The Bankruptcy Law Firm, Prof. Corp.
Scheer v. State Bar of California (In re Scheer), ___F.3d ___, case no.14-56662 (9th Cir. April 14, 2016)
The Ninth Circuit wrote an opinion on April 14 indirectly saying that the Supreme Court should overrule Kelly v. Robinson, where the high court held in 1986 that criminal restitution imposed as a condition for probation is nondischargeable under Section 523(a)(7). Writing for the appeals court, Circuit Judge John B. Owens said that Kelly "untether[ed] statutory interpretation from the statutory language." That approach, he said, "has gone the way of NutraSweet and other relics of the 1980s and led to considerable confusion." He then went on to cite circuit court decisions from around the country that distinguish Kelly to the…
CFPB v. Chance Edward Gordon, 819 F.3d 1179 (9th Cir. 4/14/2016)
CFPB v. Chance Edward Gordon, 819 F.3d 1179 (9th Cir. 4/14/2016): Defendant Gordan on 11/17/16 filed his Petition for Certiorari, requesting the US Supreme Court to grant review by the US Supreme Court of the 9th Circuit’s decision against defendant Gordon. The 9th Circuit decision affirmed Gordon’s liability for Gordon having committed deceptive practices in connection with offering/providing/charging for mortgage modification services. The petition addresses the ratification of government action alleged to be ultra vires at the time the action was taken, as well as a subject-matter jurisdiction question regarding whether federal courts’ Article III jurisdiction exists when the federal…
Shalaby v. Mansdorf (In re Nakhuda) (B.A.P. 9th Cir. 2016)
Debtor’s attorney sanctioned by Bankruptcy Court, sua sponte (sua sponte means on the Court’s own motion, instead by a party bringing a Motion for sanctions) for multiple errors, including that debtor attorney did not have debtor client’s original signature on the bankruptcy petition, schedules, other required bankruptcy documents, which is required if the debtor’s attorney efiles the bankruptcy case with “/s/” signatures for debtor, instead of with ink signed signature. In addition, bankruptcy court sanctioned debtor attorney for: “(1) making arguments not warranted by existing law or non-frivolous arguments for its extension, modification or reversal; (2) failing to ensure that…
Whatley v. Stijakovich-Santilli (In re Stijakovich-Santilli), 542 B.R. 245 (9th Cir. BAP 2015)
The U.S. Bankruptcy Appellate Panel of the Ninth Circuit (“BAP”) construed Rule 4003(b)(2) of the Federal Rules of Bankruptcy Procedure (“FRBP”), which extends the period for a trustee to object to exemptions where the exemption was fraudulently asserted, and held that a debtor fraudulently asserts an exemption when the debtor knowingly misrepresents a material fact that supports the claim of exemption and the trustee justifiably relies on a misrepresentation. A trustee can justifiably rely on that misrepresentation even if the trustee could have uncovered the fraud had the trustee carefully investigated. In determining whether a debtor fraudulently asserted an exemption,…
Revision of Certain Dollar Amounts in the Bankruptcy Code
(Effective April 1, 2016) – Source: 81 Fed. Reg. 8748-01, 2016 WL 684261 (Feb. 22, 2016) Affected sections of Title 28 U.S.C. and the Bankruptcy Code Dollar amount to be adjusted New (adjusted) dollar amount1 28 U.S.C.: Section 1409(b)—a trustee may commence a proceeding arising in or related to a case to recover (1)—money judgment of or property worth less than $1,250 $1,300 (2)—a consumer debt less than $18,675 $19,250 (3)—a non consumer debt against a non insider less than $12,475 $12,850 11 U.S.C.: Section 101(3)—definition of assisted person $186,825 $192,450…
In re Murray
In re Murray, 543 B.R. 484 (Bankr. S.D. N.Y. 2016), issued an opinion dismissing an involuntary bankruptcy case brought by a single creditor. In Murray, this creditor, the Wilk Auslander LLP law firm, was the assignee of a judgment obtained from its client (after the client did not pay its fees). The law firm sought to enforce upon its the judgment. To that end, the firm, as Murray’s sole creditor, filed an involuntary chapter 7 bankruptcy proceeding. Shortly after, Murray, filed a motion to dismiss the case under section 707(a), alleging the firm brought the petition in bad faith. Murray…
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.