The Bankruptcy Law Firm, Prof. Corp.
Law v. Siegel (In re Law)
Law v. Siegel (In re Law), No. 12-5196, 571 U.S. __ (United States Supreme Court 3/4/14): In a unanimous decision authored by Justice Scalia, the Supreme Court found that a bankruptcy court may not surcharge the homestead exemption as a result of the debtor’s misconduct. The bankruptcy court found that the debtor created a fictional loan "to preserve his equity in his residence beyond what he was entitled to exempt" by perpetrating "a fraud on his creditors and the court." That court surcharged the debtor’s $75,000 homestead exemption to reimburse the trustee’s attorney fees. The surcharge was upheld on appeal…
Public Comment Period Ending Soon for Proposed Amendments to the Federal Rules of Bankruptcy Procedure
The Judicial Conference Advisory Committee on Bankruptcy Rules has proposed amendments to the Federal Rules of Bankruptcy Procedure and Official Forms, and requested that the proposals be circulated to the bench, bar, and public for comment. On August 15, 2013, the public comment period opened for the proposed amendments to Bankruptcy Rules 2002, 3002, 3007, 3012, 3015, 4003, 5005, 5009, 7001, 9006, and 9009, and Official Forms 17A, 17B, 17C, 22A-1, 22A-1Supp, 22A-2, 22B, 22C-1, 22C-2, 101, 101A, 101B, 104, 105, 106Sum, 106A/B, 106C, 106D, 106E/F, 106G, 106H, 106Dec, 107, 112, 113, 119, 121, 318, 423, and 427. The public…
First-Citizens Bank & Trust Co. v. Reikow
First-Citizens Bank & Trust Co. v. Reikow, 313 P.3d 1208 (Wash.App. 2013) An appellate court in Washington has held that despite a broad waiver of antideficiency protections contained in a guarantee, the guarantor was nevertheless protected by the “fair value” limitation on the lender’s right to recover. Though this is a Washington state court decision, not a federal court decision, it is useful because it highlights certain issues relating to liability of persons who GUARANTEE they will pay debts owed by some other person/entity. Facts: A lender funded a $6.7 million construction loan to a development company. The equity holders…
Bradley vs. Franklin Collection Service, Inc.
Bradley vs. Franklin Collection Service, Inc., __ F.3d __, 2014 Westlaw 23738 (11th Cir. 2014). The Eleventh Circuit Court of appeals held that an attempt by a collection agency to collect a 33% “collection fee” violates the Federal Debt Collection Practices Act, unless the consumer has agreed in advance to pay “reasonable collection agency fees.” Facts: Two patients incurred medical expenses. One of the patients signed an agreement stating that he would pay “all costs of collection including … reasonable collection agency fees.” The other patient’s agreement stated that he would pay “all costs of collection,” but that agreement did…
In re H Granados Communications, Inc.
In re H Granados Communications, Inc., 2013 Westlaw 6838709 (9th Cir. BAP 2013. Creditor and creditor attorney ordered to pay monetary sanctions for violating bankruptcy automatic stay. The United States Bankruptcy Appellate Panel of the Ninth Circuit ("BAP") recently upheld sanctions of $23,072.09 against a creditor and its counsel in civil contempt under 11 U.S.C. § 105(a) for violation of the bankruptcy automatic stay. Facts: In September 2011, Rediger Investment Corporation ("Rediger") through its counsel, the Duringer Law Group, PLC ("Duringer Firm" and, jointly, the "Appellants") commenced an unlawful detainer action in state court against H Granados Communications, Inc. ("debtor")…
Vazquez v. AAA Blueprint & Digital Reprographics (In re Vazquez)
SUMMARY: Vazquez v. AAA Blueprint & Digital Reprographics (In re Vazquez), 2013 WL 6571693 (9th Cir. BAP December 13, 2013): The Ninth Circuit Bankruptcy Appellate Panel ("BAP") recently upheld summary judgment in favor of a creditor under Bankruptcy Code Section 523(a)(6), excepting from discharge debts for willful and malicious injury, in which the bankruptcy court applied issue preclusion to a California trial court’s findings of actual fraudulent transfer. Factual Background Dennis Adrian Vazquez (the "Debtor") owned a document printing, copying and digital reproduction business known as Alliance Reprographics ("Alliance"). A former employee of AAA Blueprint & Digital Reprographics ("AAA") left…
In re Tronox, Inc., 2013 Westlaw 6596696 (Bankr. S.D.N.Y 2013)
In re Tronox, Inc., 2013 Westlaw 6596696 (Bankr. S.D.N.Y 2013). A bankruptcy court decision, but the reasoning as to why there was a fraudulent conveyance could be very important, in future, if additional courts in future agree with this reasoning: Facts: An oil, gas, and chemical company was burdened with enormous “legacy liabilities,” primarily due to environmental contamination. The company developed a plan to spin off its viable assets, leaving the legacy liabilities with a newly-formed successor entity. The complex asset divestiture proceeded over a period of several years. A few years after the completion of the transaction, the successor…
In re Energytec, Inc., 2013 Westlaw 6868618 (5th Cir. 2013)
In re Energytec, Inc., 2013 Westlaw 6868618 (5th Cir. 2013). A sale of pipeline system, which was property of the bankruptcy estate, “free and clear of liens and encumbrances”, in a bankruptcy case, per 11 USC 363(f), might NOT get rid of covenants relating to pipeline system Facts: In connection with the sale of a pipeline system, the purchaser executed covenants in favor of the vendor. Those covenants required the purchaser to pay a transportation fee based upon the amount of gas flowing through the pipeline and required the purchaser to obtain consent prior to assigning its interest in the…
Brown v. Ferroni, __BR__, 2014 WL 695090 (District Court, ED PA 2014)
Brown v. Ferroni, __BR__, 2014 WL 695090 (District Court, ED PA 2014): U.S. District Court, Eastern District of Pennsylvania (Philadelphia), has become an additional court holding that the “absolute priority rule” applies in individual Chapter 11 bankruptcy cases, and that the 2005 BAPCPA amendments to the Bankruptcy Code did NOT eliminate the absolute priority rule from applying in Chapter 11 cases of individuals. Courts are split nationwide at all levels (Bankruptcy Court, District Court, BAP, and Court of Appeals), as to whether or not the 2005 BAPCPA Amendments eliminated the absolute priority rule, in Chapter 11 bankruptcy cases of individuals…
Hudson v. Martingale Investments, LLC (In re Hudson), __ B.R. __, 2014 WL 128965 (9th Cir. BAP January 14, 2014)
Hudson v. Martingale Investments, LLC (In re Hudson), __ B.R. __, 2014 WL 128965 (9th Cir. BAP January 14, 2014): The U.S. Bankruptcy Appellate Panel of the Ninth Circuit ("BAP") reversed the bankruptcy court’s ruling to annul the automatic stay. The BAP held that the bankruptcy court abused its discretion by basing the ruling on inadmissible evidence. FACTS: On March 5, 2013 at 10:28 a.m. (the "Petition Date"), John E. Hudson (the "Debtor") filed a chapter 13 bankruptcy petition. Martingale Investments, LLC ("Martingale") alleged that at 10:01 a.m. on the same day, Martingale bought the Debtor’s home at a foreclosure…