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Geltzer v. Oberlin College (In re Sterman), 18-01015 (Bankr. S.D.N.Y. Dec. 4, 2018): Bankruptcy Judge in SDNY holds
Tuition Payments for Adult Children Squarely Held to Be Constructively Fraudulent, where parents were INSOLVENT at the time the parents paid the tuition for the parent’s child who was NOT a minor at time the parents paid the “child’s” tuition. However, case also holds parents paying tuition for a MINOR child is NOT a fraudulent transfer, even if the parents were INSOLVENT at the time the parents paid the tuition for the minor child: On an issue dividing the lower courts, Bankruptcy Judge Martin Glenn of New York squarely held that educational expenses paid for a child over the age…
9th Circuit Upholds Record $1.27 Billion Judgement Against Payday Lender
FEDERAL TRADE COMMISSION, Plaintiff-Appellee, v. AMG CAPITAL MANAGEMENT, LLC; BLACK CREEK CAPITAL CORPORATION; BROADMOOR CAPITAL PARTNERS, LLC; LEVEL 5 MOTORSPORTS, LLC; SCOTT A. TUCKER; PARK 269 LLC; KIM C. TUCKER, Defendants-Appellants, Ninth Circuit Court of appeals decision on December 3, 2018, case number No. 16-17197 The Ninth Circuit recently upheld a $1.27 billion award against a former professional racecar driver’s loan companies, finding that the companies had violated Section 5 of the FTC Act by deceiving consumers and illegally charging them undisclosed and inflated fees. The $1.27 billion judgement represents the largest litigated judgement ever obtained by the FTC. The…
In re McCormick, 894 F.3d 953 (8th Cir. 2018)
In re McCormick, 894 F.3d 953 (8th Cir. 2018): The US Court of Appeals for the Eighth Circuit holds that attorney’s fees owed to an oversecured lender arose under the parties’ agreements, even though the borrowers’ obligations resulted in nonconsensual judgment liens that did not include an award of fees. This decision, if adopted in other Circuits, such as the US Court of Appeals for the Ninth Circuit (our Circuit for bankruptcy courts and US district Courts in California) increases the ability of oversecured creditors, to add attorneys fees to those creditors claims in bankruptcy cases. An oversecured creditor is…
Held: Late-Filed State Tax Return as Invalid
HELD: LATE-FILED STATE TAX RETURN AS INVALID; and because late-filed tax return was invalid, the taxes were not dischargeable, by debtor, in debtor’s bankruptcy case Kline v. Internal Revenue Service and Arkansas Department of Finance & Administration, 581 B.R. 597 (Bankr. W.D. Ark., 2018) In this case what has become known as the “McCoy rule” rearsits head again, and, like McCoy, it involves state income taxes, in particular taxes assessed by the Arkansas Department of Finance and Administration. The debtor filed his state tax returns years after they were due. The State challenged the dischargeability of the liabilities because the…
McNair vs. Maxwell & Morgan PC, 893 F.3d 680 (9th Cir. 2018)
McNair vs. Maxwell & Morgan PC, 893 F.3d 680 (9th Cir. 2018): 9th Circuit Court of Appeals holds that an attorney who does a judicial foreclosure on a piece of real property owned by an individual homeowner, is a “debt collector”, who is subject to the Fair Debt Collection Practices Act (“FDCPA”) and that a Court can order that attorney to pay damages, to the consumer homeowner, per the FDCPA, if the attorney did not comply with what the FDCPA requires. An attorney doing a judicial foreclosure would almost certainly NOT have done the things the FDCPA requires doing. More…
Supreme Court Approves Amendments to Bankruptcy Rules
Supreme Court Approves Amendments to Bankruptcy Rules; Those Amendments will go into effect on 12/1/18, unless (very unlikely to happen) the US Congress disapproves those Amendments. The U.S. Supreme Court earlier this year approved amendments to the Federal Rules of Bankruptcy Procedure that are expected to become effective on December 1, 2018. Many of the amendments are technical and are intended to conform the Bankruptcy Rules to recently amended rules of appellate and civil procedure. Bankruptcy Rules affected by the amendments include Rules 3002.1, 5005, 7004, 7062, 8002, 8006, 8007, 8010, 8011, 8013, 8015, 8016, 8017, 8021, 8022, 9025, and…
Cresta Technology Corporation
What date controls when a check is delivered before the debtor files bankruptcy, but is not cashed (honored) until after the debtor files bankruptcy: In In re Cresta Technology Corporation, 583 B.R. 224 (9th Cir. BAP 2018) the Bankruptcy Appellate Panel of the Ninth Circuit found, among other things, that a bankruptcy court did not err in finding that a check delivered pre-petition, but honored postpetition, constituted an unauthorized postpetition transfer recoverable by a chapter 7 trustee pursuant to 11 § USC 549. On March 16, 2016, appellant Matthew Lewis (“Appellant”), in his role as Chief Financial Officer (“CFO”) of…
Courts Split on Denying a Chapter 13 Discharge for Failure to Make Direct Payments
Bankruptcy Judges are Split on Whether or Not a Chapter 13 debtor should be denied a Chapter 13 discharge for debtor failing to pay mortgage/DOT payments that are to be paid direct to the secured lender, even though debtor has paid all the payments that were required to be paid through the debtor’s confirmed Chapter 13 plan. Issue is whether the “direct pay” payments are payments owed “under the chapter 13 plan” or not. Two bankruptcy judge decisions from Illinois illustrate the split among bankruptcy judges on whether or not a chapter 13 debtor who fails to make all direct…
Lehman Brothers Holdings Inc. v. 1st Advantage Mortgage LLC
Lehman Brothers Holdings Inc. v. 1st Advantage Mortgage LLC, ___BR___ (Bankr. SD NY 8/13/18) case #16-01019: Bankruptcy Court 8/15/18 decision rules Bankruptcy Court Still Has Jurisdiction Seven Years After Confirmation of Chapter 11 plan: Almost 10 years after Lehman Brothers began the biggest Chapter liquidation bankruptcy in history, Bankruptcy Judge Shelley C. Chapman ruled that the bankruptcy court still has jurisdiction to host new lawsuits against third parties. She also held that New York is the proper venue for suing defendants from all around the country, even though Lehman’s chapter 11 plan was confirmed almost seven years ago. Comment: bankruptcy…
Elite of Los Angeles, Inc. v. Hamilton (In re Hamilton)
Elite of Los Angeles, Inc. v. Hamilton (In re Hamilton), 2018 WL 3637905 (9th Cir. BAP July 31, 2018), the Ninth Circuit Bankruptcy Appellate Panel reversed an Order of the Bankruptcy Court for the Southern District of California, where the Bankruptcy Court’s Order had confirmed the chapter11 plan of the debtor, who was an individual. The BAP ruled that the debtor had not satisfied the standards of 11 USC 1129, that had to be met, in order for the individual debtor’s Chapter 11 plan to be confirmable. A major defect in the plan was that plan enjoined creditors that held…