News
Held: Late-Filed State Tax Return as Invalid
HELD: LATE-FILED STATE TAX RETURN AS INVALID; and because late-filed tax return was invalid, the taxes were not dischargeable, by debtor, in debtor’s bankruptcy case Kline v. Internal Revenue Service and Arkansas Department of Finance & Administration, 581 B.R. 597 (Bankr. W.D. Ark., 2018) In this case what has become known as the “McCoy rule” rearsits head again, and, like McCoy, it involves state income taxes, in particular taxes assessed by the Arkansas Department of Finance and Administration. The debtor filed his state tax returns years after they were due. The State challenged the dischargeability of the liabilities because the…
Supreme Court Approves Amendments to Bankruptcy Rules
Supreme Court Approves Amendments to Bankruptcy Rules; Those Amendments will go into effect on 12/1/18, unless (very unlikely to happen) the US Congress disapproves those Amendments. The U.S. Supreme Court earlier this year approved amendments to the Federal Rules of Bankruptcy Procedure that are expected to become effective on December 1, 2018. Many of the amendments are technical and are intended to conform the Bankruptcy Rules to recently amended rules of appellate and civil procedure. Bankruptcy Rules affected by the amendments include Rules 3002.1, 5005, 7004, 7062, 8002, 8006, 8007, 8010, 8011, 8013, 8015, 8016, 8017, 8021, 8022, 9025, and…
Cresta Technology Corporation
What date controls when a check is delivered before the debtor files bankruptcy, but is not cashed (honored) until after the debtor files bankruptcy: In In re Cresta Technology Corporation, 583 B.R. 224 (9th Cir. BAP 2018) the Bankruptcy Appellate Panel of the Ninth Circuit found, among other things, that a bankruptcy court did not err in finding that a check delivered pre-petition, but honored postpetition, constituted an unauthorized postpetition transfer recoverable by a chapter 7 trustee pursuant to 11 § USC 549. On March 16, 2016, appellant Matthew Lewis (“Appellant”), in his role as Chief Financial Officer (“CFO”) of…
Courts Split on Denying a Chapter 13 Discharge for Failure to Make Direct Payments
Bankruptcy Judges are Split on Whether or Not a Chapter 13 debtor should be denied a Chapter 13 discharge for debtor failing to pay mortgage/DOT payments that are to be paid direct to the secured lender, even though debtor has paid all the payments that were required to be paid through the debtor’s confirmed Chapter 13 plan. Issue is whether the “direct pay” payments are payments owed “under the chapter 13 plan” or not. Two bankruptcy judge decisions from Illinois illustrate the split among bankruptcy judges on whether or not a chapter 13 debtor who fails to make all direct…
Ninth and Fourth Circuits Issue Important Rulings on Sanctions and Exemptions
Ninth Circuit opinion is prime for Supreme Court review regarding the extent of a bankruptcy court’s contempt powers. The Ninth Circuit refused to rehear an appeal, setting up an opportunity for the Supreme Court to decide whether bankruptcy judges have constitutional power to impose sanctions as robust as Article III judges. Meanwhile, the Fourth Circuit aligned itself with the Fifth by holding that events after a chapter 7 filing cannot undermine a homestead exemption. In the Ninth Circuit case, a debtor defied a turnover order by refusing to cough up $1.4 million belonging to the estate. The bankruptcy judge imposed…
Split Among Us Circuit Courts Involving Licensees of a Trademarks
Split among US Circuit Courts of 4th, 7th, 1st Circuit, and maybe 3rd Circuit, as to whether or not the licensee of a trademark has a right to keep using the trademark, when the licensor of the trademark files bankruptcy, and rejects the trademark license contract, pursuant to 11 USC 365. Compare: Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F2d 1043 (4th Cir. 1985) (debtor’s rejection of trademark licenses stops non-debtor licensee from continuing to use trademark); In re Sunbeam Products, Inv. v. Chicago American Manufacturing, LLC, 686 F.3d 372 (7th Cir. 2012) (rejection does NOT stop trademark…
Eleventh Circuit Joins Ninth in Allowing Appellate Counsel Fees for a Stay Violation
12/5/17 decision by Eleventh Circuit US Court of Appeals agreed with Ninth Circuit 2015 decision, in In re Schwartz-Tallard, 803 F.3d 1095 (9th Cir. 2015) (en banc), in which the Ninth Circuit US Court of Appeals held that a debtor is entitled to recovery of attorneys’ fees incurred in upholding a judgment for violation of the automatic stay, siding with the Ninth Circuit’s decision. The Dec. 5 opinion for the Eleventh Circuit by District Judge Leigh Martin May, sitting by designation, held that the debtor could recover counsel fees for pursuing a monetary award and appellate counsel fees resulting from…
US Supreme Court Might Grant ‘Petition for Certiorari’ to Hear and Resolve a Split between US Circuit Courts on Dischargeability
The US Supreme Court will decide whether a false oral statement about one asset is grounds for denial of discharge of a debt, IF the justices take the advice of the U.S. Solicitor General and grant certiorari to the Eleventh Circuit in Lamar Archer & Cofrin LLP v. Appling, 16-1215 (Sup. Ct.). The courts of appeals are evenly split, with the Eleventh and Fourth Circuits holding that a false oral statement about one asset is a statement of “financial condition” that must be in writing to result in denial of discharge of a debt under Section 523(a)(2). The Fifth and…
Anti-Suit Injunction Protecting Non-Settling Defendant
US Circuit Court for the Eleventh Circuit holds that Bankruptcy Court has jurisdiction and statutory power to grant an Anti-Suit Injunction Protecting Non-Settling Defendant. The bankruptcy court has both the jurisdiction and statutory power to impose an anti-suit injunction protecting a non-settling defendant from claims by third-party nondebtors, even if the injunction was not part of the parties’ settlement, according to the Eleventh Circuit. Evidently, however, the question was not raised concerning the bankruptcy court’s constitutional power to enter a final order imposing an injunction having the effect of a third-party release. The maddeningly complex procedural history resulted from several…
BREAKING: 9th Circ. Says FCRA Claims Meet Standing Bar In Spokeo Row
The Ninth Circuit ruled on 8/15/17 that a man who accuses Spokeo of violating the Fair Credit Reporting Act by allegedly reporting inaccurate information about him had claimed a sufficiently concrete injury to meet the Article III standing bar established by the U.S. Supreme Court in the dispute last year.