Is a Bankruptcy Plan that Violates Federal Criminal Law Proposed in Bad Faith?

By: Ben Reeves

Although legal in many states, marijuana remains illegal under federal criminal law. See 21 U.S.C. § 856(a)(1). One would think that engaging in illegal activity under federal criminal law would preclude relief under federal bankruptcy law. And, in fact, several bankruptcy courts have reached that exact conclusion. See, e.g., In re Rent-Rite Super Kegs West, Ltd., 484 B.R. 799 (Bankr. D. Colo. 2012) (“[A] federal court cannot be asked to enforce the protections of the Bankruptcy Code in aid of a Debtor whose activities constitute a continuing federal crime.”). That bright-line rule, however, may now be subject to some debate.… Read More »

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