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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…
In re Pearl Resources LLC, ___BR___ (Bankr. S.D. Tex. Sept. 30, 2020), bankruptcy case no. 20-31585
Texas Mineral Liens May Be Modified in a Subchapter V Cramdown Plan A cramdown plan can reduce the collateral coverage for secured creditors. A debtor can confirm a cramdown plan under subchapter V of chapter 11, even though the objecting secured creditors will receive replacement collateral worth less than the collateral originally securing the claims, according to Bankruptcy Judge Eduardo V. Rodriguez. However, the substitute collateral was still worth six times more than the secured claims. Sitting in Houston, Judge Rodriguez explained why the absolute priority rule does not apply in subchapter V cases. He also found nothing sacrosanct about…
SE Property Holdings LLC v. Gaddy (In re Gaddy)
SE Property Holdings LLC v. Gaddy (In re Gaddy), ___F.3d___ (11th Cir. Sept. 29, 2020) appeal #19-11699: 11th Circuit Court of Appeals holds that for a debt to be held nondischargeable per 11 USC 523(a)(2)(A), the debtor’s fraud must have occurred before the debt arises. Therefore, fraudulent transfers that the debtor made, after the debtor incurred the debt (debt was that debtor personally guaranteed a 12 million dollar loan), did NOT make the debt nondischargeable per 11 USC 523(a)(2)(A). However, that did not leave the creditor with no remedy, in this case, because the creditor could have timely brought an…
Nearly 11 Million Households Missed Mortgage Or Rent Payments At Pandemic’s Outset
Nearly 11 million households fell behind on their mortgage or rent payments during the first three months of the COVID-19 pandemic, according to a new study by the Mortgage Bankers Association’s Research Institute for Housing America (RIHA). Meanwhile, 30 million people missed at least one student loan payment. The report contains data from an internet panel survey specially tailored to study the impact of the pandemic on rent, mortgage and student loan payment patterns. It found that the sudden onset of the pandemic led to abrupt job losses and reductions in hours worked. “However, federal government stimulus programs and employees…
Jalbert v. Gryaznova (In re Bicom NY LLC), ___BR___ (Bankr. S.D.N.Y. Sept. 21, 2020), bky case #19-1311
Fraudulent Transfer Law Doesn’t Victimize Innocent Parties, Bankruptcy Judge Wiles Says “Bare legal ownership” of a bank account isn’t enough to turn the account holder into the initial transferee of a fraudulent transfer made into the account, according to the interpretation of Second Circuit law by Bankruptcy Judge Michael E. Wiles of Manhattan. In substance, Judge Wiles said that Section 550(a)(1) is not a “gotcha” statute. “Strict liability,” he said, “is appropriate as a way of addressing wrongs, not as a way of victimizing innocent parties.” The defendant, a Russian citizen, said she needed a bank account in the U.S.…