Second Circuit: In re Motors Liquidation Co.

Bankruptcy, Jurisdiction, Procedural Due Process,  Mootness


As direct and indirect post-sale claims against the successor corporation arose within the bankruptcy process and related to the injunctions issued, the bankruptcy court properly exercised jurisdiction over the claims.

Prepetition tort claims against a successor corporation state a claim in bankruptcy where the both the contingent flaw and the relationship from which the duty arose were present prior to the order of sale. 

No clear error in court's holding that Procedural Due Process requires--prior to approval of sale--direct purchaser notice of flaws that manufacturer reasonably should have known about.

To determine PDP prejudice, court must have a fair assurance that the prior decision was not substantially swayed.

Given high stakes, there was a substantial likelihood of settlement for claims directly relating to the defect.

 Court's ruling that claims against successor corporation were equitably moot was advisory and is therefore vacated.


In re Motors Liquidation Co.

Eighth Circuit: Domick Nelson v. Midland Credit Management, Inc

FDCPA, Bankruptcy, Circuit Split


FDCPA does not allow for a claim against a time-barred debt filed as a claim against a bankruptcy estate.

Circuit split flagged.



Domick Nelson  v.  Midland Credit Management, Inc

Eighth Circuit: Critique Services, LLC v. LaToya L. Steward

Bankruptcy, Ethics


Pre-petition motion for equitable disgorgement is maintainable by petitioner so long as the trustee has abandoned the estate.

Insufficient basis to question impartiality of judge who previously headed US Trustee's office that engaged in adversarial process against petitioner LLC.

Court properly construed pro se petition; LLC properly a party; partial payment didn't moot the claim, etc.

Sanctions upheld.




Critique Services, LLC  v.  LaToya L. Steward

First Circuit: Hoover, III v. Harrington

Bankruptcy

Sufficient notice of conversion proceedings where the proceedings are adjourned, and the court informs the participants that the matter is turning to conversion.

Speculative testimony as to future income does not bar a finding of no reasonable likelihood of rehabilitation.

Where little or nothing can be raised from the liquidation of the estate, the claim must be riaed in the proceeding -- otherwise waived.


Hoover, III v. Harrington

First Circuit: Baker v. Harrington

Legal Ethics, Bankruptcy

Misleading characterization of statute and precedent calculated to delay the proceedings is an impermissible artifice of zeal. 
Sanction of having to enroll in a Legal Ethics course upheld.

 Baker v. Harrington

Seventh Circuit: John H. Germeraad v. Myrick J. Powers

Bankruptcy, FRCP, Mootness

A denial of a trustee's motion to modify is analogous to a 12(b)6 dismissal, and is therefore sufficiently final for appeal when not attributable to a technical defect.

Just as 60(b) motion might be filed again with a different theory, the fact that the trustee might file several motions does not affect their finality for purposes of review.

As the proposed change would relate back to the filing date of the motion, the expiration of the plan's timeframe doesn't make the controversy moot.  The fact that denial of discharge is an equitable decision does not affect mootness.

So long as the motion to modify the plan is filed during the pendency of the plan, it is timely.

Although nothing in the Code authorizes a postconfirmation modification to account for increased income, the decision is an equitable one suggested by the purposes of the Code, and is not subjet to any "good faith" requirement.


John H. Germeraad v.   Myrick J. Powers

Ninth Circuit: David Zachary v. California Bank and Trust

Bankruptcy

Petitioner can cram down plans over the objection of a dissenting class of unsecured creditors while retaining post-petition property but not while retaining pre-petition property .

(From summary)

https://d3bsvxk93brmko.cloudfront.net/datastore/opinions/2016/01/28/13-16402.pdf

Fifth Circuit: Marilyn Garner v. Knoll, Incorporated

Bankruptcy, UCC

Although the first claim on the funds transferred into the deposit account survived any secured interest against the acount, a subsequent commingling created a burden on the Trustee to establish that the funds remained identifiable.

http://www.ca5.uscourts.gov/opinions/pub/15/15-10274-CV0.pdf

Sixth Circuit: Village Green I, GP v. Federal Nat'l Mortgage Assoc.

Bankruptcy

Bankruptcy plan is not proposed in good faith when it impairs a minor class of creditors consisting of its former legal representation by delaying payment two weeks when there is evidence of present means that make the minor debt insignificant.

http://www.ca6.uscourts.gov/opinions.pdf/16a0018p-06.pdf

Fourth Circuit: James Angell v. Stubbs & Perdue, P.A.

Bankruptcy, Retroactive application

As Bankruptcy petition changed from reorganization to liquidation subsequent to the change in the statute regulating  subordination of secured debts in liquidation proceedings, administrative expenses incurred in reorganization phase cannot gain priority through the equitable subordination of secured debts.

http://www.ca4.uscourts.gov/Opinions/Published/151316.P.pdf

Eighth Circuit: O&S Trucking, Inc. v. Mercedes Benz Financial Serv.

Bankruptcy

While a person can appeal their own Chapter 11 amended bankruptcy plan if it incorporates adverse elements, there must be sufficient objection to the plan, and this isn't achieved by referring to an already-filed appeal and any subsequent appeals.

http://media.ca8.uscourts.gov/opndir/16/01/152048P.pdf

Seventh Circuit: Smith, Keith v. Sipi, LLC

Bankruptcy, standing

State tax sale isn't a transfer for value, as the purchasers bid on the lien obligation without explicit reference to the value of the property.

Both parties have standing, where one was the initial plaintiff, and the other was later joined prior to their divorce, which left the joined plaintiff with sole rights in the property but other issues unresolved.

Plaintiff's recovery limited to homestead exception.

Purchaser of the lien obligation was the initial transferee, as the state merely facilitated the transfer.

Second purchaser had no constructive knowledge of fraudulence of transfer in the circumstances.

http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2016/D01-20/C:15-1166:J:Hamilton:aut:T:fnOp:N:1689637:S:0

First Circuit: US v. Manso-Cepeda

Bankruptcy

A denial of discharge due to insufficient record-keeping in the pre-petition period is not a strict liability standard, but can be offset by a justification that is objectively reasonable.

Claiming that the petitioner was not the true principal for the assets in question is insufficient basis for denying discharge based on the unexplained dissipation of assets.

http://media.ca1.uscourts.gov/pdf.opinions/15-9005P-01A.pdf

Third Circuit: In re: Thomas C. Wettach

Bankruptcy, Burdens

At trial, bankruptcy petitioner has production burden to show that funds transferred were used for household purposes, although the creditor still retains the burden of persuasion on the voidability of the transfer.

Burden under constructive transfer state statute is identical to the Federal.

No clear error in trial court factual findings on the transfer.

http://www2.ca3.uscourts.gov/opinarch/143140p.pdf

Eighth Circuit: CRP Holdings A-1, LLC v. Casey D. O'Sullivan

Property, Bankruptcy

As the unenforcable lien against a property held by a tenancy of the entirety clouded title, it was fixed for purposes of the Bankruptcy Code, and can therefore can be avoided according to the terms of the Act.

http://media.ca8.uscourts.gov/opndir/16/01/156020P.pdf

Third Circuit: In Re Trump Entertainment Resorts

Labor / Bankruptcy

The Bankruptcy Code provisions referencing CBAs apply to the terms of the prior CBA left in place after the end of a prior CBA -- the District Court therefore had jurisdiction under the Code to allow modification of the terms of the agreement, subject to the close scrutiny of the court.

http://www2.ca3.uscourts.gov/opinarch/144807p.pdf

Tenth Circuit: Tripodi v. Welch

FRCP, Bankruptcy

Default judgment in securities action not susceptible to attack on the basis that the notes described in the pleadings were not securities, as they are not barred as a matter of law from being considered securities.

Securities judgment properly held nondischargable in bankruptcy, as relevant nondischargablilty statute requires a judicial order or verdict.

https://www.ca10.uscourts.gov/opinions/14/14-4084.pdf

Ninth Circuit: Leslie Gladstone v. Bancorp

Bankruptcy

Although the surrender value of the life insurance policies was nil, a pre-petition viatical transfer for value created value that should have been disclosed in bankruptcy proceedings.

Trustee's avoidance attempt is timely, as fraud equitably tolled the statute of limitations.

Trustee should have been given leave to amend claim.

https://d3bsvxk93brmko.cloudfront.net/datastore/opinions/2016/01/08/13-55773.pdf

Ninth Circuit: Eden Place v. Sholem Perl

Bankruptcy / property

As the bankruptcy proceeding is final with respect to the property at issue, interlocutory appeal has jurisdiction.

A tenant's remaining within a premises during an a unlawful detainer action does not create an equitable interest in the property, as the court is ruling on the supervening question of better title.

Dissent:  Insufficiently final for jurisdiction.

https://d3bsvxk93brmko.cloudfront.net/datastore/opinions/2016/01/08/14-60039.pdf

Seventh Circuit: Frederick Grede v. Bank of New York

Bankruptcy/fraud

Given the paucity of the banks assets, the creditor bank had sufficient inquiry notice of the fact that funds on deposit were being used for collateral and therefore cannot assert a secured claim against the Trustee's characterization of the transaction as pre-petition avoidable transfer.

As only the lien on the funds is retained, no impermissible double recovery by the Trustee, and no claim under the Code for assets transferred in good faith.

To trigger equitable subordination, the creditor must have known of the fraud, which is a higher bar than inquiry notice -- remand.

http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2016/D01-08/C:15-1039:J:Posner:aut:T:fnOp:N:1684393:S:0