Recent Cases
U.S. v. Miller, ___F.4th___ 21-4135 (10th Cir. June 27, 2023), appeal 21-4135
U.S. v. Miller, ___F.4th___ 21-4135 (10th Cir. June 27, 2023), appeal 21-4135: US Tenth Circuit Court of Appeal holds that IRS Has No Sovereign Immunity to Bar a Fraudulent Transfer Suit Under Section 544(b). Therefore, a bankruptcy trustee can sue the IRS to seek to recover a fraudulent transfer from the IRS, that was made to the IRS by a person or entity who/which later files bankruptcy. The circuits are now split 3 Circuits, to 1 Circuit, with the majority finding a waiver of sovereign immunity under Section 544(b)(1) for lawsuits by a trustee based on claims that an actual…
Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin
In Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, case 22-227, the U.S. Supreme Court, on 6/15/23, held that Native American tribes’ sovereign immunity does not shield them from suits brought by debtors who declare bankruptcy, finding the question of whether the U.S. Bankruptcy Code abrogates tribal immunity “remarkably straightforward.”
Bledsoe v. Cook, 22-1328 (4th Cir. June 14, 2023): appeal direct to Circuit, published decision, appeal No. 22-1328
Bledsoe v. Cook, 22-1328 (4th Cir. June 14, 2023): appeal direct to Circuit, published decision, appeal No. 22-1328: holds Chapter 13 Debtors May Deduct their Actual Mortgage Expenses to Arrive at Disposable Income, in calculating their “disposable monthly income” that is to be paid monthly to fund Chapter 13 plan The Fourth Circuit agreed with the Sixth and Ninth Circuits by allowing chapter 13 debtors to deduct their actual mortgage expenses, not limited by the local standard mortgage deduction. The chapter 13 debtors’ monthly mortgage payment was $1,100 more than the local standard mortgage deduction. Abjuring a split of circuits,…
Evans v. McCallister (In re Evans), ___F.4th___, 2023 WL 3939837(9th Cir. June 12, 2023)
In an issue that has caused a split in the bankruptcy courts, the Ninth Circuit Court of Appeals held that a Chapter 13 Trustee is not entitled to its percentage fee of plan payments as compensation in a Chapter 13 when a plan is not confirmed. The Ninth Circuit joined the Tenth Circuit as the only federal court of appeals that has addressed this issue. See Goodman v. Doll (In re Doll), 57 F.4th 1129 (10th Cir. 2023). This issue is also currently pending in the Second and Seventh Circuit Court of Appeals. SeeSoussis v. Macco, 20-05673, 2022 WL 203751…
In re Purdue Pharma, 2023 WL 3700458, ___F.4th___(2nd Cir. 5/30/23)
In re Purdue Pharma, 2023 WL 3700458, ___F.4th___(2nd Cir. 5/30/23): Second Circuit US Court of Appeals approves Chapter 11 plan in the Purdue Pharma bankruptcy case, which grants releases to non-debtors (the Sackler family, equity holders of bankruptcy debtor Purdue Pharma, which contributed 6 BILLION dollars to fund debtor Purdue Pharma’s Chapter 11 plan. The Second Circuit US Circuit Court reversed the District Court (which had refused to allow the non-debtor releases, which creditors of Purdue Pharma had not consented to. The Second circuit held that nonconsensual third-party releases of such direct claims are statutorily permitted under 11 U.S.C. §§…
Texxon Petrochemicals LLC v. Getty Leasing Inc. (In re Texxon Petrochemicals LLC), ___F.4th___ (5th Cir. May 3, 2023), appeal 22-40537
US 5th Circuit Court of Appeals holds, in an appeal in a bankruptcy case, that federal appellate Courts May Bypass Equitable Mootness to Rule on the Merits Even if an appeal is equitably moot, the appellate court nonetheless has appellate jurisdiction. Equitable mootness is prudential, not jurisdictional. When equitable mootness is a close question on appeal, the Fifth Circuit has ruled that an appellate court can bypass a motion to dismiss for equitable mootness and address the appeal on the merits. Why is that so? Because an appellate court does not lack constitutional or Article III jurisdiction, even if the…
US Supreme Court 4/19/23 decision
US Supreme Court 4/19/23 decision, in MOAC Mall Holdings LLC v. Transform Holdco LLC, ___ US ___, 2023 WL 2992693, at ∗1 (U.S. Apr. 19, 2023) holds that Bankruptcy Code section 11 U.S.C. § 363(m) is not jurisdictional, reversing the Second Circuit Court of Appeals and resolving a Circuit split over whether section § 363(m) limits appellate jurisdiction over § 363 sale orders or instead just limits the appellant’s remedies on appeal in the event there is a sale or lease to a good-faith purchaser or lessee. 11 USC 363(m) is the bankruptcy code section where the bankruptcy court makes…
CashCall, Inc. loses in 9th Circuit Court of Appeals decision
After years of litigation, lender “CashCall, Inc.” loses in 9th Circuit Court of Appeals decision, in case where Consumer Financial Protection Bureau (“CFPB”) wins, with result CashCall is Fined $167 Million For CFPA Violations [as reported in Credit & Collection e-newsletter of 4/13/23] This litigation between CFPB and CashCall, Inc. goes back to 2016, when a US District Court, Central District of California, granted judgment in favor of the Consumer Financial Protection Bureau (CFPB) in its long-running challenge to CashCall, Inc.’s tribal-lending operation. Specifically, the court found that CashCall engaged in unfair, deceptive, and abusive acts or practices in violation…
Mazloom v Navient Solutions, LLC (In re Mazloom)
Mazloom v Navient Solutions, LLC (In re Mazloom), 648 B.R. 1 (Bankr. N.D.N.Y. 2023) is a 2023 bankruptcy case dealing with the question of whether private student loans made by Navient Credit Finance Corporation (Navient) are nondischargeable under Bankruptcy Code 11 USC § 523(a)(8). On cross summary judgment motions, by debtor and Navient, the Bankruptcy Court for the Northern District of New York (the Court) ruled (1) for the debtor that the loans were not “part of a program funded in part by the government” as required for nondischargeability under § 523(a)(8)(A)(i) but (2) for the creditor that the debtor’s…
Ryan v. Branko Prpa MD, LLC, 55 F.4th 1108 (7th Cir. 2022)
Ryan v. Branko Prpa MD, LLC, 55 F.4th 1108 (7th Cir. 2022): The US Seventh Circuit Court of Appeals (the Court) recently held that an order, which arose from a workers’ compensation action, directing a debtor’s employer to deposit funds in debtor’s lawyer’s trust account for payments to medical creditors created an express trust such that the funds were excluded from the debtor’s chapter 7 bankruptcy estate and he was not entitled to claim an exemption in them. FACTS Debtor Rodney Ryan (Ryan) was injured on the job and sought worker’s compensation in Wisconsin for his injuries. He settled the…