The Bankruptcy Law Firm, Prof. Corp.
RS Air LLC v. NetJets Aviation Inc. 9th Circ BAP
An Alter Ego Suit Doesn’t Violate the Discharge Injunction, BAP Says At least where nondebtor releases are prohibited, and if Delaware law controls, a suit against an alter ego doesn’t violate the discharge injunction, the Ninth Circuit BAP says. At least when Delaware law controls, suing an alter ego does not violate the discharge injunction protecting a corporate debtor, according to the Ninth Circuit Bankruptcy Appellate Panel. The corporate debtor owned a partial interest in aircraft. The corporation filed a petition under Subchapter V of chapter 11. The entity that sold the aircraft to the corporate debtor had a claim…
Evans v. McCallister (In re Evans), ___F.4th___, 2023 WL 3939837(9th Cir. June 12, 2023)
In an issue that has caused a split in the bankruptcy courts, the Ninth Circuit Court of Appeals held that a Chapter 13 Trustee is not entitled to its percentage fee of plan payments as compensation in a Chapter 13 when a plan is not confirmed. The Ninth Circuit joined the Tenth Circuit as the only federal court of appeals that has addressed this issue. See Goodman v. Doll (In re Doll), 57 F.4th 1129 (10th Cir. 2023). This issue is also currently pending in the Second and Seventh Circuit Court of Appeals. SeeSoussis v. Macco, 20-05673, 2022 WL 203751…
In re Purdue Pharma, 2023 WL 3700458, ___F.4th___(2nd Cir. 5/30/23)
In re Purdue Pharma, 2023 WL 3700458, ___F.4th___(2nd Cir. 5/30/23): Second Circuit US Court of Appeals approves Chapter 11 plan in the Purdue Pharma bankruptcy case, which grants releases to non-debtors (the Sackler family, equity holders of bankruptcy debtor Purdue Pharma, which contributed 6 BILLION dollars to fund debtor Purdue Pharma’s Chapter 11 plan. The Second Circuit US Circuit Court reversed the District Court (which had refused to allow the non-debtor releases, which creditors of Purdue Pharma had not consented to. The Second circuit held that nonconsensual third-party releases of such direct claims are statutorily permitted under 11 U.S.C. §§…
Debt Owed by America’s Consumers Hits New Record Of More Than $17 Trillion
As Americans dealt with high inflation and recession fears, they also faced record debt, according to the latest data by the New York Fed. Total household debt increased to $17.05 trillion in the first quarter of 2023, the NY Fed reported. That marked an increase of $148 billion quarter-over-quarter. Overall, America’s debt balance now stands about $2.9 trillion above where it was at the close of 2019, right before the COVID-19 recession. Credit card balances remained flat at $986 billion, the NY Fed said. Nonetheless, credit card debt remains at record highs, according to the Consumer Financial Protection Bureau (CFPB).…
Texxon Petrochemicals LLC v. Getty Leasing Inc. (In re Texxon Petrochemicals LLC), ___F.4th___ (5th Cir. May 3, 2023), appeal 22-40537
US 5th Circuit Court of Appeals holds, in an appeal in a bankruptcy case, that federal appellate Courts May Bypass Equitable Mootness to Rule on the Merits Even if an appeal is equitably moot, the appellate court nonetheless has appellate jurisdiction. Equitable mootness is prudential, not jurisdictional. When equitable mootness is a close question on appeal, the Fifth Circuit has ruled that an appellate court can bypass a motion to dismiss for equitable mootness and address the appeal on the merits. Why is that so? Because an appellate court does not lack constitutional or Article III jurisdiction, even if the…
Student Loans Didn’t Qualify as Commercial Debt for Sub V Eligibility
To be eligible to file a “SubV” Chapter 11 bankruptcy case, that “not less than 50% of the total debt” of the debtor must be “business debt”. But what constitutes “business debt”? In re Reis, – BR – (Bankruptcy Court, D. Idaho 5/2/23) discusses that question, and ruled two things: The business debt necessary to qualify for Subchapter V need not to have arisen from the debtor’s business at the time of filing, Bankruptcy Judge Meier says. Debtor’s student loan debt did NOT constitute business debt. Educational loans obtained to earn a professional degree will not qualify as arising from…
IRS Plans To Resume Collection Notices
As of April 29, 2023, the IRS said it had 3.8 million unprocessed individual returns. These include tax year 2022 returns, 2021 returns that need review or correction, and late filed prior-year returns. Of these, 2.4 million returns require special handling such as correcting errors. The agency has another 1.4 million paper returns to review and process. It takes the IRS over 21 days to issue a refund in these cases because they require special handling although an employee typically does not have to contact the taxpayer, the agency said. The General Accounting Office said in a report issued in…
US Supreme Court 4/19/23 decision
US Supreme Court 4/19/23 decision, in MOAC Mall Holdings LLC v. Transform Holdco LLC, ___ US ___, 2023 WL 2992693, at ∗1 (U.S. Apr. 19, 2023) holds that Bankruptcy Code section 11 U.S.C. § 363(m) is not jurisdictional, reversing the Second Circuit Court of Appeals and resolving a Circuit split over whether section § 363(m) limits appellate jurisdiction over § 363 sale orders or instead just limits the appellant’s remedies on appeal in the event there is a sale or lease to a good-faith purchaser or lessee. 11 USC 363(m) is the bankruptcy code section where the bankruptcy court makes…
CashCall, Inc. loses in 9th Circuit Court of Appeals decision
After years of litigation, lender “CashCall, Inc.” loses in 9th Circuit Court of Appeals decision, in case where Consumer Financial Protection Bureau (“CFPB”) wins, with result CashCall is Fined $167 Million For CFPA Violations [as reported in Credit & Collection e-newsletter of 4/13/23] This litigation between CFPB and CashCall, Inc. goes back to 2016, when a US District Court, Central District of California, granted judgment in favor of the Consumer Financial Protection Bureau (CFPB) in its long-running challenge to CashCall, Inc.’s tribal-lending operation. Specifically, the court found that CashCall engaged in unfair, deceptive, and abusive acts or practices in violation…
Credit & Collection e-newsletter reports that all sides could be losers in the litigation about the legality/lack of legality of how the federal agency, the Consumer Protection Financial Bureau (“CFPB”) is funded
The Consumer Financial Protection Bureau (CFPB) is at a crossroads. Rather than live up to its “independent” promise, the agency has been nothing short of a political football. There is plenty of blame to go around on both sides of the CFPB battle, but the legal maneuvering and the race to the Supreme Court is not the solution. Rather, now is the time for Congress to act like adults and find the remedy for the CFPB that will allow the agency to be true to its mission of protecting consumers while at the same time ensuring a robust and compliant…