Cannabis and a bankruptcy decision I

There is some ongoing judicial indecision about the relationship between Schedule I and Chapter 7.

Schedule I of course is the list of substances considered by the U.S. government to have no approved medical use.

Chapter 7 is the liquidation chapter of the bankruptcy law. It generally requires that a trustee be appointed, and the truistee liquidate the assets of the defaulted company.

Consider what may happen if a state-legal marijuana company becomes insolvent. The owner/manager may file chapter 11 hoping for reorganization. Some of the creditors, looking for a better deal from liquidation, may petition to court for a chapter 7 conversion.

But tah entails that the liquidating trustee, acting under the authority of a federal court, is going to get into the business of selling (liquidating) to inventory of a company in the business of selling a schedule 1 drug.

This has seemed to some courts TOO paradoxical. The bankruptcy system after all is a federal not a state system, and the state-declared legality of these businesses in much of the company doesn't change this.

Ironically, the management of marginal cannabis companies stand to benefit from this indecision. Because the Chapter 7 remedy, on one reading of the situation, is not available, the creditors are in essence stuck with going along with a chapter 11 reorganization.

It doesn't always work out that way though. Consider In re Roberts (Bankr. D. Colo. September 23, 2022). In this case the Bankruptcy Court of the District of Colorado found that a debtor’s alleged ownership interest in cannabis-related companies neither compels a dismissal of the case nor prohibits a chapter 7 trustee from administering the debtor’s assets. Here is a link to extensive write-up of the case on the website of Duane Morris.

I expect to say something more about this general subject next week.

Comments

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge. We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a majesti

Five Lessons from the Allegory of the Cave

Please correct me if there are others. But it seems to be there are five lessons the reader is meant to draw from the story about the cave. First, Plato is working to devalue what we would call empiricism. He is saying that keeping track of the shadows on the cave wall, trying to make sense of what you see there, will NOT get you to wisdom. Second, Plato is contending that reality comes in levels. The shadows on the wall are illusions. The solid objects being passed around behind my back are more real than their shadows are. BUT … the world outside the the cave is more real than that — and the sun by which that world is illuminated is the top of the hierarchy. So there isn’t a binary choice of real/unreal. There are levels. Third, he equates realness with knowability. I only have opinions about the shadows. Could I turn around, I could have at least the glimmerings of knowledge. Could I get outside the cave, I would really Know. Fourth, the parable assigns a task to philosophers

Searle: The Chinese Room

John Searle has become the object of accusations of improper conduct. These accusations even have some people in the world of academic philosophy saying that instructors in that world should try to avoid teaching Searle's views. That is an odd contention, and has given rise to heated exchanges in certain corners of the blogosphere. At Leiter Reports, I encountered a comment from someone describing himself as "grad student drop out." GSDO said: " This is a side question (and not at all an attempt to answer the question BL posed): How important is John Searle's work? Are people still working on speech act theory or is that just another dead end in the history of 20th century philosophy? My impression is that his reputation is somewhat inflated from all of his speaking engagements and NYRoB reviews. The Chinese room argument is a classic, but is there much more to his work than that?" I took it upon myself to answer that on LR. But here I'll tak

Jamesian Philosophy Refreshed

Search This Blog