The Bankruptcy Law Firm, Prof. Corp.
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…
In re BMT-NW Acquisition, LLC, 582 B.R. 846 (Bankr. D. Del.2018)
A bankruptcy court in Delaware has held that a trustee’s constructive fraudulent transfer claims stemming from a failed leveraged buyout were not subject to the newly heightened pleading standards articulated by the Supreme Court. [In re BMT-NW Acquisition, LLC, 582 B.R. 846 (Bankr. D. Del.2018).] Cites to and distinguishes the US supreme court cases, Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), which hold that fraud must be pleaded with particularly, in a Complaint that alleges fraud. In In…
Lamar, Archer & Cofrin, LLP v. Appling, 16-1215 (Sup. Ct. June 4, 2018)
Lamar, Archer & Cofrin, LLP v. Appling, 16-1215 (Sup. Ct. June 4, 2018): US Supreme Court rules, on 6/4/18, that a bankruptcy debtor’s False Statement About One Asset Isn’t Grounds for holding a debt nondischargeable. This US Supreme Court decision resolves a circuit split on Section 523(a)(2)(B) and the meaning of “financial condition.” The Supreme Court resolved a split of circuits today by holding that a false statement about one asset must be in writing to provide grounds for rendering a debt nondischargeable under Section 523(a)(2). The 15-page opinion by Justice Sonia Sotomayor focused primarily on the plain language of…
Ninth and Fourth Circuits Issue Important Rulings on Sanctions and Exemptions
Ninth Circuit opinion is prime for Supreme Court review regarding the extent of a bankruptcy court’s contempt powers. The Ninth Circuit refused to rehear an appeal, setting up an opportunity for the Supreme Court to decide whether bankruptcy judges have constitutional power to impose sanctions as robust as Article III judges. Meanwhile, the Fourth Circuit aligned itself with the Fifth by holding that events after a chapter 7 filing cannot undermine a homestead exemption. In the Ninth Circuit case, a debtor defied a turnover order by refusing to cough up $1.4 million belonging to the estate. The bankruptcy judge imposed…
Lorenzen v. Taggart (In re Taggart), ___F.3d ___ (9th Cir. April 23, 2018) appeal #16-35402
Violation of Discharge Is Now Difficult to Prove in the Ninth Circuit An unreasonable but good faith, subjective belief that there is no injunction bars a finding of contempt in the Ninth Circuit. A creditor’s subjective, good faith belief that its action does not violate the discharge injunction precludes finding the creditor in contempt, even if the discharge injunction did apply and the creditor’s belief was “unreasonable,” the Ninth Circuit ruled in an April 23 opinion. The opinion appears to mean that a creditor can act in good faith even if the creditor’s belief is unreasonable. In other words, litigation…