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Garvin v. Cook Investments NW, SPNWY, LLC, 922 F.3d 1031 (9th Cir. 2019)
The U.S. Trustee argued that a chapter 11 plan was “proposed by …means forbidden by law” because one of five debtors’ income was from lease of its real property to a marijuana grower. Debtors and property were located in Washington state in which marijuana is legal. Leasing property to a marijuana grower is illegal under federal law. Click here for more information
Bankruptcy Amendments
Three narrow in scope bankruptcy amendments have been passed by both the US House of Representatives, and the US Senate, and are awaiting President Trump signing these 3 amendments into law. Bankruptcy press reports that President Trump is expected to sign these 3 bills into law, as the 3 bills had little to no opposition, in Congress: H.R. 2938: Excludes VA and Department of Defense disability payments from the monthly income calculation used for bankruptcy means testing. H.R. 2336: “H.R. 2336, the “Family Farmer Relief Act of 2019,” would increase the current debt limit used to determine whether a family…
Klein v. Good (In re Good
Klein v. Good (In re Good), ___BR___, 2018 Bankr. LEXIS 3609 (9th Cir. BAP 2018) ( BAP No. WW-18-1125-KuTaB) , (9th Cir. BAP 2018), which is a case about a homestead exemption claimed by bankruptcy debtors, that a Chapter 7 trustee objected to, unsuccessfully: Summary: The United States Bankruptcy Appellate Panel for the Ninth Circuit held that in a case converted from chapter 13 to chapter 7, the relevant date for determining a debtor’s homestead exemption was fixed on the date of the chapter 13 filing. The BAP affirmed the bankruptcy court’s ruling denying the chapter 7 trustee’s objection to…
Seventh Circuit Solidifies a Circuit Split on the Automatic Stay
Disagreeing with the Tenth and D.C. Circuits and siding with four other circuits, the Seventh Circuit rules that passively holding estate property violates the automatic stay. Solidifying a split of circuits, the Seventh Circuit ruled that the City of Chicago must comply with the automatic stay by returning impounded cars immediately after being notified of a chapter 13 filing. The decision lays the foundation for the Supreme Court to grant certiorari and decide whether violation of the automatic stay requires an affirmative action or whether inaction amounts to control over estate property and thus violates the stay. The Second, Seventh,…
Risky Borrowing Is Making a Comeback, but Banks Are on the Sidelines, Reports American Bankruptcy Institute 6/13/19 E-Newsletter
A decade after reckless home lending nearly destroyed the financial system, the business of making risky loans is back, the New York Times reported on Tuesday. This time, the money is bypassing the traditional, and heavily regulated, banking system and flowing through a growing network of businesses that have stepped in to provide loans to parts of the economy that banks abandoned after 2008. With almost $15 trillion in assets, the shadow-banking sector in the U.S. is roughly the same size as the entire banking system of Britain, the world’s fifth-largest economy. In certain areas — including mortgages, auto lending…
In Ritzen Group Inc. v. Jackson Masonry LLC
In Ritzen Group Inc. v. Jackson Masonry LLC, the US Supreme Court, on 5/20/19, granted the Petition for Certioraris, to decide the question of what Is or Is not a ‘Final, Appealable Order’, in a bankruptcy case. In Davis v. Tyson Prepared Foods Inc, the US Supreme Court, also on 5/20/19, denied the petition for certiorari in that case, thereby declining to review and decide whether a creditor or other non-debtor passively holding property of the estate violates the automatic stay under § 362(a).
Commentary: Legislation Aims to Tackle the Student Loan Crisis in Bankruptcy Court
The American Bankruptcy Institute e-newsletter of 5/16/19 reports that Legislation introduced last week, in the US Congress, seeks to allow student loans to be discharged in bankruptcy without the difficulty of proving the “undue hardship” standard, according to a Washington Post commentary. The legislation has drawn bipartisan support with two Republican co-sponsors in the House, including Rep. John Katko (R-N.Y.), who introduced a similar bill in the last session of Congress. It would, as sponsor House Judiciary Chair Jerrold Nadler (D-N.Y.) put it in a statement, “ensure student loan debt is treated like almost every other form of consumer debt.”…
Benjamin v. U.S. (In re Benjamin), ___F.3d___ (5th Cir. May 10, 2019), case18-20185
This case is described as being part of a growing split among federal Circuit Courts, on whether bankruptcy courts have jurisdicition to hear disputes over social security disputes, and over Medicare disputes: American Bankruptcy Institute [5/14/19 e-newsletter] reports that, in In re Benjamin, the Fifth Circuit Court of Appeals rejects the ‘recodification canon’ to divest bankruptcy courts of jurisdiction over Social Security suits. Deepening an existing split of circuits, the Fifth Circuit held that the recodification canon does not divest the bankruptcy court of subject matter jurisdiction to hear Social Security claims. In the May 10 opinion by Circuit Judge…
American Bankruptcy Institute e-newsletter of 5/9/19 reports RISK from over-leveraged debt, from over-borrowing by corporations
For fund managers, it’s easy to be picky when money is tight, but not so simple when they’re rolling in cash, according to a Bloomberg commentary on Tuesday. Leveraged-loan investors are suddenly willing to push back on the pervasive weakening of covenants, the safeguards in offering documents that are meant to protect creditors. In January, Moody’s Investors Service determined that covenant quality in leveraged loans was the worst on record in the third quarter of 2018. It hasn’t gotten much better since. On Monday, the Federal Reserve echoed that sentiment, further amplifying its warnings about risky corporate debt in a…
Soaring Bankruptcies in the Farm Belt Force Banks to Boost Defenses
Banks that serve U.S. farmers are increasingly restructuring existing loans and boosting the collateral needed for new ones as the numbers of late and missed payments have risen, Bloomberg News reported. While regional banks are healthy, they’re clearly boosting their defenses against the risks they face. In March, a report by First Midwest Bank in Chicago showed past-due agricultural loans up 287 percent in 2018 over the previous year. Meanwhile, cases handled by the Iowa Mediation Service involving farmers unable to make payments rose 20 percent. While regional banks are healthy, they’re clearly boosting their defenses against the risks they…