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Regularly Conducted Tax Sales Cannot Be Fraudulent Transfer, Ninth Circuit Holds
In Tracht Gut LLC v. Los Angeles Country Treasurer & Tax Collector (In re Tracht Gut LLC), ___F.3d ___case no. 14-60007 (9th Cir. Sept. 8, 2016), the Ninth Circuit joined the Fifth and Tenth by holding that a tax sale conducted in accordance with state law cannot be set aside as a fraudulent transfer for less than reasonably equivalent value. A company owned real property but did not pay real estate taxes for years. The company filed a chapter 11 petition a month after the county sold the property in a tax sale. The newly minted debtor in possession immediately…
In re Diaz, 547 B.R. 329 (9th Cir. BAP 3/11/2016)
In In re Diaz, 547 B.R. 329 (9th Cir. BAP 3/11/2016), the U.S. Bankruptcy Appellate Panel for the Ninth Circuit (the “BAP”) vacated the Bankruptcy Court’s order sustaining the chapter 7 trustee’s objection to the debtor’s homestead exemption under Cal. Civ. Pro. Code §740.730(a) and remanded the case for further proceedings. Under California law, the relevant factors for determining if a debtor resides in a property are the physical fact of occupancy and the debtor’s intent to live there. In ruling on the debtor’s claimed homestead exemption, the bankruptcy court considered that the debtor had not resided in the property…
DeNoce v. Neff (In re Neff), 824 F.3d 1181 (9th Cir. 2016)
The U.S. Court of Appeals for the Ninth Circuit held that the ONE year period of 11 U.S.C.§ 727(a)(2) is not subject to equitable tolling. 11 USC 727(a)92) states that a bankruptcy debtor may be denied a discharge, in a Chapter 7 bankruptcy case, if the debtor transferred property, within ONE year before the date the debtor filed bankruptcy, with an actual intent to hinder, delay or defraud creditors, by making that transfer.
Rivera v. Orange Cnty. Prob. Dep’t (In re Rivera), 832 F.3d 1103 (9th Cir.
Aug. 10, 2016), the U.S. Court of Appeals for the Ninth Circuit held that fees owing to a governmental unit incurred for the criminal detention of a minor child were dischargeable in the chapter 7 bankruptcy of a parent. This was not a domestic support obligation (domestic support obligations are always nondischargeable, per 11 USC 523(a)(5)).
Caldwell v. DeWoskin, ___F.3d___, case number 15-1962 (8th Cir. Aug. 5, 2016) and Flanders v. Lawrence (In re Flanders)
Caldwell v. DeWoskin, ___F.3d___, case number 15-1962 (8th Cir. Aug. 5, 2016) and Flanders v. Lawrence (In re Flanders), ___F.3d ___, case number 15-1327 (10th Cir. Aug. 5, 2016): These 2 Circuit Court decisions, one by the 8th Circuit Court of Appeals, and one by the 10th Circuit Court of Appeals, both discuss and apply the Rooker-Feldman US Supreme Court doctrine. The US Supreme Court Rooker-Feldman doctrine, named after the US Supreme Court Rooker case, and the US Supreme Court Feldman case, holds that lower federal courts (includes US bankruptcy Courts, US District Courts, BAPs, US Circuit Courts)-in fact that…
In re Intervention Energy Holdings, LLC, 553 B.R. 258 (Bankr. D. Del. 2016)
U.S. Bankruptcy Court for the District of Delaware ruled that a provision in a debtor’s operating agreement that permitted its lender to block a bankruptcy filing by voting the lender’s single Common Unit against a filing was unenforceable as a matter of federal bankruptcy policy. What restrictions on filing bankruptcy are/are not against bankruptcy public policy is the subject of many cases, with differing outcomes. An outright prohibition on a company filing bankruptcy IS unenforceable as being against federal bankruptcy policy.
In Castaic Partners II, LLC v. Daca-Castaic, LLC
In Castaic Partners II, LLC v. Daca-Castaic, LLC (In re Castaic Partners II, LLC), 823 F.3d 966 (9th Cir. 2016), the United States Court of Appeals for the Ninth Circuit dismissed the debtors’ appeal of stay relief orders as constitutionally moot after the consensual dismissal of the debtors’ underlying bankruptcy cases.
In re Quantum Foods, LLC, 554 B.R. 729 (Bankr. D. Del. 2016)
In re Quantum Foods, LLC, 554 B.R. 729 (Bankr. D. Del. 2016): The United States Bankruptcy Court for the District of Delaware held that a defendant could set off potential preference liability against its allowed administrative expense claim.
Heller Ehrman LLP, Liquidating Debtor v. Davis Wright Tremaine LLP
Heller Ehrman LLP, Liquidating Debtor v. Davis Wright Tremaine LLP (In re Heller Ehrman LLP), 830 F.3d 964 (9th Cir. July 27, 2016): The U.S. Court of Appeals for the Ninth Circuit certified to the California Supreme Court the question of whether a dissolved law firm has a property interest in hourly fee engagements in progress at the time of its dissolution such that the firm is entitled to compensation from law firms that later complete the work after employing an attorney of the dissolved firm post-dissolution to complete the engagement. The issue underlies the viability of the doctrine of…
Smith v. I.R.S. (In re Smith)
Smith v. I.R.S. (In re Smith), ___F.3d___ (9th Cir. July 13, 2016) Circuit case number 14-15857: Ninth Circuit holds that taxes owed, pursuant to a tax return that the debtor files late – after the due date for the return – may still, under some circumstances be dischargeable in the debtor’s bankruptcy case, using a 4 part test known as the "Beard" test. The part of the Beard test that is most often contested by the tax agency is whether the debtor, in filing a late tax return, made an honest and reasonable attempt to satisfy the requirements of the…