The Bankruptcy Law Firm, Prof. Corp.
Spark Factor Design Inc. v. Hjelmeset (In re Open Medicine Institute Inc.)
Spark Factor Design Inc. v. Hjelmeset (In re Open Medicine Institute Inc.), ___BR___ (B.A.P. 9th Cir. May 26, 2022), appeal no. 21-1233: Ninth Circuit BAP decision holds that a bankruptcy court does NOT always have to evaluate a settlement/proposed compromise as an 11 USC 363 sale, and NOT to require overbidding opportunity. If there are mutual claims, the Ninth Circuit BAP gives the court discretion not to evaluate a settlement as a sale. When considering approval of a compromise and settlement that includes a sale of estate property, the bankruptcy court sometimes has discretion not to evaluate the transaction as…
Consumer Financial Protection Bureau v. Cashcall, Inc.; WS Funding, LLC; Delbert Services Corporation; J. Paul Reddam,___F4th___ (9th Circuit Court of appeals 2022)
CahCall, Inc. made high interest, predatory, loans to consumers. CashCall, Inc., tried to avoid state usury laws by making loans through an LLC created by an Indian tribe. The loans had a built-in choice of law provision favoring tribal law. CashCall immediately bought all such loans and provided the funding. In litigation initiated by the Consumer Financial Protection Bureau (CFPB), the Central District Court of California (the District Court) tossed out the choice of law provision and found CashCall liable for an “unfair, deceptive, or abusive act” based on the state law violations but restricted its award of damages. In…
Bartenwerfer v. Buckley
Bartenwerfer v. Buckley, 21-908 (US Supreme Court 5/4/22.): The United States Supreme Court on 5/4/22 granted a Petition for Certiorari, to hear and rule, in Bartenwerfer v. Buckley, on whether or not a Principal’s liability, for the fraud committed by the principal’s agent, makes the debt from that fraud NONdischargeable as to the Principal, if the Principal files bankruptcy. One assumes that principals often? Always? Claim they were not aware that their Agent was committing a fraud. The US Circuit Courts are split on whether an innocent debtor’s liability is automatically nondischargeable when an agent or partner committed fraud. The…
Bartenwerfer v. Buckley, 2022 U.S. LEXIS 2331 (May 2, 2022)
Bartenwerfer v. Buckley, 2022 U.S. LEXIS 2331 (May 2, 2022): On May 2, 2022, the US Supreme Court granted a petition for certiorari, to hear a nondischargeability case. Certiorari was presumably granted, by the US Supreme Court, so that the US Supreme Court can resolve the split between the Ninth Circuit and the Eight Circuit as to whether fraudulent intent may be imputed to a debtor for the purpose of section 523(a)(2)(A) based on a partnership relationship, but without proof that the debtor knew or should have known of the fraud or false representation.
9th and 4th Circuit Both Hold: Old Bankruptcies Aren’t Grounds for Removal to Federal Court
This month, two circuits found no ‘related to’ bankruptcy jurisdiction for climate-change lawsuits against energy companies, and therefore held those climate change suits could NOT properly be removed to Bankruptcy Court. On 4/19/22 the Ninth Circuit Court of Appeals held, in County of San Mateo v. Chevron Corp., ___F.4th___ (9th Cir. April 19, 2022), appeal No. 18-15499, that a climate change suit was not properly removed from nonbky court to bankruptcy court. That was the second time in 12 days, a circuit court has held that a chapter 11 plan confirmed by an energy company doesn’t permit multinational oil companies…
Bechkart v. Newrez LLC, ___F.4th___ (US 4th Circuit Court of Appeals, 4/15/22 decision) appeal 21-1838
Bechkart v. Newrez LLC, ___F.4th___ (US 4th Circuit Court of Appeals, 4/15/22 decision) appeal 21-1838: Decision holds that reliance on advice of counsel is not a complete defense (but is relevant to defense of creditor), when a bankruptcy debtor moves to have creditor held in civil contempt, for allegedly violating the debtor’s bankruptcy discharge, and that. Taggart US Supreme Court case applies to all contempt motions citations in bankruptcy court. However, the Richmond, Va.-based appeals court held that advice of counsel is not a complete defense to civil contempt in bankruptcy court. A couple filed a chapter 11 petition after…
Censo LLC v. Newrez LLC (In re Censo LLC),___BR___ 21-1125 (B.A.P. 9th Cir. April 5, 2022): BAP Describes When a Nonbankruptcy Court’s Order or Judgment, entered AFTER bankruptcy is filed, Does, or Does Not, Violate the bankruptcy automatic Stay
If a proposed Order or proposed Judgment has been submitted to a non-bankruptcy court, but the non-bankruptcy court (such as California Superior Court, or a US District Court), has not yet signed and entered that Order or Judgment, by the date that the party the order or judgment will be against, when entered, files bankruptcy, is the non-bankruptcy court entering the Order or Judgment, after the party the Order or Judgment will be against, when entered, a violation of the bankruptcy automatic stay (11 USC §362(a)). And is the entered Order or Judgment, entered AFTER the bankruptcy is filed, void…
DC Solar owner Jeff Carpoff was sentenced to 30 years in federal prison in connection with defrauding investors
American Bankruptcy Institute (“ABI”) reports that In the fall of 2021, DC Solar owner Jeff Carpoff was sentenced to 30 years in federal prison in connection with defrauding investors (and taxpayers) out of over $2B through a Ponzi scheme involving favorable tax credits that incentivize investments in sustainable energy. The fraud, described by the Department of Justice as “the largest criminal fraud scheme in the history of the Eastern District of California” was uncovered shortly after a Christmas 2018 government raid on DC Solar’s headquarters which caused the company to file a Chapter 11 bankruptcy case, in Bankruptcy Court, Eastern…
Biden Aims to Expand Access to Student-Loan Debt Forgiveness for Millions of People
The Biden administration said it plans to make it easier for lower-income student-loan borrowers to get debt forgiveness through an existing program that has enrolled millions of people, but provided few with relief, the Wall Street Journal reported. The move, announced by the Education Department on Tuesday, is part of a politically sensitive debate on the forgiveness of student-loan debt and attempts to more broadly overhaul how the student-loan repayment system works. President Biden earlier this month extended to Aug. 31 a pandemic-related pause on payments of federal student loans and faces pressure from progressive members of his own party…
In Guevarra v. Whatley (In re Guevarra)
In Guevarra v. Whatley (In re Guevarra), ___BR___, 2021 WL 1179619 (BAP 9th Cir. Mar. 29, 2021), the Ninth Circuit Bankruptcy Appellate Panel (the “BAP”) vacated the bankruptcy court’s decision. Bankruptcy Court had sustained the chapter 7 Trustee’s Objection to debtor having used the CA CCP 703.140(b)(5) “wild card” exemption to exempt proceeds from selling a house, up to the approximately $30,000 limit of the “wild card” exemption. The bankruptcy court’s ruling was based on the grounds that debtor had not acted good faith when debtor claimed the wild card exemption. However, the BAP remanded to the bankruptcy court, so…