Shumaker Manufacturing

A Legal & Industry Review


Justice Department Issues Memo on Marijuana Enforcement

On January 4, 2018, the Department of Justice published a memorandum authored by Attorney General, Jeff Sessions, which rescinds previous guidance issued by the Department of Justice regarding marijuana prosecutions, and directs that “[i]n deciding which marijuana activities to prosecute under these laws with the Department’s finite resources, prosecutors should follow the well-established principles that govern all federal prosecutions.”  Notably, the memorandum expressly rescinds the August 29, 2013, Department of Justice Memorandum authored by former United States Attorney General, James M. Cole, commonly referred to as the “Cole Memorandum.”  The Cole Memorandum directed federal prosecutors to generally refrain from prosecuting those in the marijuana field who were complying with state law.  Continue reading


Shorter Deadline for Filing Bankruptcy Claims and Other Changes to Bankruptcy Rules Starting December 1st

Creditors need to know of significant changes about to occur to the Federal Rules of Bankruptcy Procedure (“Bankruptcy Rules”). On December 1, 2017, certain amendments to the Bankruptcy Rules will become effective. This article discusses two of the changes: 1) the period for filing proofs of claim is being shortened, and 2) secured creditors must timely file a claim to receive a distribution. Continue reading


“New Partnership Audit Regime: Opt-Out, Push-Out, or Pay-Up?”

On November 2, 2015, Congress passed the Bipartisan Budget Act of 2015 (BBA),¹ which enacted a new centralized audit regime (regime) that applies to all entities taxed as a partnership for taxable years starting after December 31, 2017. The most important feature of the regime is that it refocuses all audit activities on the partnership itself instead of the partners, including requiring assessments of tax deficiencies and collections at the entity level. The BBA identified several issues for which the Treasury Department and Internal Revenue Service (IRS) were to promulgate regulations to carry out the statutory objectives. This was a significant undertaking for Treasury and IRS, as the BBA flipped partnership taxation from a “flow-thru” construct to one in which the partnership would be primarily liable for any additional income tax due after audit. The congressional goal was to reduce the administrative burdens placed on IRS for audits of partnerships, and move that burden to the partnerships themselves.² Continue reading


AT&T – Time Warner Merger Challenge Might Signal Policy Change on Vertical Mergers

The Department of Justice (“DOJ”) recently sued to block AT&T’s $85.4 billion bid for Time Warner, stating that such a merger would harm consumers by weakening competition.  The lawsuit signals a policy change that “vertical mergers” will be more heavily scrutinized by U.S. regulators going forward.  Businesses should therefore consider this development when merging with or purchasing another business. Continue reading


“Bankruptcy Law Update: Preferences and Selected Bankruptcy Issues”

Preference Claims:
Elements:  A preference is a transfer of property of a bankruptcy debtor that (1) was to or for the benefit of a creditor; (2) was on account of an antecedent debt; (3) was made while the debtor was insolvent; (4) was made within 90 days of the filing of the bankruptcy petition; and (5) allowed the creditor to receive more than the creditor would receive if the payment had not been made but the creditor receives what it would receive in a liquidation of the debtor.  These elements are almost always (but not absolutely always) met, but there are several defenses available:  subsequent new value, ordinary course of business (either between the parties or in the industry), contemporaneous exchange for new value, and others.

Important consideration!:  The most important rule to remember is to never, ever pay a preference demand without first performing a detailed analysis of the defenses.  The application of each defense is highly technical, and the interplay of the defenses is complicated.  This analysis needs to be done by bankruptcy counsel.  Bankruptcy debtors or trustees, when making demand for payment of a preference, frequently offer a discount of around 20% to settle.  Never accept this offer.  These claims can often be resolved for no payment or for a payment under 10% of the demand amount, but the analysis and outcome of each situation is highly fact specific. Continue reading