The Bankruptcy Law Firm, Prof. Corp.
In re Hoilien
In re Hoilien, ___BR___, 2015 WL 509564 (Bankr.D. Hawaii February 3, 2015): Bankruptcy Court held that creditor that proceeded with foreclosure of debtor’s real property did not violate the bankruptcy automatic stay by doing so, because there was no stay, because the bankruptcy case in issue was the individual debtor’s third bankruptcy case ongoing in 2014 (ie ongoing within a single year), and debtor had no obtained an order from the bankruptcy court, imposing a stay in the third case. Debtor hadn’t even moved bankruptcy court to impose stay, in the third bankruptcy case. Per 11 USC 362(c)(4) of the…
Supreme Court Hears Oral Argument in Mortgage Lien-Stripping Cases
The Supreme Court heard oral argument today in the cases of Bank of America v. Caulkett and Bank of America v. Toledo-Cardona, and its decision later this year could have big implications for the U.S. housing market, the Financial Times reported today. The cases present the Supreme Court with the issue of whether, under Sect. 506(d) of the Bankruptcy Code (which provides that “[t]o the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void”), a chapter 7 debtor may “strip off” a junior mortgage lien in its entirety…
Tamm v. U.S. Trustee (In re Hokulani Square, Inc.)
Tamm v. U.S. Trustee (In re Hokulani Square, Inc.), ___F.3d___, 2015 WL 305540 (9th Cir. 2015): On 1/26/15, the U.S. Court of Appeals for the Ninth Circuit issued its decision in Tamm v. U.S. Trustee (In re Hokulani Square, Inc.),. On appeal from the U.S. Bankruptcy Appellate Panel of the Ninth Circuit, the Ninth Circuit affirmed the BAP’s reversal of the bankruptcy court’s compensation award to a chapter 7 trustee that included fees calculated on a secured creditor’s credit bid on real property of the bankruptcy estate. The Ninth Circuit held that Bankruptcy Code section 326(a) allows reasonable compensation for…
In re Virgin Offshore U.S.A., Inc.
In re Virgin Offshore U.S.A., Inc., 2015 Bankr. LEXIS 233 (Bankr. E.D. La. January 26, 2015): The Bankruptcy Court for the Eastern District of Louisiana held that a Chapter 11 trustee’s compensation is subject to the lodestar factors listed in 11 USC 330(a)(3) of Bankruptcy Code. when determining reasonable compensation, and that Section 330(a)(7) does not create a presumption that the statutory maximum provided for in Section 326 is reasonable compensation. Shows Courts are beginning to re-think blindly allowing Trustee’s fees in the statutory maximum amount allowed by 11 USC 326. Even though this decision involved a Chapter 11 trustee,…
In re Motors Liquidation Co.
In re Motors Liquidation Co., ___ F3d ___, 2015 Westlaw 252318 (2d Cir. 2015): The Second Circuit has held that a lender and its counsel had inadvertently authorized the filing of an erroneous termination statement, thus invalidating the lender’s $1.5 billion security interest. This case is an additional “secured lenders better not make mistakes” case, which is truly terrifying for secured lenders. Facts: A secured lender intended to file a termination statement (a “UCC-3”) in order to release its lien securing a $300 million synthetic lease. Unfortunately, the termination statement also erroneously included language releasing a lien securing an unrelated…
In re Genmar Holdings, Inc.
In re Genmar Holdings, Inc., 2015 Westlaw 350721 (8th Cir. 2015): Preference decision (11 USC 547 of Bankruptcy Code governs preferences). The Eighth Circuit Court of Appeals held that even though there was a very short lag between the date that the debtor incurred an obligation to pay and the actual date of payment, a preference recipient was unable to invoke the “substantially contemporaneous” defense because the parties did not intend that the payment would actually be contemporaneous.
In re Duckworth
In re Duckworth, ___ F3d ___, 2014 Westlaw 7686549 (7th Cir. 2014): The Seventh Circuit has held that a lender’s security interest in crops and equipment was void because the security agreement referred to a promissory note dated “December 13,” instead of “December 15,” the correct date of execution; further, incorporation by reference did not cure the defect because the definitions contained in the document were circular. Case is a warning to secured creditors to make sure that security agreements and other transactional documents are accurate.
America’s Servicing Company v. Schwartz-Tallard
The Ninth Circuit Court of Appeals has granted a rehearing en banc in America’s Servicing Company v. Schwartz-Tallard, 765 F.3d 1096 (9th cir. 2014). The question presented in Schwartz-Tallard is whether debtor’s counsel may obtain a fee award for defending creditor’s appeal in stay violation cases. The Ninth Circuit’s original opinion turned on the application of a wrongly decided Ninth Circuit opinion of Sternberg v. Johnston, 595 F.3d 937 (9th Cir. 2010). In Sternberg, the Court held that debtor’s counsel could be awarded fees for ending a stay violation, but not for pursuing actual damages that resulted from the violation.…
Supreme Court to Hear Oral Argument, on 1/14/15, in Wellness International LTD. v. Sharif
The US Supreme Court will hear oral arguments, on 1/14/15, in the case of Wellness International Ltd. v. Sharif, in which the US Supreme Court granted certiorari. The Wellness case is the most recent opportunity for the Court to address the jurisdiction of the bankruptcy court. Certiorari was granted on July 1, 2014, from a Seventh Circuit decision. The court will hear argument on the following issues: (1) Whether the presence of a subsidiary state property law issue in an 11 U.S.C. § 541 action brought against a debtor to determine whether property in the debtor’s possession is property of…
In re The Mortgage Store, Inc.
In re The Mortgage Store, Inc., ___F.3d___, 2014 Westlaw 6844630 (9th Cir. 2014). In a fraudulent transfer appeal, in a Chapter 7 bankruptcy case adversary proceeding, the Ninth Circuit Court of Appeals has held that an "initial transferee" of a fraudulent transfer made by an insolvent corporation was strictly liable under the "pure dominion" rule, even though the debtor corporation’s insider was the party who exercised indirect control over the funds and even though the recipient of the money was unaware of its source. Following is detail of the case, which appeared in the California State Bar’s Insolvency Committee e-bulletin…