The Bankruptcy Law Firm, Prof. Corp.
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,…
Kirkland v. U.S. Bankruptcy Court (In re Kirkland), ___F.4th___ (9th Cir. July 27, 2023), appeal 22-70092
Kirkland v. U.S. Bankruptcy Court (In re Kirkland), ___F.4th___ (9th Cir. July 27, 2023), appeal 22-70092: Ninth Circuit Court of Appeals holds that Trial Subpoenas Can’t Compel Zoom Testimony of a witness subpoenaed to testify, where the Court is located more than 100 Miles Away from where the witness is located. Comment of attorney KPMarch, Esq: Rules should be updated to allow this The court’s ability to compel trial testimony by video doesn’t eradicate the 100-mile limitation on issuance of trial subpoenas. The Ninth Circuit used a bankruptcy case to grant a writ of mandamus and quash a subpoena that…
East Coast Foods Inc. v. Development Specialists Inc. (East Coast Foods Inc.), ___BR___ 23-1034 (B.A.P. 9th Cir. July 19, 2023): BAP holds 28 USC 959(a) Isn’t an Exception to the Barton Doctrine
28 USC 959(a) doesn’t permit suing a trustee for breach of fiduciary duty outside of bankruptcy court. A nonprecedential opinion by the Ninth Circuit Bankruptcy Appellate Panel explains that 28 U.S.C. § 959(a) doesn’t mean what its words seem to say. The section says: Trustees, receivers or managers of any property, including debtors in possession, may be sued, without leave of the court appointing them, with respect to any of their acts or transactions in carrying on business connected with such property. A chapter 11 trustee retained a management consultant to operate the business. Allegedly, the consultant didn’t disclose that…
Washington v. Kijakazai, ___F4th ___ (9th Cir. July 3, 2023), case 22-35320
Washington v. Kijakazai, ___F4th ___ (9th Cir. July 3, 2023), case 22-35320: Ninth Circuit Court of Appeals holds that a Pro Se (not represented by attorney) Litigant consented to magistrate judge hearing and deciding litigant’s case (there a social security case), by litigant not timely objecting to magistrate judge hearing and eciding litigant’s case. Expect that this “did parties consent to non-article III judge hearing and finally deciding case” issue will be applied in bankruptcy adversary proceedings—such as fraudulent transfer adversary proceedings–where bankruptcy judges (who, like magistrate judges–which are Article I judges, not Article III judges–lack jurisdiction to issue a…
In re MacMillan, ___BR___, case23-30159 (Bankr. D. Ore. June 29, 2023)
A bankruptcy judge in Oregon points out that the Ninth Circuit Court of Appeals does NOT allow bankruptcy judges to grant so-called “critical vendor” Motions, though bankruptcy judges in other parts of the US (that are NOT in the Ninth Circuit) grant critical vendor motions. A decision by Bankruptcy Judge Teresa H. Pearson of Portland, Ore., reminds us that so-called critical vendor orders are not permitted in the Ninth Circuit, even when payment of a prepetition claim is critical. Judge Pearson was bound by Ninth Circuit authority from 1983, even though critical vendor orders are de rigueur in other circuits.…
U.S. v. Miller, ___F.4th___ 21-4135 (10th Cir. June 27, 2023), appeal 21-4135
U.S. v. Miller, ___F.4th___ 21-4135 (10th Cir. June 27, 2023), appeal 21-4135: US Tenth Circuit Court of Appeal holds that IRS Has No Sovereign Immunity to Bar a Fraudulent Transfer Suit Under Section 544(b). Therefore, a bankruptcy trustee can sue the IRS to seek to recover a fraudulent transfer from the IRS, that was made to the IRS by a person or entity who/which later files bankruptcy. The circuits are now split 3 Circuits, to 1 Circuit, with the majority finding a waiver of sovereign immunity under Section 544(b)(1) for lawsuits by a trustee based on claims that an actual…
Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin
In Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, case 22-227, the U.S. Supreme Court, on 6/15/23, held that Native American tribes’ sovereign immunity does not shield them from suits brought by debtors who declare bankruptcy, finding the question of whether the U.S. Bankruptcy Code abrogates tribal immunity “remarkably straightforward.”
Bledsoe v. Cook, 22-1328 (4th Cir. June 14, 2023): appeal direct to Circuit, published decision, appeal No. 22-1328
Bledsoe v. Cook, 22-1328 (4th Cir. June 14, 2023): appeal direct to Circuit, published decision, appeal No. 22-1328: holds Chapter 13 Debtors May Deduct their Actual Mortgage Expenses to Arrive at Disposable Income, in calculating their “disposable monthly income” that is to be paid monthly to fund Chapter 13 plan The Fourth Circuit agreed with the Sixth and Ninth Circuits by allowing chapter 13 debtors to deduct their actual mortgage expenses, not limited by the local standard mortgage deduction. The chapter 13 debtors’ monthly mortgage payment was $1,100 more than the local standard mortgage deduction. Abjuring a split of circuits,…