The Bankruptcy Law Firm, Prof. Corp.
Ryan v. Branko Prpa MD, LLC, 55 F.4th 1108 (7th Cir. 2022)
Ryan v. Branko Prpa MD, LLC, 55 F.4th 1108 (7th Cir. 2022): The US Seventh Circuit Court of Appeals (the Court) recently held that an order, which arose from a workers’ compensation action, directing a debtor’s employer to deposit funds in debtor’s lawyer’s trust account for payments to medical creditors created an express trust such that the funds were excluded from the debtor’s chapter 7 bankruptcy estate and he was not entitled to claim an exemption in them. FACTS Debtor Rodney Ryan (Ryan) was injured on the job and sought worker’s compensation in Wisconsin for his injuries. He settled the…
American Bankruptcy Institute 3/21/23 e-article reports that Anxiety Strikes $8 Trillion Mortgage-Debt Market After Silicon Valley Bank (“SVB”) Collapse Last Week
Strains in the banking sector are roiling a roughly $8 trillion bond market considered almost as safe as U.S. government bonds, the Wall Street Journal reported. So-called agency mortgage bonds are widely held by banks, insurers and bond funds because they are backed by the mortgage loans from government-owned lenders Fannie Mae and Freddie Mac. The bonds are far less likely to default than most debt and are easy to buy and sell quickly, a crucial reason they were Silicon Valley Bank’s biggest investment before it foundered. But agency mortgage-backed securities, like all long-term bonds, are vulnerable to rising interest…
Summerlin v. Turnage, a 3/14/23 USDC, WDNC, District Court decision in a bky appeal, in which US District Ct affirms refusal of Bky Judge to allow a (nasty) trustee tactic, by which Trustee sought, by a deal with a junior secured lender, to achieve a sale of debtor’s home, but Eradicate debtor’s Homestead Exemption
District Court decision holds that subordinated lenders can’t take a ‘haircut,’ give a ‘tip’ to the trustee, sell a home and eradicate the debtor’s homestead exemption. Employing the most vituperative language employed so far to nix the strategy, a district judge in North Carolina affirmed Bankruptcy Judge Laura T. Beyer, who had barred secured creditors from taking haircuts so the trustee could pay his commission and make a small distribution to general creditors while cheating the debtor out of her homestead exemption. In his March 13 opinion, Statesville, N.C.’s District Judge Kenneth D. Bell called the proposal a “backroom deal,”…
Harrington v. Mayer (In re Mayer), 20-56340 (9th Cir. Ct of Appeals, issued March 8, 2022), and Harrington v. Mayer (In re Mayer), 20-56340 (9th Cir. Ct. of Appeals, issued March 8, 2022)
Denial of Stay Modification Without Prejudice Can Be Final, Ninth Circuit Says In a 3/8/22 decision, the Ninth Circuit Court of Appeals answered a question left open by the Supreme Court in Ritzen. Reaching an issue the Supreme Court left undecided in Ritzen, the Ninth Circuit held that denial of a stay-relief motion without prejudice can still be a final, appealable order. The appeals court looked beyond the “without prejudice” label placed on the order by the bankruptcy court to decide whether denial of the motion meant that the creditor would not have stay relief for the purpose sought by…
In re Mack, ___BR___, 2023 WL 2397345
In re Mack, ___BR___, 2023 WL 2397345 (B.A.P. 9th Cir. Mar. 7, 2023), that demonstrates the dangers of trying to use a state court default judgment as basis for nondischargeability. Practice pointer: Be sure the default judgment says everything it needs to say, to prove up all elements you need to prove, to prove whichever kind of nondischargeability you are trying to prove via the state court default judgment. If the default judgment does NOT have everything you need, your nondischargeability complaint needs to request for trial in bky ct. In Mack, the state court default judgment did NOT say…
Department of Justice and Department of Education Released New Guidance for Stipulating to the Discharge of Federal Student Loans in Bankruptcy
NACBA (National Association of Consumer Bankruptcy Attorneys) reports that in November of 2022, the Department of Justice and Department of Education released new guidance for stipulating to the discharge of federal student loans in bankruptcy. These new guidelines direct DOJ attorneys to stipulate to the facts demonstrating that a debt would impose an undue hardship and recommend to the court that a debtor’s student loans be discharged under certain circumstances under a much less draconian standard and on a much more predictable basis. Comment of The Bankruptcy Law Firm, PC on 3/5/23: Attorneys who predict what the US Supreme Court…
Fidelity & Deposit Co. of Maryland v. TRG Venture Two LLC (In re Kimball Hill Inc.),___F4th___ (7th Cir. March 3, 2023), appeal 22-1724
Fidelity & Deposit Co. of Maryland v. TRG Venture Two LLC (In re Kimball Hill Inc.),___F4th___ (7th Cir. March 3, 2023), appeal 22-1724: US Court of Appeals for the Seventh Circuit Upholds Bankruptcy Court Order that orders a creditor to pay $9.5 Million in Sanctions, for creditor knowingly and intentionally violating the Plan Injunction in a confirmed Chapter 11 bankruptcy plan. The bonding company creditor was sanctioned $9.5 million dollars because it “ignored the confirmation order, which, by its terms, extinguished any rights to seek to recover, outside of the bankruptcy proceedings, the liabilities that the bankruptcy debtor owed the…
American Bankruptcy Institute reports the following on 02/23/23
Additional Chapter 7 Trustee Payments Suspended for FY 2022 The Department of Justice (DOJ) has advised the Administrative Office of the U.S. Courts that it has insufficient funds available to transfer to the Judiciary to make additional payments to eligible chapter 7 bankruptcy trustees for fiscal year 2022, according to a U.S. Courts press release. Trustees interested in receiving the additional payments for fiscal year 2023 should still file payment eligibility certifications. The Bankruptcy Administration Improvement Act of 2020 (BAIA) established an additional payment for eligible chapter 7 trustees for fiscal years 2021 to 2026. The payments are funded by…
Bartenwerfer v. Buckley, 598 U. S. ___ (United States Supreme Court 2/22/2023)
Bartenwerfer v. Buckley, 598 U. S. ___ (United States Supreme Court 2/22/2023): On February 22, 2023, the U.S. Supreme Court issued its unanimous opinion in Bartenwerfer v. Buckley, 598 U. S. ___ (2023) (honest debtor/business partner/wife could not discharge claim arising from fraud of dishonest partner/husband under 11 U.S.C. §523(a)(2)(A), even though the debtor did now know of the partner’s fraud). In the opinion of The Bankruptcy Law Firm, PC, this decision is very surprising, and we think is wrong, because the more reasonable interpretation of 11 U.S.C. §523(a)(2)(A) is to interpret that section of the Bankruptcy Code as only…
CFPB Targets Credit Card Late Fees As Junk Fees, Proposes Significant Reduction In Safe Harbor
For Card Issuers: The Consumer Financial Protection Bureau’s (the “CFPB” or the “Bureau”) latest move in its crusade against “junk fees” may hit closer to home for companies charging common fees that are considered, to date, to be lawful and valid. On February 1, the Bureau issued a Notice of Proposed Rulemaking1 (the “Proposed Rule”) targeting credit card late fees that would have substantial implications for the consumer credit card industry across essentially all credit bands and submarkets. Consumer credit card issuers currently are subject to a statutory prohibition against unreasonable penalty fees such as late fees.2 However, regulations implementing…