Recent Cases
Johnson & Johnson’s Third Bankruptcy Case for Talc Lawsuits Thrown Out
On 4/1/25, a US bankruptcy judge dismissed Johnson & Johnson’s (“J&J”) third attempt to resolve its mass talc liabilities through chapter 11, rejecting the company’s latest bid to end one of the largest-ever mass torts. J& J had set up an “affiliate” corporation to J&J, and had the affiliate corporation file bankruptcy ins Texas. J&J put the liabilities for the mass tort suits suing J&J, for J&J’s talc baby powder allegedly causing people to get cancer, particularly allegedly causing women to get ovarian cancer. Judge Christopher Lopez of the U.S. Bankruptcy Court in Houston dismissed a J&J affiliate’s chapter 11…
In Re Village Oaks Senior Care LLC, 664 B.R. 170 (E.D. CA 2024)
In In Re Village Oaks Senior Care LLC, 664 B.R. 170 (E.D. CA 2024), the trial court sustained the creditor’s objection to the Debtors’ eligibility as Subchapter V debtors and de-designated them as chapter 11 cases, after finding that the objecting creditor had not forfeited or waived her ability to challenge the debtors’ eligibility. To read the full decision, click here. Facts This case involved three related debtors– Village Oaks Senior Care, LLC, El Dorado Senior Care, LLC and Benjamin L. Foulk (“Dr. Foulk”). Dr. Foulk was the 100% owner of Village Oaks and El Dorado. Gina MacDonald (“MacDonald” or…
In re Raocore Technology LLC, ___ BR___ (Bankr. D.D.C. Jan. 28, 2025) bky case 24-00065
In re Raocore Technology LLC, ___ BR___ (Bankr. D.D.C. Jan. 28, 2025) bky case 24-00065: denied so called ‘Evergreen’ Retainer that SubV Chapter 11 debtor had agreed to pay its bankruptcy attorneys, and explains that ‘evergreen’ retainers are Ok Only in ‘Exceptional’ Sub V Cases Washington, D.C. Bankruptcy Judge Elizabeth Gunn describes the procedures to employ for approval and operation of an ‘evergreen’ retainer in chapter 11. In Washington, D.C., it seems unlikely that Gunn will countenance a so-called evergreen retainer in a chapter 11 case where “approval would essentially authorize the [debtor’s counsel] to write themselves a blank check…
Saldana v. Bronitsky (In re Saldana), 122 F.4th 333 (9th Cir. Nov. 22, 2024)
In Saldana v. Bronitsky (In re Saldana), 122 F.4th 333 (9th Cir. Nov. 22, 2024), the Ninth Circuit Court of Appeal (“Ninth Circuit”), in a 2-1 decision, reversed a prior holding by the Ninth Circuit Bankruptcy Appellate Panel (“BAP”). The Ninth Circuit, in Saldana, held that voluntary contributions to employer-managed retirement plans are not disposable income which must be included in determining minimum required payments to creditors in a debtor’s Chapter 13 plan. The Ninth Circuit’s ruling creates a circuit split, because US Circuit Courts in Circuits other than the Ninth Circuit, have ruled opposite to how the Ninth Circuit…
In re 301 W. North Ave. LLC, ___BR___(Bankruptcy Court. N.D. Ill. Jan. 6, 2025)
In re 301 W. North Ave. LLC, ___BR___(Bankruptcy Court. N.D. Ill. Jan. 6, 2025), bankruptcy case 24-2741, reports on a trick (and legal, and not against public policy) way for a lender to prevent a borrower which is a corporation, or a LLC, from being able to file bankruptcy, if/when the borrower defaults on paying the lender back for the loan that the borrower borrowed from the lender. Companies Can Be ‘Bankruptcy Remote,’ if Properly Done Bankruptcy Judge David Cleary wrote a manual on how a company can be prevented from filing bankruptcy (sometimes referred to as making the company…
Gramigna v. Roumeliotis (In re Gramigna), __BR__ (Bankr. D. Conn. Dec. 20, 2024), case 24-50464
A Mortgage Deficiency Judgment Is a Judicial Lien Subject to Avoidance Under § 522(f) A deficiency judgment resulting from mortgage foreclosure is not ‘a judgment arising out of a mortgage foreclosure’ and can be avoided as a judgment lien. In a somewhat similar situation, Bankruptcy Judge Mina Nami Khorrami of Columbus, Ohio, decided that a consensual judgment results in a judicial lien that can be avoided as an encumbrance on an exemption under Section 522(f). Gramigna holds a deficiency judgment arising from mortgage foreclosure is also a judgment lien subject to avoidance and does not fall under the exception to…
Bankruptcy Court Decision Holds
Bankruptcy Court decision holds that a lien that is created to enforce a court judgment the bankruptcy debtor consented to, before debtor filed bankruptcy, is a judgment lien that can be avoided pursuant to 11 USC 522(f), IF the judgment lien impairs an exemption that debtor was entitled to claim, and did claim, in debtor’s bankruptcy schedule C (exemptions). ‘Obtained by’ legal proceedings, a consent judgment is still a judgment lien that can be avoided if it impairs an exemption. Even when a debtor consents to the entry of judgment, a lien on debtor’s property (usually on debtor’s residence), created…
Stehrenberger v. Stehrenberger (In re Stehrenberger)
Stehrenberger v. Stehrenberger (In re Stehrenberger), ___BR___ (B.A.P. 9th Cir. Nov. 25, 2024), appeal 23-1207: BAP holds that for a debt to be held nondischargeable per 11 USC 523(a)(19) (securities law violations), the a Bankruptcy Court Can Find a Securities Law Violation, there does not have to be a pre-existing decision of a state or federal court that the debtor has violated securities law(s). This is a question where the lower courts are divided, which makes this Ninth Circuit Bankruptcy Appellate Panel decision important, that a prior decision by a state or federal court finding a violation of securities laws…
Saldana v. Bronitsky (In re Saldana) ___F.4th___ (9th Cir. Court of Appeals, Nov. 22, 2024); appeal 23-15860
Creating a Circuit Split, Ninth Circuit Allows Chapter 13 debtor to continuing making voluntary contributions to debtor’s retirement plan, during debtor’s Chapter 13 bankruptcy case, and the voluntary contributions are subtracted from what would otherwise be the debtor’s disposable income, that debtor would be required to pay into the Chapter 13 plan, to fund the Chapter 13 plan The Ninth Circuit split with the Sixth Circuit in the interpretation of the ‘hanging paragraph’ in Section 541(b)(7). Courts are divided four ways on whether or how much a ‘13’ debtor may contribute to voluntary retirement plans after filing. This 9th Circuit…
Harrington v. Purdue Pharma L.P., 144 S. Ct. 2071 (2024)
In re Roman Catholic Diocese of Syracuse, (Bankr. Ct. N.D.N.Y. Nov. 14, 2024), case New York, 20-30663. The US Supreme Court, in Harrington v. Purdue Pharma L.P., 144 S. Ct. 2071 (2024) ruled that it is illegal/not permitted for a proposed bankruptcy plan to have nonconsensual releases, that make tort claimant creditors subject to the proposed bankruptcy plan, which plan releases not just debtor, but also non-debtors, and the tort claimant creditors are only paid what the plan gives them, instead of the tort claimant creditors being able to sue non-debtors directly. In that case the non-debtors were the Sacklar…