The Bankruptcy Law Firm, Prof. Corp.
American Bankruptcy Institute on 11/25/20 published the following UPDATE ON PROPOSED EXTENSION OF THE PPP LOAN PROGRAM
With a change in administration likely within the next two months, and Congress scrambling to agree on another rescue package for millions of Americans facing yet more pandemic related economic hardship as many of the government subsidies and stimulus plans are set to expire the end of December, Senators Rubio and Collins have revamped S. 4321 initially introduced on July 27, 2020 (“Initial Proposed PPP III Legislation”),1 which would (finally) make the Payroll Protection Program loans (“PPP Loans”) available to debtors in bankruptcy. The PPP expired in early August 2020, and S. 4321 became bogged down in neverending partisan politics,…
Manikan v. Peters & Freedman, L.L.P, ___F.3d___, 2020 WL 6938318 (9th Cir. 11/25/20)
Manikan v. Peters & Freedman, L.L.P, ___F.3d___, 2020 WL 6938318 (9th Cir. 11/25/20): Ninth Circuit Court of Appeals ruled on the interplay between two federal statutes, the Bankruptcy Code (Code) and the Fair Debt Collection Practices Act (FDCPA). The Ninth Circuit ruled that its prior precedent establishing contempt as the exclusive remedy for discharge injunction violations did not preclude a discharged debtor from seeking a remedy under the FDCPA against debt collectors who attempted to collect a discharged debt which had been paid in full.
Wells Fargo Bank N.A. v. Mahogany Meadows Ave. Trust, ___ F3d ___ (9th Circuit Ct of Appeals; Nov. 5, 2020)
Ninth Circuit Court of Appeals Allows HOA lien to extinguishes senior DOT lender’s lien on condo, But only because senior DOT lender (Wells Fargo) Failed to Object. Ninth Circuit Court of Appeals decision allows a tiny HOA lien for unpaid HOA assessments, to wipe out a big mortgage if the bank wasn’t vigilant at the time of foreclosure. For the second time in a week, we report a decision where the Ninth Circuit had no sympathy for a lender who was asleep at the switch and woke up to find its mortgage wiped out. This time, the San Francisco-based appeals…
US v. Allahyari, ___F.3d.___, 2020 DAR p12125 (9th Cir. 2020)
US v. Allahyari, ___F.3d.___, 2020 DAR p12125 (9th Cir. 2020): US 9th Circuit Court of Appeals reversed US District Court. 9th Circuit held US District Court erred in holding that defendant’s 2005 deed of trust was not entitled to priority over later-recorded federal tax liens. That should have been obvious to US District Court, since the general rule is that earlier recorded lien has priority over later recorded lien.
In re Leucadia Group, LLC, Ninth Circuit Bankruptcy Appellate Panel Case No. SC-20-1066-GFB (9th Circuit, Nov 04,2020) Not Published
Affirmed Bankruptcy Court decision Ruling: Full Faith and Credit Act requires bankruptcy courts to give the same preclusive effect to a state court judgment. Under Georgia law, a voluntary dismissal with prejudice operates as an adjudication upon merits. Under Georgia law, claim preclusion includes: (1) an identity of the cause of action; (2) an identity of the parties or their privies; and (3) a previous adjudication on the merits by a court of competent jurisdiction. Considering Georgia statutes and case law, the Panel agreed with the Trustee’s argument that the Claimant (CHPL) was precluded. Therefore, the Claim was disallowed. Procedural…
Issue: Is Inaction of Creditor an Automatic Stay Violation?
On October 13, 2020, the US Supreme Court heard oral argument on City of Chicago v. Fulton, 19-357 (Sup. Ct. 2020), to resolve the Circuit split on whether a creditor who legally took possession of property of the debtor, prepetition, violates the bankruptcy automatic stay if the creditor does not return the property to the debtor, as soon as the debtor files bankruptcy. Supreme Court to resolve a circuit split by deciding whether a change in the status quo must occur before the automatic stay is violated. The Supreme Court heard oral argument this morning in City of Chicago v.…
United States v. Hutchinson, 615 B.R. 596 (E.D. Cal. 2020)
Bankruptcy Court denied motion of the IRS to compel abandonment of the Chapter 7 debtors’ house to IRS, because the property was not of inconsequential value to the bankruptcy estate, or burdensome to the bankruptcy estate, which is the standard the IRS motion had to show to compel abandonment of the property from the Chapter 7 bankruptcy estate, to the IRS. The Chapter 7 Trustee has a statutory right to avoid the penalty portion of a tax lien, if avoiding the penalty portion of the tax lien amount benefits the bankruptcy estate, by providing a distribution to unsecured creditors from…
Houch v. Substitute Trustee Services Inc. (In re Houck), ___BR___(Bankr. W.D.N.C. Oct. 6, 2020) case #15-5028
Unrepentant Lender Slammed with $260,000 in Damages for an ‘Egregious’ Stay Violation Lender soon recognized that home foreclosure violated the stay but continued denying liability through seven years of litigation. For an egregious violation of the automatic stay that “severely injured” the debtor, Chief Bankruptcy Judge Laura T. Beyer of Charlotte, N.C., imposed $260,000 in sanctions, given that the lender’s “behavior displayed a high degree of reprehensibility.”
In re Gilbert, ___BR___ (Bankr. E.D. La. Oct. 6, 2020) , case 16-12120
Bankruptcy Judge rules that ‘13’ Plans Already in Default on March 27 May Be Extended Under the CARES Act Judge Grabill finds nothing in Section 1329(d) to preclude extending the duration of a plan if payments were already in default when the CARES Act was enacted on March 27. Enacted on March 27, the CARES Act amended Section 1329 by allowing chapter 13 debtors to extend their plans for up to seven years if they have experienced “material and financial hardship” as a consequence of the pandemic. But if the debtors were already behind in their plan payments on March…
In re Kimball Hill Inc., ___BR___ (Bankr. ED Illinois 9/30/20) case #08-10095
Creditor seeking to avoid being held in contempt for violating bankruptcy debtor’s discharge, could not avoid being held in contempt by arguing that creditor’s objective basis for thinking creditor was not violating discharge was that creditor hoped to overturn existing precedent. Holds that ‘Fair Ground of Doubt’ required by US Supreme Court Taggart case is NOT shown by Creditor was hoping to to Overturn Precedent The contemnor shoulders the burden of showing ‘uncertainty’ under the Taggart standard for contempt, Judge Barnes says. Bankruptcy Judge Timothy A. Barnes of Chicago wrote an opinion elucidating the burdens of proof and standards for…