The Bankruptcy Law Firm, Prof. Corp.
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…
On 12/14/14, the US Supreme Court Granted Petitions for Certiorari (ie has agreed to review) in Two Different Bankruptcy Cases, Agreeing to Review Two Different Bankruptcy Issues
There is no right to appeal a bankruptcy issue from a US Court of Appeals, to the US Supreme Court. Instead, a party requests the US Supreme Court to review a bankruptcy decision (and most other kinds of decisions) of a US Court of Appeals, by filing a Petition for Certiorari with the US Supreme Court. Thousands of Petitions for Certiorari are filed each year, with the US Supreme Court, in various subject matters of cases. The US Supreme Court only grants certiorari (agrees to review the US Court of Appeals decision) in a tiny percent of those petitions for…
US Supreme Court has Recently Granted Petitions for Certiorari on Two Cases
The US Supreme Court has recently granted petitions for certiorari on two cases–Bank of America v. Calukett and Bank of America v. Toledo-Cardona–involving mortgage lien-stripping in bankruptcy. The fact that the US Supreme Court granted certiorari, regarding these two cases, means that the US Supreme Court will review, and could either affirm or reverse, the two US Courts of Appeal decisions. If the US Supreme Court were to reverse present law, which is that lienstripping is NOT allowed in Chapter 7, and is only allowed (under specific, limited, circumstances in Chapter 11, 12 and 13), that would be a HUGE…
In re NNN Parkway 400 26, LLC, 2014 Westlaw 309734 (Bankr. C.D. Cal. 2014)
In re NNN Parkway 400 26, LLC, 2014 Westlaw 309734 (Bankr. C.D. Cal. 2014). A bankruptcy court in California has held that a “new value” Chapter 11 reorganization plan requires a genuine market test of the value of the equity, that the lender’s deficiency claim could not be gerrymandered where the guarantor was insolvent, and that the artificial impairment of a consenting class cannot be the result of abusive conduct. Facts: A group of Chapter 11 debtors sought confirmation of a plan of reorganization that sought to invoke an exception to the “absolute priority rule” of 11 U.S.C.A. § 1129(b)(2)(B)(ii).…
In re Sui ___BR___, 2014 WL 5840246
In re Sui ___BR___, 2014 WL 5840246 (9th Cir. BAP 11/10/14), BAP case number 11-20448-CB: In Sui, Chapter 7 debtor Yan Sui ("Debtor") and non-debtor Pei-yu Yang ("Ms. Yang"), both acting pro se, appealed jointly from a bankruptcy court order barring each of them from filing "initiating documents" in the Debtor’s bankruptcy case without advance review by the bankruptcy court and a determination that such documents were meritorious. The order also required the Debtor and Ms. Yang to obtain leave from the bankruptcy court before filing suit in any forum against the Chapter 7 trustee, Richard A. Marshack (the "Trustee"),…