be included in the grantor’s tax estate at death and that additions to “grandfathered” Grantor Trusts would result in a portion of the trust being included in the grantor’s estate.
3. The proposed changes in the Grantor Trust rules would effectively end or make much, much more complicated GRATs, Irrevocable Life Insurance Trusts, sales to Grantor Trusts, SLATs and gifts to Grantor Trusts.
4. The proposed changes also would eliminate the discounts on sales or gifts of non-controlling interests in family partnerships or LLCs.

In effect, nearly every major estate planning tool would be either ended or made less effective. No wonder estate planners and taxpayers were hyper as we approached the end of the year.

And then just like that, all of the changes were deleted from the proposed tax bill. Yes, I said ALL OF THE CHANGES WERE DELETED FROM THE PROPOSED TAX BILL. What a sense of deja-vu! This has happened before. Every few years, the Exemption (by statute) was supposed to revert back to a lower level unless Congress agreed to extend the law. It would take an act of Congress to extend the Exemption at its then current level. Taxpayers would line up to make gifts or enter into transactions to “beat” the reversion of the Exemption to a lower level (the “Sunset” clause in Congressional lingo). And then, just as the higher Exemption was about to expire, Congress came through and not only extended the Exemption but increased it to a higher level. BUT always for a limited time period at the end of which it would revert again to a lower level. So we have been through this exercise before.

So, is this time any different? Honestly, it is impossible to know at this time. The heat does appear to be off for the time being. Taxpayers and estate planners can continue doing business “as usual” for now. But for how long?

First, one knows that there is serious intent by many members of Congress to raise money from high net worth taxpayers. These are precisely the people who would be hurt by the changes that had been proposed (but now withdrawn).

Second, there still is the huge human infrastructure bill pending in Congress which may be very difficult to pay for if passed.

Third, the current $11.7 Million Exemption has a planned “Sunset” date of January 1, 2026. So even if Congress does nothing this time, we could still wind up with a reduced Exemption of $6 Million in 2026. So we are not out of the woods by any means for the estate tax change which would affect most taxpayers.

Fourth, there still are pending some income and retirement plan changes that need Senate approval to become law. They are designed to increase taxes on very high net worth taxpayers. If passed without change, there will be (i) a 5% surtax on Modified Adjusted Incomes above $10 Million, (ii) a 3% additional surtax on taxpayers with MAGI above $25 Million, (iii) the Net Investment Income Tax will be broadened and (iv) limitation on IRAs and Roth IRAs for very high income taxpayers. Essentially, very high income taxpayers are being asked to foot the bill for the new legislation. But, it appears that even these tax increases will not be enough to pay for the bill.

So what does it all mean? I think one can conclude that Congress wants to spend more money but cannot figure out how to pay for it. High income taxpayers are a target and can expect more tax proposals designed to raise more taxes and the estate and gift tax surely will be a target. I think we can expect the Exemption to decrease. I also think that there will be changes to the Grantor Trust rules which will be better designed than the first set that were proposed. The first set were a shotgun approach that captured some very mainstream planning techniques which were used by more than just very high net worth families.

If your net worth is in the vicinity of $6 Million ($12 Million for a married couple), you are not likely to be affected by future changes. However, if your net worth exceeds these amounts, you should begin thinking about how to lessen the impact of estate taxes on your family and your business. The estate tax and gift tax rates currently are 40% (plus state inheritance tax depending upon where one lives). These tax rates used to be as high as 60% over the last 30 years. They could be increased for large estates. And if Congress does nothing between now and 2026, then the Exemption will decline by around one-half to somewhere around $6 Million per spouse on January 1, 2026.=

According to the Tax Policy Center, there only were 4,100 estate tax returns filed for people who died in 2020 and only 1,900 of them resulted in an estate tax payable. That is less than 0.1% of the 2.8 Million people expected to die in 2020. Facing facts, not many people need to worry about the estate tax any longer. Those who do are not a very big constituency. I think one can bet that there will be changes for the worse in regard to estate and gift taxation.

In conclusion, Congress did us a favor by eliminating all of the proposed harmful tax changes in 2021. We now have time to be more deliberate in our planning, but the clock is ticking. It will be January 1, 2026 before we know it.

Alan Mittelman and Dana Bernstein are ready to review your situation and help you plan a strategy. Alan’s email is amitt@sgrvlaw.com and Dana’s email is dbernstein@sgrvlaw.com. We look forward to hearing from you.

The proposed tax law being discussed in the news has some very serious tax consequences for what are called “grantor trusts.” All estate planners and insurance advisors are trying to assess the impact if the proposed changes to grantor trust taxation are passed. All insurance trusts are “grantor trusts.” You don’t need to know what a grantor trust is to understand the problem. There are many types of grantor trusts which create big loopholes in the law and which many people think are abusive, but insurance trusts are not abusive. They are just good planning!

Under the proposal, all insurance trusts that do not have their own independent source to pay premiums are in trouble. What this means is that if the settlor(s) give money to their trusts to pay the insurance premiums each year, then a portion of the death benefit will be brought back into the settlor’s estate when he or she dies. The same will be true if a settlor adds tax-free annual exclusion gifts to a trust after the law becomes effective. The percentage brought back into the settlor’s estate will be based upon the amount of premiums paid on the policy before the new law takes effect compared to the total premiums paid after the law becomes effective. This change will upset countless estate plans and is one reason I think there is a good chance it will be removed from the tax bill. But one cannot be sure.

If the grantor trust changes do pass, then we will have to find an alternative way for the settlor to pay the insurance premiums. Making an annual gift to the trust, the most common method of paying the premium, no longer will work. The main alternatives to deal with this problem appear to be: (i) changing the payments the settlor makes for the insurance from gifts to loans to the trust, (ii) transferring assets this year into the trusts that own the insurance so that the trusts have annual income that can be used to pay premiums (next year may be too late), (iii) borrowing the premium or making withdrawals from the policies if there is enough cash value in the policies to pay the premiums or (iv) have the trustee distribute the policy to the beneficiaries. This will take careful analysis because a mistake may be very costly.

I still think that this was an “inadvertent” mistake that may be cleaned up and removed from the tax bill. But maybe it was part of the plan, if there really is a “plan.” If you or your spouse created a trust that owns life insurance, you urgently will need to review your options before you put any new money into the trust.

AND just as important, Congress is contemplating lowering the exemption from Estate and Gift Taxes from over $11 million to about $6 million. If you are married and have assets that exceed $12 million, or if you are single and have assets that exceed $6 million, you may still be able to “lock in” the higher exemptions, but you must act quickly.

Alan Mittelman and Dana Bernstein are ready to review your situation and help you plan a strategy. Alan’s email is amitt@sgrvlaw.com and Dana’s email is dbernstein@sgrvlaw.com. We look forward to hearing from you.

When Debtor, Ms. Aleckna (“Aleckna”), filed for Chapter 13 bankruptcy relief, she had completed her university coursework but still owed California Coast University (“CCU”) $6,300 in tuition. While her bankruptcy was pending, Aleckna asked CCU to forward to her a copy of her transcript. CCU responded that they would only provide an “incomplete” transcript which did not include a graduation date, explaining that a “financial hold” had been placed on her account. CCU then filed a Complaint to Determine the Dischargeability of this Debt (“Complaint”) to which Aleckna filed a counterclaim against CCU. She argued that CCU had willfully violated the automatic stay (per 11 U.S.C. Section 362(k)) imposed as a result of the bankruptcy filing by refusing to give her a complete and certified transcript and by engaging in “collection actions” in trying to collect the unpaid tuition while her bankruptcy was pending. CCU then tried to withdraw its Complaint, but the Bankruptcy Court refused the request and held a trial regarding whether CCU’s actions were a willful violation of the automatic stay. The Court found in Aleckna’s favor concluding that CCU was attempting to collect a pre-petition debt during the pendency of the Chapter 13. The Bankruptcy Court held that Aleckna was entitled to receive her full transcript and failure to do so was akin to not supplying a transcript at all. They also, inter alia, awarded actual damages ($230.16) and attorneys fees ($100,000) because the CCU’s violation was “willful”.

CCU appealed this ruling to the District Court, arguing that its violation could not have been “willful” under the Third Circuit’s decision in In re University Medical Center, 973 F.2d 1065 (3d Cir.1992) as the case law was “unsettled” as to the obligation to provide a complete transcript, which could have provided them with a limited defense to the claim of a “willful” violation. The District Court affirmed the Bankruptcy Court ruling, and CCU then appealed to the Third Circuit, which also affirmed.

The Third Circuit held, in a precedential opinion (See In Re Aleckna (No. 20-1309, Sept. 9, 2021)), that University Medical remains good law and provides a mechanism by which one can challenge a finding of willfulness. The Court then found that CCU failed to show that the law regarding the transcript issue was “sufficiently unsettled” within the meaning of University Medical, and that CCU failed to establish a defense under this case law. Therefore, the violation of the stay was deemed to be willful. The Third Circuit was also very careful in pointing out that even a “good faith” defense by a creditor in that it did not believe its actions violated the automatic stay is not a defense to willfulness. Rather, willfulness is separate and distinct from good faith.

CCU next argued that the District Court erred in awarding damages and attorneys fees because there was no affirmative injury in this case. Section 362(k)(1) provides that “an individual injured by any willful violation of a stay shall recover actual damages, including costs and attorneys fees, and, in appropriate circumstances, may recover punitive damages.” Herein, the Third Circuit concluded that the injuries for which Aleckna was compensated through the lower Court’s award were cognizable under Section 362. As stated above, Aleckna was awarded: (1) $230.16 for the time she took off from work to attend trial; (2) her litigation attorneys fees (for fees associated with attempts to get her transcript and the litigation costs); (3) three copies of her certified transcript containing a graduation date; (4) a diploma; and (5) the pre-litigation attorneys fees she incurred while attempting to obtain her complete transcript. Even if the financial harm to a student is arguably small, the Third Circuit held that her failure to receive a complete transcript without court intervention constituted a cognizable injury under Section 362. Furthermore, the fact that CCU did not provide a compelling explanation as to why the attorneys fees did not constitute a financial injury on their own was fatal to their argument. Finally, the Third Circuit observed that the automatic stay is designed to protect “both financial and non-financial interests”.

Therefore, the Third Circuit held that the District Court did not err in concluding that Aleckna had been injured by the university’s violation and that the award of damages and attorneys fees was appropriate.

To discuss the issues raised here or any other issues involving creditors rights and bankruptcy, please contact Leslie Beth Baskin, Esquire at 215-241-8926 or at lbaskin@sgrvlaw.com.

Alan B. Epstein, Chair of the Employment Law Group of Spector Gadon Rosen Vinci P.C., has been selected as one of the 500 Leading Plaintiff Employment and Civil Rights Lawyers by Lawdragon™ in its 2021 list of the nation’s best plaintiff employment and civil rights attorneys.

Adam A. Filbert has joined the team at Spector Gadon Rosen Vinci P.C. as a Law Clerk. He is the youngest addition to the SGRV family, attesting to his exceptional skills. His presence brings a breath of fresh air to the firm through his new ideas and perspectives on a variety of topics.

Mr. Filbert has accumulated a diverse array of experiences, including those from his time spent with SGRV previously through Drexel University’s Thomas R. Kline School of Law’s Co-Op program.

Some of Mr. Filbert’s previous work experiences outside of SGRV include time spent as a Legal Intern for Chief Judge Juan R. Sanchez of the Eastern District of Pennsylvania, and as a Legal Intern with the Pennsylvania Attorney General Bureau of Consumer Protection, where he primarily worked on large multi-state litigation cases and investigations.

Mr. Filbert was actively involved in many extra-curricular activities during his time as a law student, including his work with client intake for the SeniorLAW Center in Philadelphia. He also served on Drexel University’s Thomas R. Kline School of Law’s Cybersecurity group, as part of their writing group. In addition, he was a staff editor on Drexel’s Law Review, as well as legal editor for the Pennsylvania Nonprofit Corporations Act Treatise.

Filbert will be focusing his practice primarily on Employment Law and Commercial litigation. He will be working closely with the esteemed Alan B. Epstein on a variety of projects.

Mr. Filbert holds  a J.D., Cum Laude, from Drexel University’s Thomas R. Kline School of Law with a Concentration in Business and Entrepreneurship law, and a B.S. in Digital Communications with a Concentration in Business Technology.

Filbert is an avid outdoorsman. In his free time, he enjoys hiking and exploring nature, in addition to playing lacrosse and cooking.

SGRV attorneys, staff, friends, and family gathered together on Friday, August 20 to celebrate everyone involved with the firm’s hard work and dedication. Steel Pier was the place to be on Friday as a seafood buffet tantalized taste buds and rides and activities brought out everyone’s inner child.

The event was made possible by SGRV’s friendship and ongoing collaboration with Steel Pier as a valued client. This year’s event, returning after a year in hiatus during the 2020 lockdowns, was a welcome return to an annual tradition, and one of the most successful so far- with a new menu and large turnout. In addition to the festivities, a raffle was held, featuring a number of varied prizes, after which most attendees did not leave empty-handed.

Friends, family, and loved ones came together to keep spirits high, and words from both SGRV Chairman Paul R. Rosen, and Shareholder and Director George M. Vinci Jr. set an optimistic tone for the future. Vinci expressed how, at the onset of the COVID-19 pandemic and lockdown, he was unsure how the firm would continue to grow and expand in the face of such circumstances. Regardless of these trials and tribulations, Vinci affirmed that SGRV had emerged stronger and more resilient than ever imagined.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security and telecommunications.

The firm’s practice areas include high stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

Spector Gadon Rosen Vinci helped sponsor a fun day of golf and giving at the Inaugural Annual Ali Spears Charity Golf Tournament. The event took place on Friday, August 20, 2021 at the Westchase Golf Club in Tampa, Florida.

Activities abounded throughout the day: putting and hole-in-one contests, prizes, raffles, a silent auction, and much more helped attract a large and enthusiastic crowd to enjoy a day to help support a worthy cause.

The Ali Spears Foundation is a 501(c)(3) non-profit charitable organization. Their mission is to help families dealing with pediatric cancer overcome hardship, empower the community by raising awareness for pediatric cancer, and help find a cure for pediatric cancer by donating funds to research.

The foundation takes part in a variety of fundraising activities included but not limited to an Annual New Year’s Day golf cart parade, farmers market sales, and other fundraising activities organized and facilitated by teens.

The major beneficiaries of the Ali Spears foundation are hospitalized children who receive gifts and toys, as well as funding for pediatric cancer research at Johns Hopkins All Children’s Hospital, with more beneficiaries to come in the future.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security and telecommunications.

The firm’s practice areas include high stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

Alan B. Epstein, Chair of the Employment Law Group of Spector Gadon Rosen Vinci P.C., has been selected to the 28^th Edition of The Best Lawyers in America^© list for the year 2022. Epstein was selected regarding his professional excellence in individual employment law and labor and employment litigation.

As the oldest and most respected peer review publication in the legal profession, recognition in Best Lawyers is widely regarded by both clients and legal professionals as a significant honor. For over forty years, Best Lawyers has gained a reputation as a truly unbiased source of legal referrals. Epstein was chosen for this honor following an exhaustive peer review process in which the nation’s leading lawyers confidentially evaluate their professional peers.

Judge Poslusny of the Bankruptcy Court for the District of New Jersey recently issued an opinion wherein he held that a Debtor may cure post-petition arrears in a modified Chapter 13 Plan as long as all other provisions of the Bankruptcy Code are met. Consistent with Section 1325, the Court held that the Amended Chapter 13 Plan was feasible and that the Debtor was able to make her newly proposed payments within the modified Chapter 13 Plan.

Briefly, Debtor’s original Chapter 13 Plan was confirmed and she was making timely payments thereunder. Debtor was paying her pre-petition mortgage arrears within the Plan and post-petition mortgage payments outside of the Plan.  She then defaulted on her post-petition mortgage payments and the Lender filed a motion for relief from the automatic stay, which the parties resolved. Thereafter, Debtor again defaulted on her mortgage payments and a certification of default was filed by the Lender seeking relief from the stay provisions of 11 USC Section 363. That too was resolved. Upon the third post-confirmation default, the Lender again proceeded to seek relief. It should be noted that the defaults were mainly caused by Debtor’s husband’s unemployment and the economic ramifications of this circumstance on the family and related COVID-19 hurdles. Debtor filed a response to Lender’s relief motion incorporating these circumstances and asserted that she intended to make not only her pre-petition but also post-petition mortgage payments under a Modified Chapter 13 Plan seeking to incorporate the post-petition mortgage arrears in the Plan and extend the length of the Plan to 73 months.

The Court addressed whether the requirements of Sections 1322(b)(5), 1325 and 1329(a) of the Bankruptcy Code were met. The Court, noting a split in the Circuits on this issue, found that Section 1322 allows for the curing post-petition arrears within a Plan. Further, the Court considered the terms of the CARES Act of 2020, which allows debtors who experience a “material hardship due, directly or indirectly” from COVID-19 to extend the length of a Chapter 13 Plan to up to 84 months. Here, Debtor met her burden to show her financial hardship and that the requested increase to a total of 73 months for the plan payments was within the purview of the CARES Act and was reasonable. In so finding, the Court determined that the Amended Chapter 13 Plan complied with the requirements of good faith, feasibility and reasonableness. Therefore, the Court confirmed the modified Chapter 13 Plan and denied the Lender’s motion for relief from the stay.

I highly recommend reading this opinion (In Re Catherine E. Smith, BKY. Case No. 18-2383 – docket # 59) for the Court’s thoughtful analysis of this issue.

To discuss this and other issues involving creditors rights and bankruptcy, please contact Leslie Beth Baskin at 215-241-8926 or lbaskin@sgrvlaw.com.

Spector Gadon Rosen Vinci P.C. Managing Member Daniel J. Dugan has been named as one of Pennsylvania’s Most Effective Dealmakers by The Legal Intelligencer, the oldest law journal in the United States. Dugan is one of just six attorneys statewide to be selected for the honor as part of the 2021 Pennsylvania Legal Awards.

Dugan was honored for his selection at a dinner reception on Thursday, June 24, 2021, at the Crystal Tea Room in Philadelphia. Here, Dugan received his award, along with praise from his friends, family, and colleagues.

Dugan successfully closed a multi-million-dollar deal to preserve the future of one of southeastern Pennsylvania’s most historic and preeminent country club resorts following a sheriff sale action that formalized lender ownership of the 115-acre property.

The sale disposed of any outstanding claims and debts, and removed any liens, against Lulu Country Club in Glenside, Pennsylvania, formalizing ownership of the property by lender LT-Lulu LP, represented by Dugan.

The underlying real estate tied to the club did not sell at a December 2020 auction arranged by the Montgomery County Sheriff’s Office, for which a $14.98 million minimum bid price was set — the amount of debt on the property.  No bids were made to buy it at the auction. The matter was precedential in that it was the first time the Montgomery County Sheriff’s Office sought to hold its property sales online.

As a result of Dugan’s creative structuring of the sale, Lulu JJR LLC now has a 20-year lease on the property and will continue its role overseeing management of the club and its operations.

In addition, Dugan has excelled in successfully negotiating other recent high-stakes deals.

Dugan negotiated the successful resolution of a $10 million-plus claim for life insurance proceeds on behalf of a client whose wife drowned in the Ganges River in India. The claims involved numerous insurance companies and the litigation was in both state and federal courts in Philadelphia and required the taking of numerous depositions in India. After obtaining a verdict in favor of his client in federal court, Dugan negotiated a successful settlement with the remaining insurers in state court.

Dugan also received a summary judgment in favor of a local bank for nearly $10 million against an individual and several companies he controlled arising out of fraudulent loans to finance millions of dollars of equipment leases, a check kiting scheme, and violations of the federal RICO Act.

Dugan is distinguished by his ability to achieve his clients’ goals by creatively structuring the best terms to ensure a winning deal.

A member of the firm’s Executive Committee, Dugan concentrates his practice in trials and appeals involving all manner of commercial and business disputes representing corporate entities, families and individuals.  He has extensive experience litigating before state and federal courts nationwide, including bankruptcy courts and Orphans Court.

Dugan has been in practice since 1977, with Spector Gadon Rosen Vinci since 1982, and a member of the firm since 1987.  He is managing member and also a member of the firm’s Executive Committee.  He concentrates his practice in trials and appeals involving all manner of commercial and business disputes, and he has extensive experience litigating before state and federal courts nationwide, including bankruptcy courts and Orphans Court.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security and telecommunications.

The firm’s practice areas include high stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

Effective January 1, 2020, after a failed attempt to raise the minimum weekly salary for exempt employees to $913 ($47,476 annually), the U.S. Department of Labor issued new regulations increasing the minimum weekly salary for exempt employees from $455 per week to $684 ($35,568 annually).  In October 2019, the Pennsylvania Department of Labor (PA DOL) issued Regulations that also raised the minimum weekly salary for exempt employees under the Pennsylvania Minimum Wage Act to $684 per week, but unlike the federal Regulations, the PA DOL Regulations also provided for additional increases.

On October 3, 2021, the minimum weekly salary for exempt executive, administrative and professional employees in Pennsylvania will rise to $780 per week ($40,560 per year).  On October 3, 2022, the minimum weekly salary for exempt employees in Pennsylvania will rise again to $875 per week ($45,500 per year).  On October 3, 2023, the annual salary threshold will be set at a “rate equal to the weighted average 10th percentile wages for Pennsylvania workers who work in exempt executive, administrative or professional classifications as determined by the Department with advice and consultation by the Minimum Wage Advisory Board and based on an annual wage survey of all worker classifications conducted by the Department.”  The salary threshold will then be increased every three years thereafter (October 2026, October 2029, etc.) based on the same formula used to determine the minimum weekly salary in October 2023.

Because the PA DOL Regulations require a higher salary than the federal regulations, employers will have to meet the PA minimum salary if they wish to treat their executive, administrative or professional employees as “Exempt.”  Employees whose pay does not equal or exceed the increased minimum weekly salary must be treated as “Non-exempt,” and will have to track the number of hours they work each week and be paid time and a half for all hours they work over 40 in a workweek.

As the minimum weekly salary for exempt employees goes above the federal minimum week salary, it is expected that the PA DOL will increase its enforcement efforts. All employers need to review their compensation structure and job descriptions to determine whether or not the employees they are treating as exempt under the administrative, executive or professional exemptions will meet the new minimum salary threshold and other requirements for those exemptions, and either adjust employee salaries or prepare to treat employees whose salaries fall below the new threshold as non-exempt for overtime purposes.

If you have any questions or would like additional information, please contact Nancy Abrams at nabrams@sgrvlaw.com or 215-241-8894.

In May 2021, the Third Circuit issued an opinion regarding the 2018 bankruptcy of the Harvey Weinstein Company, LLC (TWC), crystalizing what factors are required to prove that a contract is “executory” under § 365 of the Bankruptcy Code (the “Code”).

Section 365 of the Code provides for the assumption or rejection of a contract or unexpired lease under certain specific circumstances. If a Debtor wishes to assume (or continue) or reject (or breach) a contract, it is required to, inter alia, “cure or provide adequate assurance that it will cure any defaults under that executory contract” and “put it in the same place as if the bankruptcy never happened.” See 11 U.S.C. 365(b)(1). If a Debtor has “assumed” the executory contract in the bankruptcy proceeding, it has the ability to later “assign” that contract to a non-debtor entity. This often occurs in a bankruptcy proceeding when the assets of that Debtor are being sold under an Asset Purchase Agreement to a third party.

The issue as to whether a contract is executory or non-executory has significant ramifications for how it is treated in a bankruptcy sale of assets.  This very issue as to what an executory contract is was decided in this case by Judge Ambro of the Third Circuit.

By way of background, TWC and affiliates (the “Debtors”) filed for Chapter 11 protection in March 2018. A compelling (but not primary) reason for the bankruptcy filing was the ever-growing number of sexual misconduct allegations against its principal and then-Hollywood mogul, Harvey Weinstein, which caused its business to plummet. The bankruptcy’s main goal, though, was to facilitate the sale of most of TWC’s assets to the predecessor-in-interest of Spyglass Media Group, LLC (“Spyglass”) and to get court approval of its asset purchase agreement with Spyglass pursuant to § 363 of the Bankruptcy Code. Among the assets in Debtors’ bankruptcy estate was a contract with Bruce Cohen (“Cohen”), who produced the movie Silver Linings Playbook, which movie had been released in November 2012. A part of TWC’s contract with Bruce Cohen (the “Cohen Agreement”) included a provision that assured that Cohen will receive certain future compensation equal to roughly 5% of the net profits of Silver Linings Playbook. Debtors sold the Cohen Agreement, amongst myriad other assets, to Spyglass in a § 363 sale (the “Sale”). At the time of the Sale, TWC owed Cohen approximately $400,000 in unpaid contingent compensation.

At issue before the Third Circuit was whether the Cohen Agreement was “executory” at the time of the Sale. If so, then Cohen would be entitled to the cure amount of $400,000. If not, then Cohen would not be owed any of the unpaid contingent compensation (but would remain entitled to future contingent compensation). The Third Circuit found that the Cohen Agreement was not executory, thereby affirming the decisions in the lower courts.

The Third Circuit follows the “Countryman test” for determining whether a contract is executory or non-executory. Under this test, an executory contract is defined as “a contract under which the obligations of both the bankrupt and the other party to the contract are so far unperformed that the failure of either to complete performance would constitute a material breach excusing performance of the other.” Spyglass Media Group, LLC v. Cohen (In re Weinstein Company Holdings, LLC), Nos. 20-1750 and 20-1751, slip op., pages 10–11 (3d Cir. May 21, 2021) (quoting Vern Countryman, Executory Contracts in Bankruptcy: Part I, 57 Minn. L. Rev. 439, 460 (1973)). A contract is also not executory under § 365 “unless both parties have unperformed obligations that would constitute material breach if not performed” and such obligations are owed “when the bankruptcy petition is filed.” Id., at page 11 (quoting In re Columbia Gas Sys. Inc., 50 F.3d 233, 239–40 (3d Cir. 1995)). What makes a breach “material” is a question of state law. See id. In reliance on the above principles, the Third Circuit succinctly enunciated the test for executory contracts: “[T]he test for an executory contract is whether, under the relevant state law governing the contract, each side has at least one material unperformed obligation as of the bankruptcy petition date.” Id. (emphasis added).

To further clarify this caveat to the Countryman rule, the Third Circuit analogized the need to perform material obligations to assets and liabilities of the bankruptcy estate. “[T]he performance the nonbankrupt owes the debtor constitutes an asset, and the performance the debtor owes the nonbankrupt is a liability.” Id. In reliance on the above framework, the Court explained that “a contract where the debtor fully performed all material obligations, but the nonbankrupt counterparty has not, cannot be executory; that contract can be viewed as just an asset of the estate with no liability.” Id., at pages 11–12. “On the other extreme, where the counterparty performed but the debtor has not, the contract is also not executory because it is only a liability for the estate.” Id., at page 12. The Court further explained that “only where a contract has at least one material unperformed obligation on each side—that is, where there can be uncertainty if the contract is a net asset or liability for the debtor—[does the Court] invite the debtor’s business judgment on whether the contract should be assumed or rejected.” Id.

As explained above, in the context of a § 363 sale, in order for an executory contract to be assumed and subsequently assigned to the buyer of a debtor’s assets, the debtor must first cure or provide adequate assurance that it will cure any defaults to such executory contract. If, however, the contract being purchased by the buyer in a § 363 sale is not executory, the debtor has no obligation to cure. Put plainly, “if the contract is not executory, it can be sold to a § 363 buyer like any other liability or asset.” Id., at page 13. “In the case of a non-executory contract where only the debtor has material obligations left to perform, the contract is a liability of the estate, and if the buyer wants to buy it, the buyer is voluntarily assuming that liability.” Id. This results in the buyer being burdened only by a go-forward need to “fulfill obligations under the contract it bought after the sale closes, just as it would with any other asset or liability.” Id., at page 14.

Applying this test, the Third Circuit concluded that the Cohen Agreement was non-executory because, although failure to pay contingent compensation to Cohen would result in a material breach, Cohen as counterparty does not maintain any outstanding obligations the non-performance of which would result in material breach under New York law (the applicable state law) or by the terms of the Cohen Agreement. See id., at page 25. This is true since as the Third Circuit indicated, Cohen’s remaining obligations (i.e., to refrain from pursuing injunctive relief over intellectual property he does not own) were ancillary and immaterial and did not avoid NY’s “substantial performance rule.” The Court articulated that parties could contract around a state’s default contract rule regarding substantial performance (which is key in defining what sorts of breaches are material), and that, by crafting provisions that take the contract outside of such state rules, parties can “override the Bankruptcy Code’s intended protections for the debtor.” Id. However, the Court cautioned that contracting around a state’s default substantial performance rule “can only be accomplished clearly and unambiguously in the text of the agreement.” Herein, the Third Circuit concluded that ”[n]o provision in the contract clearly and unambiguously overrode New York’s default substantial performance rule that obligations are immaterial if they do not go to the root and purpose of the transaction,” and that, therefore, the Cohen Agreement was subject to New York’s substantial performance rule and commensurate definition for material breach. Id., at page 25. The Third Circuit did recognize though that the parties could have contracted around a state’s default contract rule regarding substantial performance and by doing so could override the Code’s intended protections for a Debtor.

Despite Cohen not being entitled to any cure amount under § 365, the Court did indicate that the amount owed to Cohen before closing of the Sale can still be asserted as an unsecured claim to be paid on a pro rata basis with other unsecured creditors (including the victims of Weinstein’s sexual abuse), provided such claim is timely. The Third Circuit also stated that although Spyglass did not owe Cohen the unpaid pre-sale amount, Spyglass nonetheless had to comply with post-closing obligations coming due under the Cohen Agreement. Finally, the Court opined that “(t)his pill is bitter to swallow, but bankruptcy inevitably creates harsh results for some players.”

As an aside, this ruling can have severe implications for the likes of Bradley Cooper (Philadelphia native), Jennifer Lawrence (Oscar winner for the movie) and others who are trying to collect unpaid royalties.

To discuss issues regarding creditors rights and bankruptcy, please contact Leslie Beth Baskin at 215-241-8926 or lbaskin@sgrvlaw.com.

Spector Gadon Rosen Vinci P.C. has announced that the firm will fully resume in-office operations on Tuesday, June 1, when attorneys and staff will return to their in-office, pre-pandemic work schedules.  The firm has been seamlessly servicing the needs of its clients throughout the COVID-19 pandemic. The firm will welcome its employees back with a “Homecoming” appreciation luncheon on June 1.

SGRV is concluding its pandemic remote work option and hybrid schedules for attorneys and staff which have been in place since June 15, 2020, following the lifting of governmental stay-at-home orders.

Last month, SGRV announced a policy strongly urging all employees to become fully vaccinated.  Since that time, the firm has achieved nearly a 100 percent vaccination rate.

The policy states, “In accordance with [the firm’s] duty to provide and maintain a safe workplace, we are adopting this policy to safeguard the health of our employees and their families; our clients and visitors; and the community at large from COVID-19, which may be reduced by vaccinations. This policy will comply with all laws and is based on guidance from the Centers for Disease Control and Prevention (CDC) and state and local health authorities, as applicable.”

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security and telecommunications.

The firm’s practice areas include high stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

Alan B. Epstein, Chair of the Employment Law Group of Spector Gadon Rosen Vinci P.C., has been featured in a Lawyer Limelight profile by Lawdragon™.

Spector Gadon Rosen Vinci P.C. Managing Member Daniel J. Dugan has been named as one of Pennsylvania’s Most Effective Dealmakers by The Legal Intelligencer, the oldest law journal in the United States.  Dugan is one of just six attorneys statewide to be selected for the honor as part of the 2021 Pennsylvania Legal Awards.

Dugan successfully closed a multi-million-dollar deal to preserve the future of one of southeastern Pennsylvania’s most historic and preeminent country club resorts following a sheriff sale action that formalized lender ownership of the 115-acre property.

The sale disposed of any outstanding claims and debts, and removed any liens, against Lulu Country Club in Glenside, Pennsylvania, formalizing ownership of the property by lender LT-Lulu LP, represented by Dugan.

The underlying real estate tied to the club did not sell at a December 2020 auction arranged by the Montgomery County Sheriff’s Office, for which a $14.98 million minimum bid price was set — the amount of debt on the property.  No bids were made to buy it at the auction. The matter was precedential in that it was the first time the Montgomery County Sheriff’s Office sought to hold its property sales online.

As a result of Dugan’s creative structuring of the sale, Lulu JJR LLC now has a 20-year lease on the property and will continue its role overseeing management of the club and its operations.

In addition, Dugan has excelled in successfully negotiating other recent high-stakes deals.

Dugan negotiated the successful resolution of a $10 million-plus claim for life insurance proceeds on behalf of a client whose wife drowned in the Ganges River in India. The claims involved numerous insurance companies and the litigation was in both state and federal courts in Philadelphia and required the taking of numerous depositions in India. After obtaining a verdict in favor of his client in federal court, Dugan negotiated a successful settlement with the remaining insurers in state court.

Dugan also received a summary judgment in favor of a local bank for nearly $10 million against an individual and several companies he controlled arising out of fraudulent loans to finance millions of dollars of equipment leases, a check kiting scheme, and violations of the federal RICO Act.

An awards dinner reception will take place at 7 p.m. on Thursday, June 24, 2021, at the Crystal Tea Room, 100 E. Penn Square, in Philadelphia.

Dugan is distinguished by his ability to achieve his clients’ goals by creatively structuring the best terms to ensure a winning deal.

A member of the firm’s Executive Committee, Dugan concentrates his practice in trials and appeals involving all manner of commercial and business disputes representing corporate entities, families and individuals.  He has extensive experience litigating before state and federal courts nationwide, including bankruptcy courts and Orphans Court.

Dugan has been in practice since 1977, with Spector Gadon Rosen Vinci since 1982, and a member of the firm since 1987.  He is managing member and also a member of the firm’s Executive Committee.  He concentrates his practice in trials and appeals involving all manner of commercial and business disputes, and he has extensive experience litigating before state and federal courts nationwide, including bankruptcy courts and Orphans Court.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security and telecommunications.

The firm’s practice areas include high stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

As we informed you on April 28, Federal tax credits are available through September 30, 2021 for employers who voluntarily give employees paid time off for COVID-related leave or to get a COVID-19 vaccine. Philadelphia employers can take advantage of this tax credit when they comply with the City’s Pandemic Sick Leave Ordinance.

Effective March 29, 2021, Employers who are located within the City of Philadelphia and have 50 or more employees must provide up to 80 hours of paid sick leave to employees for specific COVID-19 reasons, including

• Care for self or family member showing symptoms of COVID-19.
• Care for self or family member exposed to COVID-19 in order to self- isolate.
• Childcare or school closure.
• In order to receive a vaccine or recover from injury, disability or illness related to vaccination.

This paid sick leave must be provided outside of and prior to using the eligible employee’s existing accrued paid time off for certain employees. Covered employers whose existing leave policies provide 160 hours or more of paid time off in 2021 that is not specifically designated as sick leave but can be used for the same purposes under the same conditions as required by this law are not required to provide additional paid sick leave. The Ordinance will remain in effect for the duration of the COVID-19 pandemic.

Eligible employees must be employed for 90 days or more in order to receive this paid sick. The law covers full time employees, part time employees, and union employees. However, this law does not cover seasonal or temp employees, state or federal employees and independent contractors (1099 employees).

If you have any questions, please contact Nancy Abrams at nabrams@sgrvlaw.com or (215) 241-8894.

On April 26, 2021, the Equal Employment Opportunity Commission announced that it is opening the 2019 and 2020 EEO-1 Component 1 Data Collection and issued a July 19, 2021 deadline for filing the Data Collection for both years. Due to the Covid-19 pandemic, on May 8, 2020, the EEOC delayed the opening of the 2019 EEO-1 Component 1 Data Collection.

The EEO-1 Component 1 report is a mandatory annual data collection applicable to all private employers with 100 or more employees and federal contractors with 50 or more employees meeting certain criteria. It requires the submission of demographic workforce data by eligible employers including data by race/ethnicity, sex and job categories.  The 2019 and 2020 EEO-1 Component 1 Reports can be filed through the online form on the EEO-1 Component 1 Online Filing System at EEOCdata.org/eeo1/signin beginning on April 26, 2021 or through the data file upload on the EEO-1 Component 1 Online Filing System at EEOCdata.org/eeo1 beginning May 26, 2021. If you are an eligible employer and have not received a 2019 and 2020 EEO-1 Component 1 notification letter via U.S. mail, you should contact the EEOC’s Filer Support Team at FilerSupport@eeocdata.org for assistance so you can create a user account.

If you have any questions regarding the foregoing, please contact any of the following attorneys in our Employment Law Group: Alan Epstein at aepstein@sgrvlaw.com, Jennifer Chalal at jchalal@sgrvlaw.com or Nancy Abrams nabrams@sgrvlaw.com.

As part of the American Rescue Plan, “small” employers who voluntarily provide paid time off for Covid-related illnesses, quarantine, or childcare, can continue to claim a tax credit equal to the value of the paid time off granted through September 30, 2021. On April 21, President Biden extended the availability of that employer tax credit to paid time off an employer provides to its employees so they can get a COVID-19 vaccine. The tax credit will be funded through the existing American Rescue Plan and may be claimed through the same procedure used for claiming a tax credit for voluntarily provided paid sick leave. Like the prior tax credit provisions, the credit is available to employers with 500 or fewer employees and will remain in effect from April 1, 2021 through September 30, 2021.

If you have any questions, please contact Nancy Abrams at nabrams@sgrvlaw.com or (215) 241-8894.

On March 15,2021, the Third Circuit held that a “stalking horse” bidder in a failed transaction may still be entitled to assert an administrative claim in the bankruptcy notwithstanding the fact that its “termination fee” was disallowed by the Court. In In re Energy Future Holdings Corp., 2021 U.S. App. LEXIS 7400, (3d Cir. 2021), the Debtors opted to terminate a merger agreement with NextEra Energy, Inc. ( “Bidder”) since the Bidder, which was a “stalking horse bidder”, failed to get the required regulatory approvals needed to meet its requirements under a Merger Agreement. The Delaware Bankruptcy Court denied the Bidder’s request for allowance and payment of its $275 million termination fee, which denial was subsequently affirmed by the Third Circuit in 2018. In the Third Circuit opinion, it recognized that the fee could be allowed as an administrative expense per 11U.S.C. Section 503(b)(1)(A) as it would foster competitive bidding in such a transaction.

Thereafter, the Bidder filed an application for allowance of an administrative claim which would allow for Debtor’s payment of all costs it incurred during its attempts to consummate the proposed merger. In this matter, the request for allowance of the administrative claim was for $60 million for such costs. Certain creditors filed a Motion to Dismiss and Motion for Summary Judgement, and the Bankruptcy Court granted both motions resulting in the denial of an allowed administrative claim and finding that the Bidder did not engage in any action to promote competitive bidding, but rather it forced the Debtor to seek other options at far less value. Thus, it found that the Bidder did not meet the standards as required for an allowed administrative clam under the Bankruptcy Code. This ruling was appealed to the District Court where it was affirmed. An appeal was taken to the Third Circuit.

The Third Circuit reversed the denial of the administrative claim and found that there existed a material issue of genuine fact as to the scope of the cost and expense provision in the Merger Agreement, and remanded the matter to District Court to vacate its orders with further remand to Bankruptcy Court. It found that the Merger Agreement itself allowed for recovery of the expenses per 503(b)(1)(A) and was addressed in the Debtor’s Chapter 11 Plan. The Third Circuit found that the Bidder plausibly alleged the requirements under Section 503(b)(1)(A), that the costs were actual, necessary costs and expended to preserve the estate. It further found that the Bidder had to make a showing (upon remand to Bankruptcy Court) that the benefit it provided to the estate exceeded any associated increased costs to the estate, which may include additional interest expenses while various appeals were being pursued.  In doing so, the Third Circuit confirms that there is an alternate remedy for stalking horse bidders to seek reimbursement for out of pocket expenses, notwithstanding the fact that there may be no entitlement to a break-up fee.

Practice Note- A potential purchaser must memorialize, in a merger or similar agreement, its ability to seek an administrative claim in trying to consummate a failed transaction. The flip side to this position is that Debtors may be able to avoid paying any such claim if it specifically puts in the controlling documents that if a termination fee is not allowed, the Bidder is precluded from requesting an administrative claim under Section 503(b)(1)(A).

To discuss this topic or any issues relating to creditors rights and bankruptcy, please contact Leslie Beth Baskin, Esquire at lbaskin@sgrvlaw.com or 215-241-8926.

On March 19, 2021, the Third Circuit, in In Re: Orexigen TherapeuticsInc., No. 20-1136, 2021 WL 1046485 (3d Cir. March 19, 2021) issued a unanimous and precedential opinion adopting the analysis set forth by Bankruptcy Judge Shannon in In Re: SemCrude L.P., 399 B.R. 388 (Bankr. D.Del. 2009) wherein the Court disallowed what is known as “triangular setoffs,” opining that they lack “mutuality” as required by Bankruptcy Code Section 553(a), and therefore are unenforceable. Here, although an issue of first impression in the Third Circuit, this ruling follows most of the other courts that have decided this issue, including three other Circuit Courts.

In this case, the Debtor owed a subsidiary (“Subsidiary”) of one of its creditors $9.1 million. That same creditor (“Creditor”) had owed the Debtor approximately $7 million. The issue to be decided was whether the creditor who had a right under non-bankruptcy law to set-off these amounts, had a right of setoff in the bankruptcy proceeding. This concept is generally known as a “triangular setoff.” Put another way, if the Bankruptcy Court allowed this right of setoff, the Creditor would owe nothing to the Debtor and the Debtor would owe the Subsidiary $2 million.

The Bankruptcy Court found that setoff was improper, opining that Bankruptcy Code Section 553(a)’s requirement of mutuality is immutable.  The District Court affirmed and the ruling was appealed to the Third Circuit. The Third Circuit, adopting the “sound analysis” presented by the Bankruptcy Court, found that the language of the statute imposed a distinct limitation on any exercise of setoff rights to a debtor’s claim against the creditor and that creditor’s claim against the Debtor. It was articulated that Congress intended for “mutuality” to mean only the debts between the same two parties. The concept of “mutuality” does not include anything except for a bilateral arrangement and that the triangular setoffs are not mutual, and that there can be no contractual exception to the mutuality requirement. The Third Circuit stated that allowing anything beyond this scope would fly in the face of a fundamental principle underlying the Bankruptcy Code which, inter alia, tries to maximize all returns to the creditors themselves. They stated that mutuality is literally tied to the identity of a particular creditor that owes an offsetting debt, declaring that this right is personal and that there is no way around the language of Section 553.

Interestingly though, in dicta, the Third Circuit did hint that there are measures which could be adopted by a number of market participants which could include the use of “joint and several” arrangements in tri-party structures.

To discuss this topic or any other issues relating to creditors rights and bankruptcy, please contact Leslie Beth Baskin, Esquire at 215-241-8926 or lbaskin@sgrvlaw.com.

As Covid-19 vaccines become more readily available and more adults become eligible to receive them, places of business are welcoming their employees back into the workplace. At the same time, employers are considering whether or not to require that employees get vaccinated before they return to the workplace, or whether or not to require them to get vaccinated to remain in the workplace.

According to guidance from the Equal Employment Opportunity Commission (“EEOC”), employers may require that employees get vaccinated before returning to or remaining in the workplace, as long as they provide an accommodation for employees who cannot get vaccines because of a disability or a sincerely held religious belief. Employers who wish to impose a vaccine requirement should inform employees of the requirement and should state the documentation required to support a request for an exemption from the requirement. A request for an exemption should be treated as any other request for a reasonable accommodation, and an accommodation should be granted if an alternative to the vaccine is reasonably available, but no accommodation need be granted if no reasonable alternative can be made.

Employers who do require employees to be vaccinated may require that employees provide proof that they have been vaccinated. As vaccinated individuals are routinely provided with a CDC vaccine card, this requirement should not be onerous. The proof of vaccination and any documents supporting a need for an accommodation should be treated as any other documents containing employee health information and should be maintained in a confidential manner.

Many employers are not requiring that their employees get vaccinated, but strongly encourage their employees to get vaccinated and provide an incentive if they do so. This should be considered as an alternative to requiring vaccines.

Family First Act Leave

The mandate in the Families First Coronavirus Response Act (“Families First Act”) requiring employers to provide two weeks’ paid sick leave for employees who tested positive for COVID-19, showed symptoms of COVID-19 or had to quarantine because they were exposed to COVID-19, and up to ten weeks’ paid family leave for employees who had to provide childcare for a child under the age of 18 expired on December 31, 2020. However, employers may still choose to provide the type of paid sick and family leave required under the Families First Act. If they do so, they may still take a credit against any federal payroll taxes for the amount paid to employees for those leaves for wages paid during the period beginning April 1, 2021, and ending on September 30, 2021, in the same manner they took tax credits under the Families First Act.

If you have any questions, please contact Nancy Abrams at nabrams@sgrvlaw.com or (215) 241-8894.

The American Rescue Plan Act of 2021 (“ARPA”), signed by President Biden on March 11, 2021, includes a number of provisions designed to assist workers impacted by the COVID-19 pandemic. Among them is a new COBRA premium subsidy that pays for 100 percent of the applicable COBRA premium for eligible individuals with respect to coverage periods beginning April 1, 2021 and ending Sept. 30, 2021.

Employees are eligible for this assistance if they (1) become COBRA eligible during the Premium Assistance Period, (2) are currently enrolled in COBRA, or (3) are within their COBRA continuation period (generally 18 months) but did not elect or previously dropped COBRA coverage. Employees who were eligible for but did not elect COBRA coverage must do so within 60 days of the date they are notified of their right to subsidized payments. The subsidy only applies to employees (and their beneficiaries) who lose their coverage because of the employee’s involuntary termination or a reduction in the employee’s hours. The subsidy will not be provided to employees who voluntarily terminate their employment or to employees who are not eligible for COBRA because their employment was terminated for gross misconduct.

Written notification regarding the availability of the COBRA premium subsidy must be provided to all employees who are or will be eligible for COBRA coverage on April 1, 2021 within 60 days of April 1, 2021. This notice requirement may be satisfied by amending the employer’s current COBRA notice or by supplementing the current notice with a separate notice, and must include:

• The forms necessary for establishing eligibility for premium assistance;
• The name, address, and telephone number necessary to contact the plan administrator and any other person with relevant information regarding the premium subsidy;
• A description of the special 60-day election period;
• A description of the qualified beneficiaries’ obligation to inform the plan administrator if the qualified beneficiary becomes disqualified from coverage (i.e., gets another job that provides health care coverage);
• A description, displayed in a prominent manner, of a qualified beneficiary’s right to a subsidized premium and any conditions on the beneficiary’s entitlement to the subsidized premium; and
• A description of the qualified beneficiary’s option to enroll in different coverage, if permitted by the employer.

The employer must also provide notification of the expiration of the subsidy period no more than 45 days or less than 15 days before the subsidy period will expire.

Most employers will be reimbursed for the premium subsidy by a new tax credit that applies against the employer’s share of the Medicare hospital insurance tax. The credit is a dollar-for-dollar reimbursement of the qualified employee or beneficiary COBRA premiums that were waived pursuant to the ARPA subsidy. To the extent that the credit amount exceeds the employer’s Medicare hospital insurance payroll tax, the excess amount may be claimed as a tax credit. ARPA also includes a provision indicating that the credit may be advanced, pursuant to forms and instructions to be developed by the IRS.

If you have any questions, please contact Nancy Abrams at nabrams@sgrvlaw.com or (215) 241-8894.

For many businesses, the COVID-19 pandemic has drastically and negatively affected their security due to issues arising from permitting or directing many, if not all, of their employees to work remotely from home or elsewhere to avoid virus transmission.

In this work structure, technology has become more important than ever. Unfortunately, all too often remote activity is not a ‘cyber-safe’ working environment since remote-working individuals do not often enjoy the inherent protections afforded them at their place of business.

Some of the major factors contributing to critical cyber security threats in a remote work environment include:

• Bring Your Own Device (“BYOD”) policies for phones, tablets and laptops. Businesses can meet this issue effectively for employees by instituting Corporate Owned Personally Enabled (“COPE”) policies.
• Human error, prevalent before COVID-19, is greater now as a cyber security issue. Human error can be addressed in many ways including time-outs in key information systems and automated controls.
• Remote-working employees untrained in enhanced cyber security issues.
• Increased activity of cyber criminals targeting less secure remote systems and usage.

What can you do to help your business combat increased, COVID-enhanced cyber security risks? Begin with the importance of risk assessment as a necessary first step in dealing with cyber and COVID-19 exposures.

Your risk assessment must be thorough and comprehensive, price effective and have a rapid turnaround. This is particularly important now with the exposures changing rapidly in scope, kind and numbers.

To be useful to your business, any thorough assessment report must include recommended remediations and check lists. For flexibility, the process yielding a report should be algorithm-based. A full report should be ready for you in a matter of days, not weeks or months.

An effective process will assist underwriters in placing the right coverage and assist claims folks in determining if a claim is covered, all of which will likely save you a lot of time and expense.

An informed and well-crafted process will allow you to make informed decisions as to whether to fix, ignore or transfer given exposures.

If you have any questions regarding the foregoing, please contact Edward M. Dunham Jr. at (215) 241-8802 or edunham@sgrvlaw.com

1. Help sole proprietors, independent contractors, and self-employed individuals receive more financial support.

2. Eliminate the exclusion of small business owners with prior non-fraud felony convictions from PPP eligibility.

3. Eliminate the exclusion of small business owners who are delinquent on their federal student loans from PPP eligibility because the exclusion disproportionately impacts people of color.

4. Ensure access for non-citizen small business owners who are not lawful US residents by clarifying that they may use Individual Taxpayer Identification Numbers (“ITINs”) to apply for a PPP loan.

The Fact Sheet also states that the Administration will take the following steps:

1. Promote transparency and accountability by improving the PPP loan application to encourage self-reporting of demographic data and better illustrate the impact of the PPP across various population segments

2. Improve the Emergency Relief Digital Front Door by updating the SBA websites to help applicants find resources about relief options and completing applications more easily.

3. Continue to conduct extensive stakeholder outreach to learn more about challenges and opportunities with the current emergency relief programs.

4. Enhance the current lender engagement model. The SBA is launching a new initiative to deepen its relationships with lenders and give lenders more opportunity to ask questions, provide recommendations, and help resolve open questions and concerns in a more streamlined way.

Spector Gadon Rosen Vinci P.C. Shareholder and Director George M. Vinci Jr. has been named to the National Law Journal’s inaugural list of Insurance Law Trailblazers. This list honors individuals who have changed the practice of insurance law through the use of innovative legal strategies. The Trailblazer series spotlights professionals who are agents of change in their respective practice areas.

Vinci recently secured a landmark $100 million award against Grant Thornton for its marketing of an abusive tax shelter. He argued the public must be protected, and ultimately, such pervasive fraud must be punished. The ruling sent an important message to help prevent such conduct from ever occurring again, establishing courts in Kentucky will recognize a 4:1 punitive damages ratio.

Vinci is Shareholder and Director of Spector Gadon Rosen Vinci P.C., a Member of the Executive Committee and Chairman of the Insurance and Professional Liability Practice Groups. He focuses his practice on civil litigation with a strong emphasis on professional malpractice, commercial, employment, and insurance coverage disputes.

Vinci is a member of the American Bar Association, the Professional Liability Underwriting Society and DRI. He served for six years as a panel member with the Disciplinary Board of the Supreme Court of Pennsylvania. Vinci has consistently been selected as a Pennsylvania Super Lawyer. In 2019, he was recognized with the Professional Excellence Award from The Legal Intelligencer, the oldest law journal in the United States, in the category of Distinguished Leaders. Mr. Vinci was also a recipient of the Philadelphia Business Journal’s 2019 Best of the Bar Award.

The National Law Journal is an American law journal, daily legal news website and legal analysis content-aggregating database. The organization offers hourly legal news updates and analysis of recent court decisions, regulatory changes and legislative actions and includes a combination of original content and content submitted by various professionals in the legal and business communities.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for nearly 50 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters. The firm has offices in Philadelphia, New Jersey, Florida, and New York.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security and telecommunications.

The firm’s practice areas include high stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.