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Articles 31 - 57 of 57
Full-Text Articles in Law
Negligent Vehicular Homicide Caps A Debtor’S Homestead Exemption, Christine Knoesel
Negligent Vehicular Homicide Caps A Debtor’S Homestead Exemption, Christine Knoesel
Bankruptcy Research Library
(Excerpt)
In an expansive reading of the homestead exemption cap added by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the First Circuit Court of Appeals, in Larson v. Howell, held that criminal negligence is sufficient to trigger the section 522(q)(1)(B)(iv) homestead exemption cap. 513 F.3d 325, 328 (1st Cir. 2008). In Larson v. Howell, Larson was found guilty of negligent vehicular homicide. In Larson’s bankruptcy case, the homestead exemption cap was applied because the debt arose from a criminal act. Id. at 327. The Court of Appeals reasoned that the cap should apply …
Non-Consensual Third Party Releases In Chapter 11 Bankruptcy, Craig Lutterbein
Non-Consensual Third Party Releases In Chapter 11 Bankruptcy, Craig Lutterbein
Bankruptcy Research Library
The Seventh Circuit, in Airadigm Communications, Inc. v. Federal Communications Comm’n. (In re Airadigm Commc’n, Inc.), 519 F.3d 640 (7th Cir. 2008), has joined the circuits permitting the non-consensual releases of non-debtor third parties from their obligations to creditors in chapter 11 reorganizations. In Airadigm, the court considered the validly of releasing a guarantor and major reorganization financer, Telephone and Data Services (hereinafter TDS), from liability resulting from the reorganization of debtor Airadigm Communications. The Court came to three conclusions on the subject: 1. Bankruptcy code section 524(e) does not prevent bankruptcy courts from granting third-party releases; 2. …
Narrowing The Scope Of Auditor Duties, David Margulies
Narrowing The Scope Of Auditor Duties, David Margulies
Bankruptcy Research Library
(Excerpt)
The tort of “deepening insolvency” refers to an action asserted by a representative of a bankruptcy estate against directors, officers, lenders, or others based on their pre-petition interactions with the debtor. 9 NORTON BANKR. L. & PRAC. 3d § 174:22. Liability under deepening insolvency has been imposed where “the defendant’s conduct, either fraudulently or even negligently, prolongs the life of a corporation, thereby increasing the corporation's debt and exposure to creditors.” In re LTV Steel Co., Inc., 333 B.R. 397, 421 (Bankr. N.D. Ohio 2005). Damages under the theory are sometimes awarded to a bankrupt corporation when, by delaying …
Bapcpa Does Not Require The Chapter 13 Means Test In Individual Chapter 11 Cases, Steven Saal
Bapcpa Does Not Require The Chapter 13 Means Test In Individual Chapter 11 Cases, Steven Saal
Bankruptcy Research Library
(Excerpt)
The Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) was implemented in order to prevent debtors from unjustly shielding value in their estate from deserving creditors and thus abusing the functionality of the federal bankruptcy system. Specifically, one problem perceived to be very prevalent was a practice by individual debtors who would seek to avoid the stringent guidelines of the “means test” in Chapter 13 cases by running for the protection of the more relaxed standards in Chapter 11 cases. The BAPCPA Amendments to section 1129 of the Bankruptcy Code were adopted to institute stricter standards in Chapter 11 …
Whether “Hedging” Anticipated Contingency Fees Should Be Deemed Impermissible Fee-Sharing Under Section 504 When The Policy Considerations Underlying The Statute Are Not Offended, David Bloom
Bankruptcy Research Library
(Excerpt)
Although the Bankruptcy Code establishes a clear prohibition against the sharing of fees by persons receiving compensation or reimbursement under section 504, it is unclear whether bankruptcy attorneys may be permitted to enter into “hedging” arrangements in order to obtain downside protection against risks associated with appeal. Ultimately, what is needed to decide this issue is a determination of what constitutes “sharing” of compensation within the meaning of the Code. Recently, in In re Winstar Communications, Inc., 378 B.R. 756 (Bankr. D. Del. 2007), the bankruptcy court found no ambiguity in the statute, and gave the term “sharing” …
In Re Whitehall Jewelers Holdings, Inc., Jonathan Borst
In Re Whitehall Jewelers Holdings, Inc., Jonathan Borst
Bankruptcy Research Library
(Excerpt)
In In re Whitehall Jewelers Holdings, Inc., No. 08-11261(KG), 2008 WL 2951974 (Bankr. D. Del. July 28, 2008), the court held against Whitehall Jewelers Holdings, Inc. (“Debtors”), in favor of approximately 124 consignment vendors (“Consignment Vendors”), where Debtors sought an order permitting the “free and clear” sale of all of their assets and inventory, including consigned goods from Consignment Vendors. See id. at *1–2. In order to develop a full understanding of the court’s holding, it is necessary to understand its statutory context, specifically sections 363 and 541 of the Bankruptcy Code, as well as Federal Rule of …
Chapter 13 Plan Cannot Avoid Lien Absent Adversary Proceeding, Michael Buccino
Chapter 13 Plan Cannot Avoid Lien Absent Adversary Proceeding, Michael Buccino
Bankruptcy Research Library
(Excerpt)
In SLW Capital, LLC v. Mansaray-Ruffin (In re Mansaray-Ruffin), 530 F.3d 230, 233 (3d Cir. 2008), the Third Circuit considered whether a Chapter 13 confirmation plan has res judicata effect with respect to a creditor’s lien when no adversary proceeding regarding the lien was brought under the Federal Rules of Bankruptcy Procedure (“the Rules”). The court held that the plan had no res judicata effect on such a lien. Accordingly, the lien passed through bankruptcy unaffected and could only be invalidated through an adversary proceeding. In doing so, the court made it clear that the requirements of …
Applying The “Applicable” Standard Or The Actual Amount: Monthly Rent In A Debtor’S Chapter 13 Plan, Paola Chiarenza
Applying The “Applicable” Standard Or The Actual Amount: Monthly Rent In A Debtor’S Chapter 13 Plan, Paola Chiarenza
Bankruptcy Research Library
(Excerpt)
Under The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) (S. 256, Pub. L. No. 109–8, 119 Stat. 23), debtors are subjected to a test in order to ensure their creditors are repaid as much as possible. Chapter 13 requires debtors in bankruptcy to file a plan indicting a monthly amount they will repay to creditors over a given set of years. The amount to be repaid is a debtor’s entire “disposable income,” which is income minus expenses. See 11 U.S.C. § 1325 (2007). Deductable expenses are to be calculated the same as a chapter 7 filing. …
Allowing Trustee Removal For Cause, Sua Sponte, After Notice And A Hearing, Jonathan Grasso
Allowing Trustee Removal For Cause, Sua Sponte, After Notice And A Hearing, Jonathan Grasso
Bankruptcy Research Library
(Excerpt)
The issue of whether a bankruptcy judge can sua sponte remove a trustee has rarely been addressed; however, two courts have recently considered the issue. The Bankruptcy Appellate Panel in Morgan v. Goldman (In re Morgan), 375 B.R. 838 (B.A.P. 8th Cir. 2007) and the U.S. Court of Appeals for the Eleventh Circuit in Walden v. Walker (In re Walker), 515 F.3d 1204 (11th Cir. 2008) both concluded that a bankruptcy judge has the ability to remove a trustee “for cause,” sua sponte, after “notice and a hearing.”
Morgan was the first case to ever deal …
United States V. White, 365 B.R. 457, Robert Griswold
United States V. White, 365 B.R. 457, Robert Griswold
Bankruptcy Research Library
(Excerpt)
In U.S. v. White, 365 B.R. 457 (Bankr. M.D. Pa. 2007), the U.S. Bankruptcy Court for the Middle District of Pennsylvania addressed the issue of whether the Internal Revenue Service (“IRS”) may setoff the entire pre-petition debt against pre-petition claims that have been declared exempt, or whether the IRS is only allowed to setoff up to the amount of the priority claim. The court held that the IRS may setoff the entire debt and is not limited to the amount of the priority claim.
The proper treatment of the IRS’ setoff right in bankruptcy is unclear because of …
In Re Kagenvaema: An End-Run Around The “Applicable Commitment Period”, Christopher Hunker
In Re Kagenvaema: An End-Run Around The “Applicable Commitment Period”, Christopher Hunker
Bankruptcy Research Library
(Excerpt)
Imagine a debtor who lives in New York State, where the median household income for 2007 was approximately $53,000. The debtor is a doctor and receives $80,000 of income from the hospital where she works. The good doctor, however, has gotten in over her head. She purchased a gigantic home she could not afford, has too many student loans to pay back, and regrets buying that expensive car. Her credit card debt is staggering, and she incurs thousands of dollars each month in interest and fees. She decides she can no longer handle the financial pressure and wants to …
Bapcpa’S Exception To The Absolute Priority Rule For Individual Chapter 11 Debtors, Christina Kormylo
Bapcpa’S Exception To The Absolute Priority Rule For Individual Chapter 11 Debtors, Christina Kormylo
Bankruptcy Research Library
(Excerpt)
Under the absolute priority rule of 11 U.S.C. § 1129(b)(2)(B)(ii), a reorganization plan that gives a junior class of creditors an interest in the estate will not be confirmed unless each senior class receives full payment or gives its consent. The absolute priority rule was amended in 2005 by the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) by adding an exception that allows individual chapter 11 debtors to retain property included in the estate under newly added section 1115. This amendment furthers the congressional intent of allowing chapter 11 to function more like chapter 13, under which there …
Chapter 13 Plan Must Pay Adequate Protection Payments Prior To Attorney’S Fees, Brian Lacoff
Chapter 13 Plan Must Pay Adequate Protection Payments Prior To Attorney’S Fees, Brian Lacoff
Bankruptcy Research Library
(Excerpt)
In In re Dispirito, a decision of importance to Chapter 13 debtors’ attorneys, the Bankruptcy Court for the District of New Jersey ruled that an undersecured creditor was entitled not only to adequate protection payments, but that the section 507(b), 11 U.S.C. § 507(b) (2006), “super-priority” status of the inadequate adequate protection provided during the case meant that the Chapter 13 plan had to pay those amounts before paying any of the debtor’s attorneys fees. 371 B.R. 695, 695 (Bankr. D.N.J. 2007). This article will compare how the Dispirito court’s ruling compares to other bankruptcy court’s rulings. It …
Whether Negative Equity Is Part Of Purchase Money Security Interest?, Vitaly Libman
Whether Negative Equity Is Part Of Purchase Money Security Interest?, Vitaly Libman
Bankruptcy Research Library
(Excerpt)
The 2005 BAPCPA amendments have turned routine car purchases into a source of litigation in the federal courts. The litigation stems from the financing agreements made during the transaction. Today, these financing agreements often require the purchaser to repay loans over a term of five years or longer. See, e.g. In re Peaslee, 358 B.R. 545, 554 (Bankr. W.D.N.Y. 2006). During these long terms, cars rapidly depreciate in value. Consequently, many consumers are left with vehicles that have a market value less then the amount of debt still owed on them. This deficiency is called “negative equity.” Often, consumers …
A Prime Brokers Good Faith Defense To Fraudulent Transfers, Michael Maffei
A Prime Brokers Good Faith Defense To Fraudulent Transfers, Michael Maffei
Bankruptcy Research Library
(Excerpt)
The exposure of Madoff Ponzi scheme, and others like it, will undoubtedly have an impact on the way that bankruptcy courts deal with fraudulent transfers to prime brokers, particularly the degree to which the prime broker on inquiry notice of fraud must act with diligence. Due to the recent economic tumult, the number of bankruptcies is continually growing. Another result of the economic decline is that a large number of investment funds have failed. After these funds failed, many prime brokers discovered that some of the funds were not operating funds at all. They were in fact Ponzi schemes. …
Case Analysis Of In Re Atlantic Gulf Comtys. Corp., Meagan Mahar
Case Analysis Of In Re Atlantic Gulf Comtys. Corp., Meagan Mahar
Bankruptcy Research Library
(Excerpt)
In In re Atlantic Gulf Comtys. Corp., a Delaware Bankruptcy Court applied New York law to both equitable and legal arguments made by the debtor, holding that funds in an escrow account created by the debtor were not property of the debtor’s estate. 369 B.R. 156, 164–65 (Bankr. D. Del. 2007). First, this memo will examine the two opposing legal and equitable arguments made by the parties, with each relying on different theories of characterizing the debtor’s interest in escrow accounts as they have evolved throughout New York caselaw. Second, it will analyze the contingency argument made by the …
A Bankruptcy Court’S “Preference” Towards Mandatory Mediation, Seth Meyer
A Bankruptcy Court’S “Preference” Towards Mandatory Mediation, Seth Meyer
Bankruptcy Research Library
(Excerpt)
Mediation has gained general acceptance in the legal community but has been slow to take root in bankruptcy. See generally Geetha Ravindra, Reflections on Institutionalizing Mediation, 14 DISP. RESOL. MAG. 28, (Spring/Summer 2008). Over the past 20 years, mandatory bankruptcy mediation has become a feasible alternative to traditional litigation of adversary proceedings. In the beginning, creditors and debtors would mediate only if they agreed to mediate. As statutory authority for court ordered mediation strengthened, bankruptcy courts ordered parties to mediate with more regularity. Presently, mandatory mediation is statutorily authorized and bankruptcy courts have institutionalized the use of mandatory bankruptcy …
Giant Eagle, Inc. V. Phar-Mor, Inc., Courtney Pasquariello
Giant Eagle, Inc. V. Phar-Mor, Inc., Courtney Pasquariello
Bankruptcy Research Library
(Excerpt)
Although under Pennsylvania common law a lessor has a duty to mitigate damages and is unable to claim damages that could have been avoided, no legal proposition exists that an injured lessor who attempts mitigation of damages resulting from a lessee’s misconduct must bear the consequences of a failed effort. Although the lessor received partial mitigation of a claim against a liable lessee, the lessee nonetheless remains liable for his previous breach.
Non-Claim Status Of Environmental Clean-Up Injunctions Limited To States, Klevis Peshtani
Non-Claim Status Of Environmental Clean-Up Injunctions Limited To States, Klevis Peshtani
Bankruptcy Research Library
(Excerpt)
Does the equitable right of an individual, whose property has been damaged by the debtor’s pollution, to injunctive clean-up relief constitute a “claim” that may be discharged in the debtor’s Chapter 11 bankruptcy? This was the issue of first impression which the Pennsylvania Bankruptcy Court dealt with in Krafczek v. Exide Corp., No. 00-1965, 2007 WL 1199530, at *1 (E.D. Pa. Apr. 19, 2007). The Krafczek court answered the question in the affirmative, 2007 WL 1199530 at *3, setting new precedent in an already narrow area of Bankruptcy Law upon which other courts had trodden carefully.
This article …
Early Retirement Benefits Not Entitled To Severance Priority, Joe Scolavino
Early Retirement Benefits Not Entitled To Severance Priority, Joe Scolavino
Bankruptcy Research Library
(Excerpt)
In Supplee v. Bethlehem Steel Corp (In re Bethlehem Steel Corp.), 479 F.3d 167 (2d Cir. 2007), the Second Circuit Court of Appeals addressed the issue of whether early retirement benefits triggered by severance are entitled to administrative expense treatment. The court held that that early retirement benefits are not entitled to severance priority. While the Second Circuit generally treats severance payments as priority administrative expenses when employment is terminated during the employer’s bankruptcy, Bethlehem determined that lump-sum retirement benefits for which the employee became eligible at termination did not constitute a new benefit earned at termination, …
American Home Mortgage, Holdings, Inc. V. Lehman Brothers Inc., Valerie Sokha
American Home Mortgage, Holdings, Inc. V. Lehman Brothers Inc., Valerie Sokha
Bankruptcy Research Library
(Excerpt)
The derivatives provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) amendments greatly enlarged the scope of the financial contracts that are shielded from traditional bankruptcy limitations such as the automatic stay and the prohibition on ipso facto clauses. Those exceptions were reaffirmed in a strong anti-debtor opinion in Am. Home Mortg. Inv. Corp. v. Lehman Bros. (In re Am. Home Mortg. Holdings, Inc.), 388 B.R. 69 (Bankr. D. Del 2008). Although Lehman may now regret its victory since it is a debtor in its own bankruptcy case, it succeeded in defeating a number …
Can Software Be A Bankruptcy Petition Preparer?, Thomas Szaniawski
Can Software Be A Bankruptcy Petition Preparer?, Thomas Szaniawski
Bankruptcy Research Library
(Excerpt)
Recently, in Reynoso v. United States (In re Reynoso) — a case of first impression for the Ninth Circuit that addressed the intersection of cyberspace and bankruptcy — the court held that a provider of web-based bankruptcy software was a bankruptcy petition preparer (“BPP”) under 11 U.S.C. section 110 and that under California law, the features and functionality of the software went beyond mere typesetting and constituted the unauthorized practice of law. Reynoso v. United States (In re Reynoso), 477 F.3d 1117 (9th Cir. 2007). In re Reynoso is significant because prior to this …
Defense Of In Pari Delicto Does Not Affect Trustee Standing, Elizabeth L. Anderson
Defense Of In Pari Delicto Does Not Affect Trustee Standing, Elizabeth L. Anderson
Bankruptcy Research Library
(Excerpt)
Rejecting the Second Circuit’s Wagoner rule and agreeing with the First, Third, Fifth, and Eleventh Circuits, the United States Court of Appeals for the Eighth Circuit held that the collusion of corporate insiders with third parties to injure the corporation does not deprive the corporation’s trustee of standing to sue third parties, resulting in a greater rift between Second Circuit and the other Courts of Appeal on this issue. Moratzka v. Morris, 482 F.3d 997, 1004 (8th Cir. 2007). Nevertheless, the court affirmed that such a situation may give rise to the defense of in pari delicto barring the …
What Exactly Does The Term “Fair And Equitable” Mean?, Peter Doggett Jr.
What Exactly Does The Term “Fair And Equitable” Mean?, Peter Doggett Jr.
Bankruptcy Research Library
(Excerpt)
In a plan of reorganization, the Bankruptcy Code outlines a priority scheme that must be strictly adhered to. 11 U.S.C. § 1129. According to the Code, “the holder of any claim or interest that is junior to the claims of such class will not receive or retain under the plan on account of such junior claim or interest any property.” 11 U.S.C. § 1129(b)(2)(B)(ii). When faced with the question of extending the codified priority rule to settlement approvals, the Fifth Circuit in United States v. AWECO Inc. (In re AWECO, Inc.), 725 F.2d 293 (5th Cir. 1984) held …
Expanding The Settlement Payments Exception In Lbo’S, Matthew Mcnamara
Expanding The Settlement Payments Exception In Lbo’S, Matthew Mcnamara
Bankruptcy Research Library
(Excerpt)
This memorandum will first give a statutory background of relevant bankruptcy code provisions and their effects on the bankruptcy proceeding. Next, the memorandum will present description of pertinent cases related to the 546(e) ‘settlement payment’ exemption. In particular, the memorandum will document the progression of cases interpreting the meaning of ‘settlement payment’ within 546(e) from a restrictive interpretation to an increasingly broad one. Finally, the memorandum will discuss the case Brandt v. B.A. Capital (In re Plassein International) and its implication on the 546(e) exemption in relation to transfers of stock made in an LBO for publicly-held …
Repossession Does Not Alter Debtor’S Rights In Collateral, Ian Park
Repossession Does Not Alter Debtor’S Rights In Collateral, Ian Park
Bankruptcy Research Library
(Excerpt)
Does section 541(a)(1) of title 11 of the U.S. Code, which defines a debtor’s bankruptcy “estate,” include collateral which has been lawfully repossessed by secured creditors pursuant to Article 9 of the Uniform Commercial Code (“UCC”) prior to the debtor’s filing for bankruptcy? The courts have split in answering this pro-debtor issue by defining “estate” differently. Recently, in Tidewater Fin. Co. v. Curry (In re Curry), 509 F.3d 735, 735 (6th Cir. 2007), the Sixth Circuit Court of Appeals split with the Fourth and Eleventh Circuits and held that a secured creditor’s repossession of collateral under the state’s …
The Exclusive View V. The Non-Exclusive View: Can A Creditor’S Claim Be Dismissed For Failing To Provide Supporting Documentation?, Robert J. Ryan
The Exclusive View V. The Non-Exclusive View: Can A Creditor’S Claim Be Dismissed For Failing To Provide Supporting Documentation?, Robert J. Ryan
Bankruptcy Research Library
(Excerpt)
May a creditor’s claim be dismissed simply because he failed to provide supporting documentation in violation of Federal Rule of Bankruptcy Procedure 3001? The answer depends on which jurisdiction the creditor is pursuing its claim in. Courts are currently sharply divided on the issue. If the creditor is fortunate enough to be in a jurisdiction which follows the “exclusive” view, which is the majority rule, the answer to this problem will be yes. However, if the creditor happens to be in a jurisdiction which follows the “non-exclusive” view, which is the minority rule, the answer to this problem will …