Recent Cases
Summerlin v. Turnage, a 3/14/23 USDC, WDNC, District Court decision in a bky appeal, in which US District Ct affirms refusal of Bky Judge to allow a (nasty) trustee tactic, by which Trustee sought, by a deal with a junior secured lender, to achieve a sale of debtor’s home, but Eradicate debtor’s Homestead Exemption
District Court decision holds that subordinated lenders can’t take a ‘haircut,’ give a ‘tip’ to the trustee, sell a home and eradicate the debtor’s homestead exemption. Employing the most vituperative language employed so far to nix the strategy, a district judge in North Carolina affirmed Bankruptcy Judge Laura T. Beyer, who had barred secured creditors from taking haircuts so the trustee could pay his commission and make a small distribution to general creditors while cheating the debtor out of her homestead exemption. In his March 13 opinion, Statesville, N.C.’s District Judge Kenneth D. Bell called the proposal a “backroom deal,”…
Harrington v. Mayer (In re Mayer), 20-56340 (9th Cir. Ct of Appeals, issued March 8, 2022), and Harrington v. Mayer (In re Mayer), 20-56340 (9th Cir. Ct. of Appeals, issued March 8, 2022)
Denial of Stay Modification Without Prejudice Can Be Final, Ninth Circuit Says In a 3/8/22 decision, the Ninth Circuit Court of Appeals answered a question left open by the Supreme Court in Ritzen. Reaching an issue the Supreme Court left undecided in Ritzen, the Ninth Circuit held that denial of a stay-relief motion without prejudice can still be a final, appealable order. The appeals court looked beyond the “without prejudice” label placed on the order by the bankruptcy court to decide whether denial of the motion meant that the creditor would not have stay relief for the purpose sought by…
In re Mack, ___BR___, 2023 WL 2397345
In re Mack, ___BR___, 2023 WL 2397345 (B.A.P. 9th Cir. Mar. 7, 2023), that demonstrates the dangers of trying to use a state court default judgment as basis for nondischargeability. Practice pointer: Be sure the default judgment says everything it needs to say, to prove up all elements you need to prove, to prove whichever kind of nondischargeability you are trying to prove via the state court default judgment. If the default judgment does NOT have everything you need, your nondischargeability complaint needs to request for trial in bky ct. In Mack, the state court default judgment did NOT say…
Fidelity & Deposit Co. of Maryland v. TRG Venture Two LLC (In re Kimball Hill Inc.),___F4th___ (7th Cir. March 3, 2023), appeal 22-1724
Fidelity & Deposit Co. of Maryland v. TRG Venture Two LLC (In re Kimball Hill Inc.),___F4th___ (7th Cir. March 3, 2023), appeal 22-1724: US Court of Appeals for the Seventh Circuit Upholds Bankruptcy Court Order that orders a creditor to pay $9.5 Million in Sanctions, for creditor knowingly and intentionally violating the Plan Injunction in a confirmed Chapter 11 bankruptcy plan. The bonding company creditor was sanctioned $9.5 million dollars because it “ignored the confirmation order, which, by its terms, extinguished any rights to seek to recover, outside of the bankruptcy proceedings, the liabilities that the bankruptcy debtor owed the…
Bartenwerfer v. Buckley, 598 U. S. ___ (United States Supreme Court 2/22/2023)
Bartenwerfer v. Buckley, 598 U. S. ___ (United States Supreme Court 2/22/2023): On February 22, 2023, the U.S. Supreme Court issued its unanimous opinion in Bartenwerfer v. Buckley, 598 U. S. ___ (2023) (honest debtor/business partner/wife could not discharge claim arising from fraud of dishonest partner/husband under 11 U.S.C. §523(a)(2)(A), even though the debtor did now know of the partner’s fraud). In the opinion of The Bankruptcy Law Firm, PC, this decision is very surprising, and we think is wrong, because the more reasonable interpretation of 11 U.S.C. §523(a)(2)(A) is to interpret that section of the Bankruptcy Code as only…
In re Piskiel, ___BR___ (Bankr. D.N.Mex 2-10-23), bky case no. 21-10717, discusses that Survivor’s Benefits Under a Pension Plan Might Not Become Property of the Bankruptcy Debtor’s “bankruptcy estate”
Unlike Clark v. Rameker, where an inherited IRA wasn’t exempt, the inheritance of benefits under a pension plan might not become estate property under Section 541(c)(2). Although the Supreme Court held in Clark v. Rameker, 573 U.S. 122 (2014), that an inherited individual retirement account is not exempt, the inheritance of survivor’s benefits under a pension plan can be excluded from a debtor’s bankrupt estate, for reasons explained by Bankruptcy Judge David T. Thuma of Albuquerque, N.M. In his February 10 opinion, Judge Thuma wasn’t required to decide whether the debtor’s survivor’s benefit was exempt. The debtor’s father worked for…
Harris v. Creditmax Collection Agency Inc. (In re Warsco), ___F4th___(7th Cir. Jan. 9, 2023) appeal 22-1733
Date of a Garnishment Order Doesn’t Matter for Preferences, Seventh Circuit Says; Its date of payment that determines whether payment is made in more than or less than 90 days before bky filed Circuit Judge Frank Easterbrook tersely held that the Supreme Court’s Barnhill opinion overruled prior Seventh Circuit precedent. Overruling the Seventh Circuit’s own 1984 precedent in deference to the later-decided Barnhill v. Johnson, 503 U.S. 393 (1992), Circuit Judge Frank H. Easterbrook held that a judgment creditor is liable for a preference if the creditor collects on a garnishment within the 90-day preference window. Even though the garnishment…
LTA Claimholders Group v. LATAM Airlines Group S.A. (In re LATAM Airlines Group S.A.), ___F.4th___ (2d Cir. Dec. 14, 2022)
LTA Claimholders Group v. LATAM Airlines Group S.A. (In re LATAM Airlines Group S.A.), ___F.4th___ (2d Cir. Dec. 14, 2022), appeal 22-1940: Second Circuit Court of Appeal agrees with Ninth, Fifth and Third Circuits, that a claim is only “impaired” if a bankruptcy 13 or 11 plan changes that claims rights; and that an unsecured creditor of an insolvent debtor is not entitled to be paid post-petition interest by the debtor’s plan, where the plan treatment of that unsecured creditor’s claim is “unimpaired” Unimpaired, Unsecured Creditors Don’t Get Post-Petition Interest No “Circuit Split” occurred, because, because the Second Circuit agrees…
Avion Funding LLC v. GFS Industries LLC (In re GFS Industries LLC), 22-05052 (Bankr. W.D. Tex. Nov. 10, 2022)
Avion Funding LLC v. GFS Industries LLC (In re GFS Industries LLC), 22-05052 (Bankr. W.D. Tex. Nov. 10, 2022): discusses that there is a “split” (ie disagreement) among Judges as to whether or not a corporation that files Subchapter V of Chapter 11 bankruptcy case can be sued to hold a debt “nondischargeable”, pursuant to 11 USC 523(a)(2), (4) or (6), where the debt is a debt arising from debtor committing fraud, embezzlement, breach of fiducisary duty, or is a debt from debtor committing a “willful and malicious act” (except a Chapter 13 debtor can seek to discharge a “willful…
Masingale v. Muding (In re Masingale), ___BR___ (9th Cir. BAP 11/2/22), appeal 22-1016
Masingale v. Muding (In re Masingale), ___BR___ (9th Cir. BAP 11/2/22), appeal 22-1016; for publication 9th Cir BAP decision is important, because BAP rules that by claiming exemption of ‘100% of FMV’ of asset (usually homestead exemption, but could be something like stock) debtors keep postpetition appreciation in exempt assets. Note that for debtors in California, using California exemptions, this result is the result required by the amended California exemption law, which takes effect for bankruptcy cases filed after 1/21/23.