Recent Cases
In re Diaz, 547 B.R. 329 (9th Cir. BAP 3/11/2016)
In In re Diaz, 547 B.R. 329 (9th Cir. BAP 3/11/2016), the U.S. Bankruptcy Appellate Panel for the Ninth Circuit (the “BAP”) vacated the Bankruptcy Court’s order sustaining the chapter 7 trustee’s objection to the debtor’s homestead exemption under Cal. Civ. Pro. Code §740.730(a) and remanded the case for further proceedings. Under California law, the relevant factors for determining if a debtor resides in a property are the physical fact of occupancy and the debtor’s intent to live there. In ruling on the debtor’s claimed homestead exemption, the bankruptcy court considered that the debtor had not resided in the property…
Caldwell v. DeWoskin, ___F.3d___, case number 15-1962 (8th Cir. Aug. 5, 2016) and Flanders v. Lawrence (In re Flanders)
Caldwell v. DeWoskin, ___F.3d___, case number 15-1962 (8th Cir. Aug. 5, 2016) and Flanders v. Lawrence (In re Flanders), ___F.3d ___, case number 15-1327 (10th Cir. Aug. 5, 2016): These 2 Circuit Court decisions, one by the 8th Circuit Court of Appeals, and one by the 10th Circuit Court of Appeals, both discuss and apply the Rooker-Feldman US Supreme Court doctrine. The US Supreme Court Rooker-Feldman doctrine, named after the US Supreme Court Rooker case, and the US Supreme Court Feldman case, holds that lower federal courts (includes US bankruptcy Courts, US District Courts, BAPs, US Circuit Courts)-in fact that…
In re Intervention Energy Holdings, LLC, 553 B.R. 258 (Bankr. D. Del. 2016)
U.S. Bankruptcy Court for the District of Delaware ruled that a provision in a debtor’s operating agreement that permitted its lender to block a bankruptcy filing by voting the lender’s single Common Unit against a filing was unenforceable as a matter of federal bankruptcy policy. What restrictions on filing bankruptcy are/are not against bankruptcy public policy is the subject of many cases, with differing outcomes. An outright prohibition on a company filing bankruptcy IS unenforceable as being against federal bankruptcy policy.
In Castaic Partners II, LLC v. Daca-Castaic, LLC
In Castaic Partners II, LLC v. Daca-Castaic, LLC (In re Castaic Partners II, LLC), 823 F.3d 966 (9th Cir. 2016), the United States Court of Appeals for the Ninth Circuit dismissed the debtors’ appeal of stay relief orders as constitutionally moot after the consensual dismissal of the debtors’ underlying bankruptcy cases.
In re Quantum Foods, LLC, 554 B.R. 729 (Bankr. D. Del. 2016)
In re Quantum Foods, LLC, 554 B.R. 729 (Bankr. D. Del. 2016): The United States Bankruptcy Court for the District of Delaware held that a defendant could set off potential preference liability against its allowed administrative expense claim.
Smith v. I.R.S. (In re Smith)
Smith v. I.R.S. (In re Smith), ___F.3d___ (9th Cir. July 13, 2016) Circuit case number 14-15857: Ninth Circuit holds that taxes owed, pursuant to a tax return that the debtor files late – after the due date for the return – may still, under some circumstances be dischargeable in the debtor’s bankruptcy case, using a 4 part test known as the "Beard" test. The part of the Beard test that is most often contested by the tax agency is whether the debtor, in filing a late tax return, made an honest and reasonable attempt to satisfy the requirements of the…
In re Boates, ___BR___ (BAB case no. AZ-15-1279-KuJaJu) (9th Cir. B.A.P. July 8, 2016)
In re Boates, ___BR___ (BAB case no. AZ-15-1279-KuJaJu) (9th Cir. B.A.P. July 8, 2016). Published. 9th circuit BAP holds that a chapter 7 debtor’s rights arising from a prepetition payment to a lawyer are estate property, even if the engagement agreement isn’t executory. Comment: this opinion does not seem consistent with the Bankruptcy Code.
Southwest Airlines Co. v. Tidewater Finance Co. (In re Cole), ___BR___ 15-70960 (N.D. Ga. June 24, 2016)
Southwest Airlines Co. v. Tidewater Finance Co. (In re Cole), ___BR___ 15-70960 (N.D. Ga. June 24, 2016) is yet another bankruptcy case which rules on the issue of whether the Rooker-Feldman doctrine prohibits a bankruptcy court (or any other federal court except the US Supreme Court) from changing a ruling made by a state court, or whether the federal court can change/overrule the state court’s ruling on an automatic stay. With cases going both ways on this issue, this will likely eventually be a “Circuit split” (conflicting decisions by various US Circuit Courts). Circuit splits usually eventually get ruled on…
Grossman v. Wehrle (In re Royal Manor Management Inc., ___F3d___, 15-3146 (6th Cir. June 15, 2016)
Grossman v. Wehrle (In re Royal Manor Management Inc., ___F3d___, 15-3146 (6th Cir. June 15, 2016), In Grossman Sixth Circuit Joins the Split Among US Circuit Courts, on Whether Bankruptcy Courts Are ‘Courts of the U.S.’The Sixth Circuit Grossman decision joined the Second, Third and Seventh Circuits in holding that a bankruptcy court is a “court of the United States.The Ninth and Tenth, US Circuit Courts of Appeals, have held that bankruptcy courts are not courts of the U.S. To decide another case where the outcome would either elevate or deprecate the status of bankruptcy courts, the Supreme Court should…
In re Sunnyslope Housing Ltd. Partnership, ___F3d___, 2016 Westlaw 1392318 (9th Cir. 2016)
In re Sunnyslope Housing Ltd. Partnership, ___F3d___, 2016 Westlaw 1392318 (9th Cir. 2016), the Ninth Circuit Court of Appeals held that since affordable housing covenants encumbering a development were subordinated to the senior lender’s lien, the borrower’s valuation of the lender’s collateral in a bankruptcy case had to account for the potential extinguishment of those junior covenants in the event of foreclosure. One could quarrel with the Ninth Circuit’s reasoning which led to this result, because it could be argued that the affordable housing covenants “ran with the land”, and therefore would NOT be extinguished by a foreclosure, that they…