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In re Tapang
In re Tapang, 540 B.R. 701 (Bankr. N.D. Cal. 2015): the U.S. Bankruptcy Court for the Northern District of California determined that a 5% interest rate on the secured creditor’s claim met the standards set forth in Till v. SCS Credit Corporation, 541 U.S. 465 (2004) ("Till") for confirmation of the debtor’s chapter 11 plan, by "cramdown" on the secured creditor who voted to reject the Chapter 11 plan. Facts: The Tapang case concerned the limited question of the rate of interest required for the debtor to cram down her proposed plan of reorganization on a dissenting secured creditor, 523…
Double Bogey, L.P. v. Enea, 794 F.3d 1047 (9th Cir. 2015) (Double Bogey)
In Double Bogey, L.P. v. Enea, 794 F.3d 1047 (9th Cir. 2015) ("Double Bogey"), the U.S. Court of Appeals for the Ninth Circuit held in a published opinion that the debtors, who were the sole officers and shareholders of a corporation, could not have their debts determined non-dischargeable under 11 U.S.C. Section 523(a)(4) solely on the basis that the debtors were found to be the alter ego of the corporation under applicable California law. The Ninth Circuit determined that California’s alter ego doctrine acts as a procedural mechanism rather than providing for "trust-like" obligations that would create a fiduciary relationship.…
In re Village Green I, GP, ___F.3d___, 2016 Westlaw 325163 (6th Cir. 2016)
The Sixth Circuit has held that a cramdown plan of reorganization was not propounded in good faith due to the artificial impairment of small claims held by two creditors who were closely connected to the Chapter 11 debtor, especially since the debtor had sufficient funds on hand to pay those creditors in full immediately. This is a circuit split issue: 9th Circuit and 6th Circuit are split on the issue of "artificial impairment." See, e.g., In re L & J Anaheim Associates, 995 F.2d 940 (9th Cir. 1993), holding that the definition of "impairment" under § 1124 did not necessarily…
Ninth Circuit Rules That Debtor’s Insider Can Sell Claims to Friendly Third Parties and Garner Critical Acceptance Votes on Its Plan
U.S. Bank N.A. v. The Village at Lakeridge, LLC (In re The Village at Lakeridge, LLC), ___F3d___, 2016 WL 494592 (9th Cir. Feb. 8, 2016). Earlier this month, the Ninth Circuit ruled that an insider can sell its claim to a friendly third party, whose vote fulfills Bankruptcy Code section 1129(a)(10)’s requirement of an impaired consenting class, unless the third party has a close relationship with the debtor and negotiated the claim purchase at less than arm’s length.
Zachary v. California Bank & Trust
Zachary v. California Bank & Trust, ___F.3d ___, 2016 WL 360519 (9th Cir. Jan. 28, 2016), the U.S. Court of Appeals for the Ninth Circuit ( "9th Circuit") held that the absolute priority rule, codified in section 1129(b)(2)(B)(ii) of the Bankruptcy Code, continues to apply to individual chapter 11 cases following the enactment, in 2005, of the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA 2005"). In so holding, the Ninth Circuit overruled the decision of the U.S. Bankruptcy Appellate Panel for the Ninth Circuit (the "BAP") in In re Friedman, 466 B.R. 471 (9th Cir. BAP 2012) ("Friedman"), and…
Coker v. JP Morgan Chase Bank, N.A., ___Cal.___
Coker v. JP Morgan Chase Bank, N.A., ___Cal.___, 2015 Westlaw —– (Supreme Court of the State of California, 2015.): The California Supreme Court held that a lender holding a residential purchase money obligation cannot obtain a deficiency from a borrower, even though the property was sold at a short sale and even though the borrower waived her antideficiency protection. Secured lender could not collect the deficiency owed after short sale of residence, from borrower. FACTS: The owner of a residence encumbered by a purchase money deed of trust arranged for a "short sale," under which the proceeds of the sale…
Eden Place LLc v. Perl (In re Perl)
Eden Place LLc v. Perl (In re Perl) ___F.3d___ (9th Cir. 1/8/16) (9th Cir. Appeal number14-70039): Creditor did NOT violate bankruptcy stay when creditor had law enforcement officers evict debtor, post-petition, from real property debtor was occupying, which had previously belonged to debtor, but which debtor no longer owned, at time debtor filed bankruptcy. Held mere fact that bankruptcy debtor had possession of a real property did NOT mean that new owner violated stay by having debtor evicted. The new owner of the real property had purchased debtor’s real property at a nonjudicial foreclosure sale held pre-petition (before debtor filed…
In re Free
In re Free, … BR… (9th Cir. BAP 12/17/15) BAP case number WW-14-1395-JuKiF: Good decision for debtors. Debtors filed a chapter 7 and received their discharge. The discharge released them from personal liability on two wholly-unsecured junior liens that encumbered their real property. Before the chapter 7 was closed, Debtors file a chapter 13 intending to strip off the two junior liens in the in the chapter 13 plan. Trustee moved to dismiss, arguing they were ineligible for chapter 13 because their debt exceed the 109(e) limits. The bankruptcy court agreed. On appeal the BAP reversed, holding in personam liability…
Kostecki v. Sutton (In re Sutton)
Kostecki v. Sutton (In re Sutton)___BR___ (9th Cir. BAP 12/3/15) (not for publication) (BAP case number EC014-1204-JuFD) held that a case-terminating sanction may not be imposed absent bad faith or consideration of a more moderate penalty, such as a continuance.
In re Penrod, ___F.3d ___, 2015 Westlaw 5730425 (9th Cir. 2015)
In re Penrod, ___F.3d ___, 2015 Westlaw 5730425 (9th Cir. 2015): The Ninth Circuit has held that a Chapter 13 debtor was entitled to recover $245,000 in fees from a secured lender because she defeated a $7,000 portion of the lender’s claim. [.] FACTS: A consumer borrowed $32,000 to buy a car worth $25,000. The difference ($7000) was used to pay off the “negative equity” in her old vehicle. Less than two years later, she filed a Chapter 13 petition. The lender asserted a secured claim for $26,000, the amount she still owed on the loan. The debtor proposed a…