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In re Golan, ___BR___ (Bankr. E.D.N.Y. Dec. 19, 2019), E.D.N.Y case #19-75598
In re Golan, ___BR___ (Bankr. E.D.N.Y. Dec. 19, 2019), E.D.N.Y case #19-75598: Bankruptcy Court decision holds that it did not violate the bankruptcy automatic stay for the state court to hold a contempt hearing, in a divorce suit, after the debtor filed bankruptcy, because the bankruptcy debtor failed to pay a $20,000 sanction to wife’s attorney, in divorce suit, which the state court had ordered the bankruptcy debtor to pay to wife’s divorce attorney. There was no stay violation for the state court to hold the contempt hearing, because the contempt hearing was criminal contempt, and 11 USC 362(b)(1) stay…
McCoy v. Mississippi State Tax Comm’n
McCoy v. Mississippi State Tax Comm’n, 666 F.3d 924 (5th Cir. 2012) held that if a tax return of a debtor was filed even ONE day late, the taxes reported in that return cannot be discharged. Case is referred to as the “McCoy rule,” or the “McCoy test”. In a nutshell, this 5th Circuit rule provides that if the debtor’s tax return was filed late, even by one day, it is invalid and the tax cannot be dischargeable. The rule has been adopted in the 1st, 5th, and 10th circuits, but rejected in the 11th Circuit. Expect that eventually the…
In re Emerge Energy Services LP, ___BR___ (Bky Ct D. Del 12/5/19) case #19-11563 December 10, 2019: Failure to Opt Out Won’t Justify Imposing Third-Party Releases, Delaware Bky Judge Says
Saying she is in the minority in her district, a new Delaware judge ruled that allowing creditors to opt out won’t permit a plan to impose nonconsensual, third-party releases. Disagreeing with some of her colleagues in Delaware, a newly appointed bankruptcy judge refused to approve third-party releases binding creditors and equity holders who receive no distribution in a chapter 11 plan but had been given the option of opting out from the releases. In her December 5 opinion, Bankruptcy Judge Karen B. Owens could not conclude that the failure to opt out represented consent to granting the releases, under the…
U.S. Bank NA v. Saccameno, ___F.3d___ (7th Cir. Nov. 27, 2019) (case number 19-1569)
American Bankruptcy Institute (ABI) reports on this case as follows: Seventh Circuit Limits Punitive Damages to Total Compensatory Damages of $582,000 Despite atrocious mortgage servicing, the circuit court cut a jury’s $3 million award of punitive damages to $582,000. As a matter of constitutional law, the Seventh Circuit reduced punitive damages from $3 million to $582,000 when the jury had awarded the debtor $582,000 in compensatory damages as a consequence of the mortgage servicer’s “reprehensible conduct” and its “obstinate refusal” to correct its mistakes. The story told by Circuit Judge Amy J. St. Eve in her November 27 opinion would…
DeGiacomo v. Sacred Heart Univ. Inc. (In re Palladino), ___F.3d___ (1st Cir. Nov. 12, 2019), case number 17-1334
US Court of Appeals for the First Circuit held, on 11/12/19, that where parents pay the college tuition of an adult child (child over 18 years old) to the college, that the parent paying that payment is a gift transfer, and that college can be sued for receiving a fraudulent transfer, if the parent files bankruptcy, after making the tuition payment, to get the tuition payment back from the college. ABI article on 11/15/19 describes this case as follows: The First Circuit starkly held – without any ifs, ands, or buts – that college tuition paid by an insolvent parent…
U.S. Secretary of Education Betsy DeVos Fined $100,000 for Violating an Order ordering the Department of Education to STOP Trying to Collect Student Loans made to Students to attend Corinthian Colleges, a for profit college that closed and filed bankruptcy
U.S. Secretary of Education Betsy DeVos was hit with a $100,000 fine for violating a judge’s order to stop debt collection efforts against former students at bankrupt Corinthian Colleges Inc., Bloomberg News reported. Despite the order, the department went as far as seizing the students’ tax refunds and wages. U.S. Magistrate Judge Sallie Kim in San Francisco issued the fine Thursday, after finding DeVos in contempt of court. Kim ordered the $100,000 to go to a fund held by the students’ lawyers to help the more than 16,000 borrowers who she said suffered damages from the violation. Both sides must…
New California Law
A 10/10/19 article in Credit & Collection e-newsletter reports: A new California law signed by Gov. Gavin Newsom prohibits collection agencies from wiping out bank accounts to pay medical debts. “People who are living paycheck to paycheck need the protection that this bill will provide to give them more financial security,” said Sen. Bob Wieckowski, who authored the legislation. “We do not want people living on the streets because debt collectors, who don’t have the greatest track record for accuracy, claim someone owes an old debt.” Mr. Wieckowski says the legislation doesn’t erase debt, but “gives people the ability to…
California Legislature Declares That Mortgage Debt Is Regulated Under State’s Debt Collection Law
For many years it was unclear whether mortgage debt was covered under the California Rosenthal Fair Debt Collection Practices Act (the “Rosenthal Act”), which is California’s corollary to the federal Fair Debt Collection Practices Act (“FDCPA”). That issue was resolved on October 7, 2019, when California Governor Gavin Newsom signed into law legislation that expressly includes “mortgage debt” within the Rosenthal Act’s definition of “consumer credit.” Senate Bill 187 (“SB 187”), which is effective January 1, 2020, amends the Rosenthal Act to expressly apply to debt collection activities involving residential mortgage loans. SB 187 also amends the Rosenthal Act so…
2 Bankruptcy Court Opinions are opposite to each other, on Bankruptcy Court Allowing a Late Claim if the Creditor Was Not Listed and did not find out there was a bankruptcy until after the deadline for filing proofs of claim had passed
Bankruptcy Judge Elizabeth Brown of Denver differs with Bankruptcy Judge Michelle Harner of Baltimore on the interpretation of Bankruptcy Rule 3002(c)(6), about whether a Bankruptcy Court can allow a Proof of Claim filed AFTER the deadline (“bar date”) for filing Proofs of Claim has passed, in a bankruptcy case, if the creditor filing the Proof of Claim, after the deadline (“bar date”) did not receive notice of the existence of the bankruptcy case, and did not find out there was a bankruptcy case, until after the deadline (“bar date”) for filing a Proof of Claim had passed. Yesterday we reported…
Big Electric Company Chapter 11 Bankruptcy
Big Electric Company Chapter 11 bankruptcy case in the news: In the Pacific Gas & Electric Co. (“PG&E”) Chapter 11 bankruptcy, the Bankruptcy Court recently ended the “exclusivity period”, in which only debtor PG&E could file a proposed Chapter 11 plan of reorganization. Now the noteholders and wildfire victims have filed a joint alternative proposed Chapter 11 plan, which will compete for confirmation, with PG&E’s proposed Chapter 11 plan. The proposed Chapter 11 plan filed by the noteholders and wild fire victims, would, if confirmed (means approved) by the Bankruptcy Court, give the noteholders control of the company and would…