Below you’ll find more case summaries on the following BAPCPA-related decisions from bankruptcy courts around the nation:
BAPCPA – Automatic Stay – Serial Filers: In re Collins, 2005 WL 3163962 (Bankr. D. Minn., 11/29/05).
BAPCPA – Automatic Stay – Stay Termination – Failure to File Statement of Intention: In re Schlitzer, 2005 WL 3072791 (Bankr. W.D.N.Y., 11/17/05).
BAPCPA – Chapter 15 – Commencement of an Ancillary Case: US v. J.A. Jones Constr. Group, LLC, 2005 WL 3199053 (E.D.N.Y., 11/29/05).
BAPCPA – Credit Counseling – Exigencies: In re Cleaver, 2005 WL 3099686 (Bankr. S.D. Ohio, 11/17/05).
BAPCPA – Credit Counseling – Exigencies: In re Sukmungsa, 2005 WL 3160607 (Bankr. D. Utah, 11/23/05).
BAPCPA – Homestead Exemption – Statutory Cap: In re Blair, 2005 WL 3108495 (Bankr. N.D. Tex., 11/21/05).

BAPCPA – Automatic Stay – Serial Filers: In re Collins, 2005 WL 3163962 (Bankr. D. Minn., 11/29/05). Here, Chief Judge Kishel (like those before him, referenced here) noted that the language of BAPCPA’s new Code section 362(c)(3)(A) terminating the automatic stay after 30 days in respect of serial filers is “clumsily drafted,” but the protection of a continuing stay is available to serial filers “only on request to the court via motion and only if the movant makes a specific showing.”
As to the “notice and hearing” requirement of BAPCPA’s new Code section 362(c)(3)(B), the Court stated:

The Code’s own definition of “notice and hearing” leaves it to the court to determine what is “appropriate in the particular circumstances.” In that determination, the requirements of procedural due process should be foremost, though the resonant considerations for the general according of equitable relief in the federal courts are a close second. As to the first, “[a]n elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all of the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” As to the second, “[n]o preliminary injunction shall be issued without notice to the adverse party.” Fed.R.Civ.P. 65(a)(1). Under the respective structures of Rule 65 and the post-Act § 362(c), an extension of the stay is a direct corollary to a preliminary injunction. (Citations omitted).
These principles all dictate that the notice requisite for a motion under § 362(c)(3)(B) to extend the stay of § 362(c)(3)(A) is, at the very least, service on those individual creditors that the debtor would have subjected to the extended stay – and, most prophylactically, on all creditors.
Here, the Debtor did neither of those things. It is still not clear which of the Debtor’s creditors she is most concerned about, but whichever they are she did not serve a one. Her motion thus fails, on procedural grounds.

BAPCPA – Automatic Stay – Stay Termination – Failure to File Statement of Intention: In re Schlitzer, 2005 WL 3072791 (Bankr. W.D.N.Y., 11/17/05). BAPCPA’s new Code section 362(h) provides for the termination of the automatic stay as to any personal property securing a claim if the debtor fails to file its “statement of intention” with respect to such property, as required by Code section 521(a)(2). The Court held that Code section 362(h) doesn’t apply in cases under chapter 13 because the statement of intention required by Code section 521(a)(2) only applies in chapter 7 cases.
BAPCPA – Chapter 15 – Commencement of an Ancillary Case: US v. J.A. Jones Constr. Group, LLC, 2005 WL 3199053 (E.D.N.Y., 11/29/05). The US initiated an action against various defendants for breach of a construction contract. An interim receiver of one of the defendant’s corporate parent moved to stay the action in accordance with Canadian bankruptcy law. The Court held that the receiver’s failure to commence an ancillary proceeding under BAPCPA’s new chapter 15 for recognition of the pendency of foreign insolvency proceedings prevented the Court from being able to consider the receiver’s request for a stay (though “such a request may not be necessary should a bankruptcy court grant a petition for recognition”).
As for the purposes and basic mechanics of BAPCPA’s new chapter 15, the Court stated:

[Chapter 15 is] designed “to provide effective mechanisms for dealing with cases of cross-border insolvency ….” 11 U.S.C. § 1501(a). Incorporating the provisions of the Model Law on Cross-Border Insolvency, the new chapter 15 “is intended to encourage cooperation between the Untied States and foreign countries with respect to transnational insolvency cases” and “to provide for the fair and efficient administration of cross-border insolvencies …” H.R.Rep. No. 109-31 at 105 (2005). Any determination of a request for assistance under chapter 15 must be “consistent with principles of comity….” 11 U.S.C. § 1507. As the House Judiciary Committee noted in its report, “comity is raised to the introductory language to make clear that it is the central concept to be addressed.” H. Rep. at 109; see also 11 U.S.C. § 1509(b)(3) (once recognition of a foreign proceeding is granted, the “court in the United States shall grant comity or cooperation to the foreign representative”).
Generally, the provisions of chapter 15 are applicable to cases where “assistance is sought in the United States by a foreign court or a foreign representative in connection with a foreign proceeding.” 11 U.S.C. § 1501(b)(1). Once a foreign bankruptcy proceeding is recognized, a wide range of relief available under American bankruptcy law immediately becomes applicable, including the automatic stay provision in section 362 of the Code. See 11 U.S.C. § 1520 (incorporating sections 361, 362, 363, 549, and 552 of the Code as to debtors and property of debtors within the territorial jurisdiction of the United States). In addition, the foreign representative has a right to seek other relief not provided under § 1520. 11 U.S.C. § 1521.
However, relief under Chapter 15 is available only after a foreign representative commences an ancillary proceeding for recognition of a foreign proceeding before a bankruptcy court. 11 U.S.C. § 1504; H. Rep. at 107-08 (discussing statutory scheme and amendment of 28 U.S.C. § 157 to designate a petition for recognition as a “core proceeding”). Any petition for recognition must be accompanied by “(1) a certified copy of the decision commencing such foreign proceeding and appointing the foreign representative; (2) a certificate from the foreign court affirming the existence of such foreign proceeding and of the appointment of the foreign representative; or (3) … any other evidence acceptable to the court of the existence of such foreign proceeding and of the appointment of the foreign representative.” 11 U.S.C. § 1515(b). The minimal requirements of § 1515, coupled with the presumptions as to certain evidence submitted to support recognition, 11 U.S.C. § 1516, were “designed to make recognition as simple and expedient as possible…” H. Rep. at 112. Once recognition is granted, the foreign representative has the right to “apply directly to a court in the United States for appropriate relief in that court … to an American to federal courts….” 11 U.S.C. § 1509(b)(2).

The Court noted the complexities of the matter at hand, including the involvement of domestic sureties, the long pending Canadian bankruptcy proceedings, and the failure of the parties “to apprise American courts formally of the receivership in this action earlier.” The Court ultimately concluded:

Under these circumstances and given the comity that American courts should accord foreign bankruptcy proceedings, the receiver of [the Canadian corporate] parent should be given an opportunity to seek appropriate protection of that corporation’s assets. Thus, this Court stays this action for an additional 60 days to give [the receiver] or other authorized person an opportunity to seek appropriate relief under chapter 15 with respect to [the corporate parent].

BAPCPA – Credit Counseling – Exigencies: In re Cleaver, 2005 WL 3099686 (Bankr. S.D. Ohio, 11/17/05). Another poorly advised debtor falls through the safety net as his case, filed on the eve of a foreclosure sale on his home, is dismissed because he didn’t understand what BAPCPA required of him and thus failed to timely seek credit counseling. The Court stated:

With respect to the first requirement of “exigent circumstances,” Mr. Cleaver indicates that he had to file bankruptcy on an emergency basis because a sheriff’s sale of his residence “is scheduled for tomorrow,” that he filed to stop the sale and retain his property, and there was insufficient time to complete the required briefing prior to filing….
It can be argued that the exigency in this case is self-created. After all, foreclosures in Ohio follow a lengthy judicial process, typically lasting several months before the gavel finally falls at a sheriff’s sale. Mr. Cleaver might have filed his bankruptcy a week, two weeks, or even a month earlier thus allowing sufficient time to obtain the briefing. However, the common reality is that many debtors file at the last minute just before a foreclosure sale or the loss of their money or possessions to creditors. Furthermore, it is difficult to conceive of any exigent circumstances related to bankruptcy that would not involve impending creditor action. Absent some sort of immediate collection activity, there is no urgency affecting the timing of a bankruptcy filing. Consequently, the immediacy of the foreclosure sale in this case appears to be exactly the sort of exigent circumstance contemplated by the statute….
The typical brinkmanship attributable to such exigent circumstances may be considerably curtailed by the second certification requirement. In addition to certifying the existence of exigent circumstances, the debtor must certify that he requested the required credit counseling services from an approved agency, but was “unable to obtain the services…during the 5-day period beginning on the date on which the debtor made that request.” 11 U.S.C. § 109(h)(3)(ii). Given the general rule of § 109(h)(1) that, to be eligible for bankruptcy relief, a debtor must receive his or her credit briefing prior to filing the petition, the quoted language of § 109(h)(3)(ii) would appear to require a five-day waiting period before a debtor could file a petition together with the certification. Arguably, a debtor on the date of filing a bankruptcy petition could ascertain that credit briefing would not be available prospectively within five days and thereby qualify under the language of the statute. Another issue raised by the language is whether a debtor need only certify that a single agency was not able to provide the services within five days, as a literal reading would seemingly compel, or must instead certify that no approved agency could provide the services within five days.
The court need not decide these issues because in this case Mr. Cleaver did not certify or mention anything regarding his prepetition attempts to obtain a credit briefing, but only that he would promptly obtain the briefing postpetition. While Mr. Cleaver’s attempt at compliance may have been pragmatic and well-intentioned given the exigent circumstances, it does not comply with the statutory certification requirements.
Pursuant to the newly enacted changes to the Bankruptcy Code, an individual must receive credit briefing prior to filing for bankruptcy protection, or he must submit a certification to the court describing exigent circumstances and detailing the unavailability of the credit briefing during the five days after requesting it. In the absence of the certificate of an approved nonprofit budget and credit counseling agency verifying Mr. Cleaver’s receipt of the credit briefing prior to filing as per § 521(b) or Mr. Cleaver’s certification in compliance with § 109(h)(3), he is not eligible to be a debtor under the Bankruptcy Code. Therefore, Mr. Cleaver’s Motion for Waiver of the Requirement to Obtain Budget and Credit Counseling Prior to Filing is denied and this case shall accordingly be dismissed by separate order.

BAPCPA – Credit Counseling – Exigencies: In re Sukmungsa, 2005 WL 3160607 (Bankr. D. Utah, 11/23/05). More ill-advised debtors are tossed out of bankruptcy court for failing to obtain prepetition credit counseling from an approved agency. Here, the Court rejected the debtors’ argument that they were entitled to relief from the requirement based on “excusable neglect.” This novel approach to seeking relief from the credit counseling requirement clearly piqued the interest of the Court, but in the end, the Court would not grant the debtors the relief they requested. The Court stated:

Under the totality of the circumstances, while the Court believes that neglect occurred, the Debtors and Debtors’ counsel have failed to show by a preponderance of the evidence that the failure to certify compliance with § 109(h)(1) on the petition was excusable. Given the inconsistencies in the testimony of Debtors’ counsel, the lack of contemporaneous documentation, the representations in the Motion and at oral argument, and the multiplicity of documents filed in this case, the Court is not persuaded either that the Debtors actually received the required briefing prepetition or that the Debtors or their counsel were excusably negligent in failing to properly certify completion of the briefing requirement. If the issues in this case were simply about computer software errors and counsel’s excusably negligent efforts in reporting the Debtors’ otherwise completed acts to the Court, the Court may have ruled differently; however, the real issues involve the Debtors’ questionable prepetition actions and counsel’s inexcusable failure to reasonably inquire and verify before filing.

BAPCPA – Homestead Exemption – Statutory Cap: In re Blair, 2005 WL 3108495 (Bankr. N.D. Tex., 11/21/05). The Court here holds that, under BAPCPA’s new Bankruptcy Code section 522(p), a debtor’s increasing equity in residential property from regular mortgage payments made during the 40 months preceding the debtor’s bankruptcy filing did not qualify as an “interest” acquired during the period that would be subject to the BAPCPA’s statutory homestead cap (and thus the increased equity position would remain exempt). The Court stated:

[O]ne does not actually “acquire” equity in a home. One acquires title to a home. The Debtors acquired title and fee to their home in early 2000, about five years before Congress passed the BAPCPA, and two and half years prior to the start of the 1215 day period applicable to their bankruptcy case. The “interest” the Debtors acquired was the actual purchase of the home, which was completed well before the 1215-day period. Thus, the “interest” held by the debtors in their homestead is outside the 1215-day period and not subject to the $125,000 cap.

© Steve Jakubowski 2005