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In re Trinity Legacy Consortium LLC,___BR___ (Bankr. D.N.M. Sept. 25, 2023), case # 22-10973
The Standard for Enlarging the Time to File a Subchapter V Plan Judge Jacobvitz of New Mexico follows Judge Harner of Maryland in developing a standard for deciding whether a Subchapter V debtor may extend the time for filing a plan. In the form of an opinion, Bankruptcy Judge Robert H. Jacobvitz of Albuquerque, N.M., wrote a treatise identifying the best definition of Section 1189(b), which requires a debtor in Subchapter V of chapter 11 to file a plan within 90 days of filing, but allows the court to “extend the period if the need for the extension is attributable…
In re Boteilho Hawaii Enterprises, Inc., ___BR___ (Bankr. D. Hawaii 10/24/23): Bankruptcy Judge decision explains why a hypothetical chapter 7 sale isn’t necessarily ‘FMV’
A chapter 7 trustee’s obligation to sell can mean that chapter 7 prices don’t fit the ordinary definition of fair market value. An opinion by Bankruptcy Judge Robert J. Faris explains why the valuation of a debtor’s assets in a chapter 11 cramdown can be lower than “fair market value” in an ordinary appraisal, because a hypothetical chapter 7 trustee is typically compelled to sell expeditiously without the luxury of operating the business. Sitting in Honolulu, Judge Faris composed a template for someone writing a cramdown opinion where the focus is valuation. Judge Faris also sits on the Ninth Circuit…
In re Litton,___BR___ 23-10189 (Bankr. W.D. La. Sept. 18, 2023)
In re Litton,___BR___ 23-10189 (Bankr. W.D. La. Sept. 18, 2023): holds nonpurchase money debt service on a car is NOT a deductible ‘ownership of vehicle’ cost in ‘13’, which debtor can deduct in determining debtor’s monthly disposable income which debtor must generally pay into chapter 13 plan, each month, to fund chapter 13 plan Courts aren’t fully in agreement, but most hold that non-purchase money debt service on a car isn’t an ‘ownership cost’ deducted from current monthly income to arrive at disposable income in chapter 13. On a question where the courts are divided, Bankruptcy Judge John S. Hodge…
Auto Loans Pass Student Loans in Consumer Debt Load, Fed Data Shows
Auto loans have moved past student loans this year as the second-largest debt burden for consumers, at $1.582 trillion compared with $1.569 trillion for student loans, according to Federal Reserve Bank of New York data, WSJ Pro Bankruptcy reported. At $12 trillion, mortgages are the largest debt for consumers. Consumers had owed more in student loans than auto loans since early 2010, when a surge of college students, some of whom lost jobs in the financial crisis and sought education and new training, led to big student loan borrowing. But the U.S. government froze payments and interest on federal student…
Americans’ Credit Card Balances Hit New Peak
Credit & Collection e-newsletter of 8/28/23 reports that Americans’ credit card balances rose briskly in the second quarter of 2023, hitting a sobering milestone of more than $1 trillion, the Federal Reserve Bank of New York reported this month. Credit cards are the most prevalent type of household debt, New York Fed researchers wrote in a blog post, and saw the biggest increase of all debt types. More than two-thirds of Americans had a credit card in the second quarter, up from 59% roughly a decade earlier, the researchers found. And, they noted, card balances were more than 16% higher…
In re Elassal, ___BR___, 2023 WL 5537061 (Bankr. E.D. Mich. Aug. 28, 2023)
This new bankruptcy court decision notes that cases use 5 different procedures (with differing outcomes) regarding who gets to keep the money (above money to pay of liens on house) when a chapter 13 debtor sells the debtor’s house, in chapter 13, after the bankruptcy court has confirmed (approved) debtor’s chapter 13 plan, and the confirmed chapter 13 plan provides debtor keeps the house. When, post-confirmation, a chapter 13 debtor sells his or her home, who gets the benefit of the appreciation: the debtor, or his or her creditors? Judge Randon in Michigan adopted the so-called “estate replenishment approach” and…
Credit Card And Car Loan Delinquencies Surpass Pre-Pandemic Levels
Credit & Collection e-newsletter of 8/15/23 reports that Credit Card And Car Loan Delinquencies Surpass Pre-Pandemic Levels More Americans are falling behind on their credit card payments. Driving the news: The rate of new credit card delinquencies has surpassed its pre-COVID level, clocking in at 7.2% in the second quarter, per a report out this month from the New York Fed. Auto loan delinquencies were at 7.3% in Q2, also higher than pre-pandemic levels. Meanwhile, mortgage delinquencies remain very low. Why it matters: Even as inflation declines, Americans are increasingly relying on credit cards to make their budgets work —…
On 8/10/23 the U.S. Supreme Court announced it will review confirmation of the Purdue Pharma LP chapter 11 plan and decide
“Whether the Bankruptcy Code authorizes a court to approve, as part of a plan of reorganization under Chapter 11 of the Bankruptcy Code, a release that extinguishes claims held by nondebtors against nondebtor third parties, without the claimants’ consent.” This issue does not only affect the Purdue Pharma Ch11 plan, where the non-debtor Sackler family members received non-consensual releases in exchange for contributing several billion dollars to fund the Purdue Pharma Ch11 plan. Cases where a subsidiary is created and the subsidiary files bankruptcy (like J&J, which twice set up, and had a subsidiary file bankruptcy, to seek to discharge…
Castleman v. Burman (In re Castleman), ___F.4th ___ (9th Cir. July 28, 2023), appeal #22-35604
Castleman v. Burman (In re Castleman), ___F.4th ___ (9th Cir. July 28, 2023), appeal #22-35604: Splitting with the Tenth Circuit, the Ninth Circuit holds that chapter 13 debtors lose post-petition appreciation in a home if the case converts to chapter 7. Such “Circuit splits” usually eventually get decided by the US Supreme Court. Splitting with the Tenth Circuit, a divided panel on the Ninth Circuit held that the post-petition appreciation in the value of a home belongs to creditors when a chapter 13 debtor converts the case to chapter 7. The dissenter on the Ninth Circuit said that the majority…
Castleman v. Burman (In re Castleman), 75 F. 4th 1052 (9th Cir. Court of Appeals, July 28, 2023)
The Ninth Circuit Court of Appeals (Ninth Circuit) recently held that post-petition, pre-conversion appreciation in value of an asset belongs to the chapter 7 bankruptcy estate, not the debtors, following conversion from chapter 13 in good faith. As the lengthy dissent pointed out, this ruling created a circuit split with a decision from the Tenth Circuit, Rodriguez c. Barrera (In re Barrera), 22 F. 4th 1217 (10th Cir. 20220. Barrera holds that when a ch13 bankruptcy case is converted to chapter 7, it is the chapter 7 bankruptcy estate (trustee) that gets any appreciation in assets, such as real property,…