Latest papers submitted to Bankruptcy Court of Pennsylvania by the Original Directors

For Text version Click Here: Motion #1 Motion #2

Motion #1

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Motion #2

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3 Responses to Latest papers submitted to Bankruptcy Court of Pennsylvania by the Original Directors

  1. goggle says:

    If you goggle Machne Menachem you will find links of court documents (and many more Interesting martial) , from both parties relating to the bankruptcy case (and the camp in general).

    Also, a simple phone call to one of the Original directors will get you more information (in just ten minutes time) then you will ever get from this site (as informative as this site may be).

    You can’t compeer writing or reading to a meeting (or conversation) face to face (Alter Rebbe in his Interdiction to Tanya).

  2. Court says:

    I don’t know all the details of the Machne Menachem case, my post is just a general Halachah I found on line in reference to bankruptcy.
    This is just a general question and answer.

    QUESTION: If a Jewish-owned corporation declares bankruptcy, does the Halachah require the shareholders to pay the suppliers and creditors from their personal funds?

    DISCUSSION: Generally, no. A corporation, by definition, means that the shareholders are not held accountable for the debts of the corporation. The Halachah recognizes this as well,(1) since the suppliers and lenders are aware that they are doing business with a corporation, and that the shareholders are not personally liable. In the atypical case where the suppliers or lenders were unaware that they were doing business with a corporation but were under the mistaken impression that they were lending money or selling goods to a private partnership or to the shareholders as individuals, then the Halachah may be different. A Rav or a Beis Din must be consulted. Another case where the shareholders could be personally liable for the corporation’s debts is if the shareholders abused their trust and illegally deposited company money in their personal accounts. Technically speaking, the money which is in their personal accounts is not “personal” at all; it is still the corporation’s money, and the creditors or suppliers should receive their due. A Rav or a Beis Din must be consulted.(2)

    ——————————
    1. A corporation is similar to the the talmudic concept of apotiki; see Bava Kama 96a.
    2. See Pischei Choshen, Halvahah 7, note 17; Koveitz Meishiv ba-Halachah 10:142.

  3. Court says:

    Bankruptcy in Halacha
    Under present day secular law, individuals or companies, unable to repay their debts, are, under certain conditions, declared bankrupt. Their remaining assets are divided amongst the creditors, in proportion to the amount each is owed. Once certain restrictions have been placed on the bankrupt party there is exemption from future repayment of outstanding debts. How does halacha treat bankruptcy?

    The relevant issues include:

    1) The mitzvah to repay debts
    2) Dina d’malchusa dina (the authority given to secular law by Torah)
    3) Accepted business practices
    4) Settlements
    The Mitzvah to Repay Debts
    The Gemora [1] rules that it is a “mitzvah” to repay one’s debts.

    The Rishonim [2] relate this ruling to various verses in Torah and the Minchas Chinuch [3] finds proof that this is a Torah obligation of biblical force (d’oraiso): one who does not repay his debts transgresses a Torah prohibition.

    The mitzvah, whether it is of Rabbinic or Torah origin, entails that even if one cannot repay now, he is not exempted from repaying in the future. According to this, one who is declared bankrupt is not thereby absolved of his debts.

    Dina d’Malchusa Dina
    The Gemora [4] rules that the “law of the kingdom is law”. Different reasons are given for this. The Rashbam [5] writes that when people live in a country they have willingly taken upon themselves the laws of the King.

    The Rashba [6] – and the Alter Rebbe [7] agrees to his reason – writes that the king owns the land and has the right to deprive of benefit from his land anyone who does not abide by his laws. Accordingly, anyone living on the king’s land and not abiding by his laws, is using the king’s land against his will, which is tantamount to stealing.

    The Poskim state that the laws of present day democracies are also binding according to halacha for the above reasons. There is a difference of opinion, however, as to the extent of the authority given by Torah to secular law.

    The M’chaber [8] states that this authority is limited to those laws directly benefiting the government, such as taxes. According to this, the laws of bankruptcy have no authority as they do not directly benefit the government.

    The Remo [9] argues that this authority extends to any law which benefits the public.

    The Chelkas Ya’acov [10] writes that the rule of dina d’malchusa dina does not extend to the laws of bankruptcy even according to the Remo. They do not benefit the public in that they steal money from creditors by absolving debtors from repaying; and by so doing pose a disincentive to potential lenders. Apart from these considerations, the Shach [11] rules that any secular law which contradicts Torah law has no authority and one cannot apply to it the rule: that “the law of the kingdom is law”. Since the laws of bankruptcy do contradict Torah law (as mentioned above) the laws of bankruptcy will not apply according to halacha.

    Accepted Business Practices
    The Shulchan Aruch [12] states that methods of agreement, which are not mentioned in halacha but are common business practices, such as the handshake, are recognized by halacha.

    The Rashba [13] extends this rule to all monetary matters. The implication of this is that any business transaction is implicitly based on accepted practice, even if not explicitly expressed, for all are taken to have agreed to these practices.

    The Pischei Choshen [14] (written by a contemporary Dayan in Israel) accordingly rules that all company loans are conducted according to the common business practice and so the laws of bankruptcy apply. Private loans, however, are not considered as business transactions, rather as private transactions which are not necessarily based on common business practice. Where, therefore, in individual cases, the lender will not necessarily have these conditions in mind, secular bankruptcy laws would not apply.

    Settlements
    The Shulchan Aruch [15] states that when parties to a dispute come before a Beis Din (Jewish court), the judges should try to bring the parties to a compromise (p’shora). If the parties agree to a compromise and perform an act (kinyan) giving effect to their agreement they are bound by it and cannot retract. A verbal agreement, however, can be retracted by either party.

    The Poskim [16] rule that if the lender and borrower agree to settle according to the secular law of bankruptcy, then this is an halachically binding compromise. Accordingly, if a kinyan is made, both parties are bound by it and the lender cannot subsequently collect the rest of his loan, even if the borrower acquired the means to repay it.

    This would apply also to private loans.

    Conclusion
    The debtor can be absolved of his loans through the law of bankruptcy in one of two ways:

    1) Where the loan was between companies (in which case business practices – including the law of bankruptcy – are presumed implicitly to underlie the transaction and are given authority by halacha);
    2) If the lender agrees to settle according to the laws of bankruptcy and backs it up with an act of kinyan.

    ————————————————-

    [1] Ketuboth 86a
    [2] see Rashi there; Ramban Baba Batra 174a; Responsa Radvaz Vol2:610
    [3] Mitzvah 259
    [4] Gittin 10b; Nedarim 28a; Baba Batra 54b
    [5] Baba Batra 54b
    [6] Nedarim 28a
    [7] Laws of Stealing, Ch 15
    [8] Choshen Mishpat, Ch 68:1
    [9] ibid 9
    [10] Responsa, Choshen Mishpat 32
    [11] Choshen Mishpat, Ch 73:36,39
    [12] Choshen Mishpat, Ch 201
    [13] Responsa, Vol 2:268
    [14] Laws of Lending, Ch 12
    [15] Choshen Mishpat, Ch 12
    [16] see responsa Avnei Tzedek Choshen Mishpat 2; Minchas Elazar Vol 3:31; B’tzail Hachochma Vol 3:123

    ————————————-
    [The above is not intended to decide halachic questions, but rather to clarify them in a clear and concise form. Please refer all your practical questions to your local Rabbi].

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