Recent Cases
Tico Construction Co. v. Van Meter (In re Powell)
Tico Construction Co. v. Van Meter (In re Powell), ___BR___ (B.A.P. 9th Cir. Oct. 21, 2022), appeal number 22-1014.9th Cir BAP says debtor has absolute right to dismiss a ch13 case, even if debtor was not eligible to file ch13. I can see some possibilities this ruling could be abused by a debtor who wants the automatic stay, but does not want to be stuck in bankruptcy, so files a Chapter 13 case, knowing debtor is NOT eligible for chapter 13, then later dismisses the Chapter 13 case, after having the bankruptcy automatic stay protecting the debtor for as long…
Smart Capital Investments I LLC v. Hawkeye Entertainment LLC (In re Hawkeye Entertainment LLC), ___F.4th___ (9th Cir. Sept. 23, 2022) appeal no. 21-56264
A Cured Breach Still Invokes Section 365(b)(1)’s Landlord Protections, Ninth Circuit Court of appeals rules Adequate assurance of future performance may not be required if the debtor has already cured the breach of lease, the Ninth Circuit says. If there has ever been a breach of a lease of real property — even if it was cured or was not material — the landlord is still entitled to “adequate protection” or one of the other assurances laid out in Section 365(b)(1), according to the Ninth Circuit. However, “adequate assurance” may not be required if the breach has been cured or…
In re Klein, ___BR___ (US Bankruptcy Court D. Colo. Aug. 23, 2022) bky case No.17-19106: holds Debtor Retains Appreciation in Nonexempt Property Sold During Chapter 13
Judge Rosania answered a question left open by the Tenth Circuit in Barrera. Answering a question left open by the Tenth Circuit in Rodriguez v. Barrera (In re Barrera), 22 F.4th 1217 (10th Cir. Jan. 19, 2022), Bankruptcy Judge Joseph G. Rosania, Jr., of Denver decided that a chapter 13 debtor retains appreciation in the value of nonexempt property that the debtor owned on the filing date but sold in the course of the chapter 13 case. In Barrera, the Tenth Circuit held that nonexempt appreciation in the value of a home sold after confirmation of a chapter 13 plan…
In re Castleman
In re Castleman, (US District Court W.D. Wash. July 1, 2022), appeal to District Court from Bankruptcy Court, DC case no. 21-00829: US District Court Affirms that when a Chapter 13 Debtor’s bankruptcy case is converted from Chapter 13 to Chapter 7, that appreciation in the value of debtor’s residence/real property from when the Chapter 13 case was filed, onward, belongs to the Chapter 7 bankruptcy estate, not to the debtor; whereas if the debtor had remained in Chapter 13, the appreciation in the value of the residence/real property, during the Chapter 13 case, belongs to the Chapter 13 bankruptcy…
Stark v. Pryor (In re Stark), 20-4766 (E.D.N.Y. June 28, 2022): US District Court Judge Bars a “Short Sale”, Unless the bankruptcy debtor’s Homestead Exemption is paid in full
Reversing, a Long Island district judge credits value to a homeowner’s ability to delay foreclosure, taking a position contrary to a recent decision from a Ninth Circuit B.A.P. On an issue where the lower courts are split, a district judge on Long Island, N.Y., reversed the bankruptcy court by holding that a debtor is entitled to a homestead exemption in sale proceeds when the mortgage lender offers to buy the home and voluntarily takes a haircut designed to create an estate for unsecured creditors and the trustee’s commission. The debtor’s mortgage was long in default. After judgment of foreclosure, the…
MOAC Mall Holdings LLC v. Transform Holdco LLC (In re Sears Holdings Corp.) 20-1846 (US Supreme Court), and Bartenwerfer v. Buckley, 21-908 (US Supreme Court)
The US Supreme Court now has two bankruptcy cases on the calendar for argument in the term to begin in October, 2022. These are MOAC Mall Holdings LLC v. Transform Holdco LLC (In re Sears Holdings Corp.) 20-1846 (US Supreme Court), and Bartenwerfer v. Buckley, 21-908 (US Supreme Court). On 6/27/22, the US Supreme Court granted a petition for certiorari, ithe MOAC case, to decide whether the failure to obtain the stay of a sale approval order erects a jurisdictional bar to appeal under Section 363(m). The courts of appeals are split 6-2. Led by the Second Circuit, the minority…
Spark Factor Design Inc. v. Hjelmeset (In re Open Medicine Institute Inc.)
Spark Factor Design Inc. v. Hjelmeset (In re Open Medicine Institute Inc.), ___BR___ (B.A.P. 9th Cir. May 26, 2022), appeal no. 21-1233: Ninth Circuit BAP decision holds that a bankruptcy court does NOT always have to evaluate a settlement/proposed compromise as an 11 USC 363 sale, and NOT to require overbidding opportunity. If there are mutual claims, the Ninth Circuit BAP gives the court discretion not to evaluate a settlement as a sale. When considering approval of a compromise and settlement that includes a sale of estate property, the bankruptcy court sometimes has discretion not to evaluate the transaction as…
Consumer Financial Protection Bureau v. Cashcall, Inc.; WS Funding, LLC; Delbert Services Corporation; J. Paul Reddam,___F4th___ (9th Circuit Court of appeals 2022)
CahCall, Inc. made high interest, predatory, loans to consumers. CashCall, Inc., tried to avoid state usury laws by making loans through an LLC created by an Indian tribe. The loans had a built-in choice of law provision favoring tribal law. CashCall immediately bought all such loans and provided the funding. In litigation initiated by the Consumer Financial Protection Bureau (CFPB), the Central District Court of California (the District Court) tossed out the choice of law provision and found CashCall liable for an “unfair, deceptive, or abusive act” based on the state law violations but restricted its award of damages. In…
Bartenwerfer v. Buckley
Bartenwerfer v. Buckley, 21-908 (US Supreme Court 5/4/22.): The United States Supreme Court on 5/4/22 granted a Petition for Certiorari, to hear and rule, in Bartenwerfer v. Buckley, on whether or not a Principal’s liability, for the fraud committed by the principal’s agent, makes the debt from that fraud NONdischargeable as to the Principal, if the Principal files bankruptcy. One assumes that principals often? Always? Claim they were not aware that their Agent was committing a fraud. The US Circuit Courts are split on whether an innocent debtor’s liability is automatically nondischargeable when an agent or partner committed fraud. The…
Bartenwerfer v. Buckley, 2022 U.S. LEXIS 2331 (May 2, 2022)
Bartenwerfer v. Buckley, 2022 U.S. LEXIS 2331 (May 2, 2022): On May 2, 2022, the US Supreme Court granted a petition for certiorari, to hear a nondischargeability case. Certiorari was presumably granted, by the US Supreme Court, so that the US Supreme Court can resolve the split between the Ninth Circuit and the Eight Circuit as to whether fraudulent intent may be imputed to a debtor for the purpose of section 523(a)(2)(A) based on a partnership relationship, but without proof that the debtor knew or should have known of the fraud or false representation.