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Bankruptcy Schedules Will Not Be Treated As Judicial Admissions In Court, Charles Akinboyewa Jr.

Bankruptcy Research Library

(Exceprt)

When an individual debtor files for bankruptcy, it must file bankruptcy schedules listing, among other things, the creditors that hold claims against the individual. The information contained on the schedules may have ramifications on the debtor and its creditors. Specifically, often debtors unknowingly fail to list certain claims, which may affect the debtor’s right to discharge a creditor’s right to a recovery. Part I of this memo discusses bankruptcy schedules and claim dischargeability. Part II illustrates the distinction between judicial and evidentiary admissions. Part III explores cases that have held bankruptcy schedules to be admissions and others that have …

A Chapter 7 Trustee’S Qualified Right Of Immunity May Be No Shield For Intentional, Negligent, Or Grossly Negligent Conduct: Analyzing And Applying The Three-Way Circuit Split, Nataniel E. Arabov

Bankruptcy Research Library

(Excerpt)

Quasi-judicial immunity is best understood as a blessing and a curse. A bankruptcy trustee is appointed to act as trustee through an order of the bankruptcy court. In Antoine v. Byers & Anderson, the Supreme Court provided a two-part test to analyze how far judicial immunity extends to persons who perform quasi-judicial functions in connection with their appointment. This test explains whether a judicial appointee is absolutely immune from personal liability to the estate or others. Under the test, a court (1) must decide whether the functions of the individual were historically adjudicative in nature, and (2) must …

Bankruptcy Tourism: How A Comi Change Can Serve As Ammunition In Debt Wars, Taylor Anderson

Bankruptcy Research Library

(Excerpt)

In general, Chapter 15 of title 11 of the United States Code (the “Bankruptcy Code”) provides a mechanism to recognize a “foreign proceeding.” Upon recognition of a foreign proceeding, the foreign representative will be allowed to sue and be sued in the United States. However, Chapter 15 distinguishes between “foreign main proceedings” and “foreign nonmain proceedings.” Upon recognition of a “foreign main proceeding” section 1520 of the Bankruptcy Code provides for certain automatic relief, including an automatic stay of proceedings against the debtor in the United States. There is no automatic relief conferred upon recognition of a foreign nonmain …

Balancing Principles Of Cooperation And Public Policy In Applying Comity, Kristen Barone

Bankruptcy Research Library

(Excerpt)

Comity is a common law legal principle that allows U.S. courts to afford deference to foreign judgments. Comity is utilized as a basis for granting extraterritorial effect to judgments of foreign courts. This principle plays an integral role in a number of cross-border bankruptcy proceedings and has been adopted as a predominate legal principal in the Model Law on Cross-Border Insolvency (the “Model Law”), promulgated by the United Nation’s Commission on International Trade, and Chapter 15 of title 11 of the United States Code (the “Bankruptcy Code”).

Although American courts have long recognized the need to extend comity to …

Effects Of Licensors’ Duty To Maintain Control Over A Trademark On Licensees’ Ability To Assert Rights Provided Under Section 365 Of The Bankruptcy Code, Arianna Clark

Bankruptcy Research Library

(Excerpt)

Under title 11 of the United States Code (the “Bankruptcy Code”), a debtor may reject or assume an executory contract, including a license for intellectual property. The definition of intellectual property does not include the term “trademark.” Consequently, it is not clear whether a non-debtor licensee can continue using a trademark if the debtor-licensor rejects it. Moreover, there appears to be a consensus forming among courts in that a debtor-licensee cannot assign a license to a third-party without the consent of the licensor. Regardless of which party initiates bankruptcy proceedings, there is a special consideration contemplated by courts– the …

A Union's Duty In Bankruptcy Cases To Fairly Represent Its Constituency, Denise Dessel

Bankruptcy Research Library

(Excerpt)

Under the National Labor Relations Act (“NLRA”), a union, as the sole representative of its workers, has a duty to fairly represent them. This duty entitles a union to fairly represent all employees, “whether members of the union or not, fairly.” A union breaches this duty when its conduct or decisions are arbitrary, discriminatory, or committed in bad faith.

The terms “arbitrary,” “discriminatory,” and “bad faith” have been interpreted through case law. Part I of this memorandum discusses the interpretation of arbitrary conduct; Part II addresses how courts have defined discriminatory conduct; and Part III analyzes how bad faith …

Bankruptcy Court Jurisdiction: Are Libel And Slander Personal Injury Torts?, Joseph Collini

Bankruptcy Research Library

(Excerpt)

A bankruptcy court may adjudicate tort claims, including libel and slander against a debtor, if it concludes that it has jurisdiction over those claims. The statutes governing a bankruptcy court’s jurisdiction, including title 11 of the United States Code (“The Bankruptcy Code”) and title 28 of the United States Code, are ambiguous. Consequently, the bankruptcy courts are divided as to their jurisdiction over libel and slander claims.

At the heart of this issue is the personal injury tort exception under 28 U.S.C.A. §157(b). The exception specifically limits the jurisdiction of the bankruptcy courts and states that personal injury torts …

Exercising Dominion And Control; An Initial Transferee’S Liability For Avoidable Transfers, Shelley Fredericks

Bankruptcy Research Library

(Excerpt)

Under section 550(a)(1) of the Bankruptcy Code, a bankruptcy trustee may collect the full amount of an avoidable transfer from the initial transferee of a fraudulent or avoidable transfer. Specifically, it provides that, “[e]xcept as otherwise provided in this section, to the extent that a transfer is avoided…the trustee may recover, for the benefit of the estate, the property transferred or…the value of such property, from the initial transferee of such transfer or the entity for whose benefit such transfer was made.” This section of the Bankruptcy Code gives power to bankruptcy trustees seeking to collect improperly transferred funds, …

Circumstances In Which A Fee Is An Excise Tax Entitled To Priority, Valerie Hammel

Bankruptcy Research Library

(Excerpt)

Title 11 of the United States Code (the “Bankruptcy Code”) enumerates several categories in which claims are entitled to receive priority. Indeed, Section 507(a)(8)(E) grants governmental units priority on obligations that are “excise tax[es] on a transaction.” The Bankruptcy Code, however, does not define the universe of circumstances necessary to fall within the excise tax priority category. Governmental units therefore spend considerable efforts litigating to ensure that their claims are granted priority under the Bankruptcy Code. Ultimately, the success of a claim will hinge on how narrowly or broadly a court interprets Section 507(a)(8)(E). Part I of this memorandum …

Conflicts Counsel Is Not A Cure All; It Does Not Overcome An Actual Conflict Of Interest, Stephanie Kenn

Bankruptcy Research Library

(Excerpt)

The Sixth Amendment of the Constitution guarantees the right to assistance of counsel. With this right comes many nuances, including the right of an individual to obtain counsel of his or her choice in civil matters if they choose to engage in such matters. The lawyer-client relationship is a fiduciary one and it carries many responsibilities on the attorney’s part. For example, a lawyer must provide “undivided loyalty” to his or her clients. This means that a lawyer must be aware of any conflicts of interest that may arise in the ordinary course of business. Lawyers must take the …

Evidentiary Support Needed For Successful Proof Of Claim Against Affiliated Debtors, Madeline Mallo

Bankruptcy Research Library

(Excerpt)

According to title 11 of the United States Code (the “Bankruptcy Code) and the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), a debtor must file schedules of the debtor’s assets and liabilities. A debtor’s schedules would include a list of all known claims against the debtor and list the claims as disputed, contingent or unliquidated.

If an entity believes they have a claim against the debtor that the debtor has not included on a schedule, or the claim is disputed, contingent, or unliquidated, that party can file a proof of claim. A proof of claim in a bankruptcy …

Stop Right There! Assessing The Role Of Collateral Estoppel In A Fraud Proceeding Against A Debtor And A Debtor-Owned Business, Brandon Dorman

Bankruptcy Research Library

(Excerpt)

In an adversary proceeding, under section 523(a)(2)(A) of title 11 of the United States Code (the “Bankruptcy Code”), to determine the non-dischargeability of a debt based upon fraud, a state courts finding of fraud against a debtor-owned business may collaterally estop the debtor in the adversary proceeding from relitigating the issue of fraud. Essential to this issue is the timing at which the debtor filed for bankruptcy. Timing is critical in determining whether the prior decision against the debtor-owned business in the state court action collaterally estopped the litigation against the debtor or whether the debtor was afforded the …

Adversary Proceeding Not Required For Bankruptcy Courts To Determine Lien Status, Justin Korenblatt

Bankruptcy Research Library

(Excerpt)

In Wells Fargo Bank, N.A. v. AMH Roman Two NC, LLC, the Fourth Circuit denied Wells Fargo’s motion to set aside an order canceling its mortgage because the motion was not timely. In 2002, Wells Fargo extended a mortgage to the debtors on a property in Pendleton, North Carolina. Two years later, debtors refinanced the property with PNC Bank. Although PNC fully repaid Wells Fargo’s loan, Wells Fargo allowed the debtors’ line of credit to remain open, and permitted the debtors to take advances totaling over $300,000. Then, in 2012, debtors filed voluntary petitions for relief under chapter …

Under What Circumstances Can A Bankruptcy Court Grant Innocent Spouse Relief To A Debtor?, Noreen Gilroy

Bankruptcy Research Library

(Excerpt)

The United States tax system allows married couples to file joint tax returns. For those married couples that jointly file, there is joint and severable liability for the taxes due on those returns. Because spouses who file joint tax returns are held both jointly and severally liable for those joint returns, the drafters of the Tax Code created an exemption from liability for innocent spouses in Section 6015 of the Tax Code. Section 6015(e) of the Tax Code expressly grants subject matter jurisdiction to the Tax Courts to review determinations of innocent spouse relief. However, the language of Section …

Uncertainty In The Gap Period: The Dangers Of Doing Business With An Alleged Debtor, Daniel Ishoo

Bankruptcy Research Library

(Excerpt)

Section 303 of the Bankruptcy Code allows creditors to initiate an involuntary case against a debtor by filing a petition with the court. Although the provisions applied to an involuntary case and a voluntary case are largely the same, one major difference surfaces in an involuntary case—the existence of what is commonly referred to as the “gap period.” The gap period is the period between the filing of an involuntary petition and a Judge’s entry of an order for relief.

Pursuant to § 303(f) of the Bankruptcy Code, the debtor may continue to operate during the gap period as …

Protecting Valuable Estate Interests Through The Unenforceability Of Ipso Facto Clauses, Kayla Martin

Bankruptcy Research Library

(Excerpt)

A trustee or debtor-in-possession is provided with a plethora of powers under title 11 of the United States Code (the “Bankruptcy Code”). A chapter 13 debtor-in-possession, pursuant to section 1322 of the Bankruptcy Code, may assume or reject any executory contract in connection with its plan. The ability, however, to assume or reject an executory contract is limited by section 365, which in part prohibits the modification or termination of a debtor’s interest in a contractual agreement on the sole basis that the debtor filed for bankruptcy, which is commonly known as an ipso facto provision. This prohibition of …

Successful Motions For Reconsideration Require Extraordinary Circumstances, Maria A. Gomez

Bankruptcy Research Library

(Excerpt)

Motions for reconsideration are not recognized under the Federal Rules of Civil Procedure (the “Rule(s)”) or the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rule(s)”). A party seeking reconsideration of an order in the bankruptcy courts can file either: (1) a motion to alter or amend a judgment under Bankruptcy Rule 9023, if the order is interlocutory; or (2) a motion for relief from judgment under Bankruptcy Rule 9024, if the order is a final one. The applicable rules to motions for reconsideration are different depending on whether the motion is for an interlocutory or final order. There are …

Application Of The Federal Rule Of Bankruptcy Procedure Rule 2004 Balancing Test, Patrick O’Connor

Bankruptcy Research Library

(Excerpt)

Federal Rule of Bankruptcy Procedure 2004 (“Rule 2004”) provides that “[o]n motion of any party in interest, the court may order the examination of any entity.” By its terms, the rule is broad. It is only marginally narrowed by Rule 2004(b) to require that examinations “relate only to the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor's estate, or to the debtor's right to a discharge.” Given that Rule 2004 is broadly available in bankruptcy cases to “any party in interest” …

The Insolvency Effect On Attorney-Client Privilege, Anna Piszczatowski

Bankruptcy Research Library

(Excerpt)

“The attorney-client privilege is the oldest of the privileges for confidential communications known to the common law.” This privilege has been held as sacred and essential to encourage complete and candid communication between attorneys and their clients. In fact, if the attorney’s “professional mission” is to be carried out appropriately to the fullest extent, then the attorney must be able to acquire all the information necessary to represent his client. Therefore, the privilege allows unfettered communication, for the benefit of both parties.

By carving more exceptions to the privilege, as bankruptcy courts, and even the Supreme Court, have in …

Contractual Provider Agreement Provides For Permissible Government Recoupment, Emily Santoro

Bankruptcy Research Library

(Excerpt)

A debtor healthcare provider without significant resources is unlikely to survive any prolonged disagreement with private or government payors. This challenge may be exacerbated by a debtors’ bankruptcy filing if a payor may refuses to make certain payments owed to the debtor. Therefore, whether a payors’ withholding of funds owed to a debtor hospital is considered an impermissible setoff or a permissible equitable recoupment is crucial.

This memorandum will explore whether a Medicaid/Medicare payor can withhold payments owed to a debtor, or whether such withholding violates the automatic stay. Part A will discuss withholding in healthcare bankruptcy scenarios generally. …

Fraudulent Transfer Provision Of The Bankruptcy Code Defined More Narrowly Than Similar Provisions In Other Statutes, Yaakov Seff

Bankruptcy Research Library

(Excerpt)

The fraudulent conveyance provision of the Bankruptcy Code, (“the Code”), Section 548, is an “elemental and ancient provision of debtor-creditor relations.” It provides that “[t]he trustee may avoid any transfer ... of an interest of the debtor in property ... that was made ... within two years before the date of the filing of the petition . . .” where the transfer involved actual or constructive fraud.

But the ability to avoid fraudulent transfers is not limited to the bankruptcy context; parallel provisions are found in several areas of the federal legislation. For instance, there is a fraudulent transfer …

Although A Presumption Against Extraterritoriality Generally Precludes A Foreign Plaintiff From Recovering A Debtor’S Assets In A Civil Rico Claim, That Presumption Can Be Overcome To Hold A Foreign Defendant Liable For A Preference Claim, Amanda M. Schaefer

Bankruptcy Research Library

(Excerpt)

The civil portion of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) permits any individual “injured in his business or property by reason of a violation of the statute’s criminal provisions” to pursue a cause of action against a tort feasor. For a party to pursue a civil remedy for economic injury under the civil portion of the statute, its criminal portion must first be violated through illegal activity, such as numerous acts of mail and wire fraud. In RJR Nabisco, Inc. v. European Community (“RJR Nabisco”), the Supreme Court held that RICO’s private right of action under …

More Than Fraud: Proving Fraud On The Court, Stephen Van Doran

Bankruptcy Research Library

(Excerpt)

In all adversarial proceedings, litigants have a duty of full disclosure and honesty with the court. Typically, where a party obtains a judgment through fraudulent conduct, the only way to overturn that judgment is through a motion to vacate pursuant to Federal Rule of Civil Procedure 60(b)(3).

A final judgment can also be overturned by a motion, pursuant to Federal Rule of Civil Procedure 60(d)(3), as incorporated into the Bankruptcy Rules by Rule 9024, to vacate a judgment based upon fraud on the court. Fraud on the court is generally limited to instances where “the integrity of the judicial …