Self-proclaimed “true” (i.e., non-bankruptcy) litigators who find themselves having to litigate in bankruptcy’s free-wheeling arena often lament that “nothing’s inadmissible in bankruptcy; everything just goes to the weight of the evidence.” Obviously, this is a tremendous over-simplification, and Judge Barry Russell’s 1,800 page manifesto, the Bankruptcy Evidence Manual (2005 ed., Thomson/West), is a testament to the fact that everything is clearly not admissible in bankruptcy.
Still, one has to sit up and take note when Judge Stan Bernstein from the Eastern District of New York, in Chartwell Litigation Trust v. Addus Healthcare, Inc. (In re Med Diversified, Inc.), 2005 WL 3077228 (Bankr. E.D.N.Y., 11/14/05), not only bars an expert from testifying in a high-stakes fraudulent transfer case, but adds:

Since this particular issue has not been discussed by any other bankruptcy court, this Court has taken the pains to present a comprehensive analysis of the gatekeeper function in the hope that it may be useful to other bankruptcy judges, the business bankruptcy bar, and, tangentially, the bankruptcy law professoriat.

The Court described the “narrow issue” under submission as whether, in litigation to recover an alleged $7.5 million constructive fraudulent transfer, “the Defendants’ proposed expert witness, Scott P. Peltz (Peltz) is qualified and whether his purported expertise satisfies the standards of relevance and reliability under Daubert.”
The subject matter of his testimony was “the value of 100% of the shares of the defendant, Addus Healthcare, Inc. (Addus),” a privately held healthcare concern, and “the reasonably equivalent value of an alleged option payment of $7.5 million paid by the Plaintiffs’ predecessor in interest, Med Diversified, Inc. (Med D), for a 6 1/2 month extension to close its purchase of these shares.”
Mr. Peltz was the Defendants’ sole expert on all issues of business valuation. After three full days of intense voir dire on his qualifications, the Court barred his testimony and report and issued a lengthy opinion explaining its reasoning, significant portions of which are set forth below. Obviously, not a good day for the defense.
For anyone interested in bankruptcy litigation, and particularly in issues of business valuation (which invariably require expert testimony), this case is mandatory reading. The Court wrote:

Continue Reading NY Bankruptcy Judge Stan Bernstein Tosses Expert’s Business Valuation Opinion in a “Must Read” Decision

Below you’ll find more case summaries on the following BAPCPA-related decisions from bankruptcy courts around the nation:
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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).
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Continue Reading More BAPCPA Decisions from November 2005

Below is a roundup of recent cases interpreting BAPCPA’s new additions to the Bankruptcy Code. Judge Mark recently noted (referenced here) that BAPCPA “is not a model of clarity.” Similarly, Judge Isgur recently said (see below) that BAPCPA can be “particularly difficult to parse and, at worst, virtually incoherent.” We hope that these periodic BAPCPA decisional updates don’t suffer from the same malady and help you sort through BAPCPA’s legal thicket.
Below you’ll find case summaries on the following BAPCPA-related decisions from bankruptcy courts around the nation:
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BAPCPA – Automatic Stay – Serial Filers: In re Montoya, 2005 WL 3160532 (Bankr. D. Utah, 11/23/05).
BAPCPA – Automatic Stay – Serial Filers: In re Charles, 332 B.R. 538 (Bankr. S.D. Tex., 11/4/05).
BAPCPA – Bankruptcy Petition Preparers: Martini v. We the People Forms and Service Centers, USA, Inc. (In re Barcelo), 2005 WL 3007104 (Bankr. E.D.N.Y., 10/24/05).
BAPCPA – Credit Counseling – Exigencies: In re LaPorta, 2005 WL 3078507 (Bankr. D. Minn., 10/27/05).
BAPCPA – Homestead Exemption – “As a Result of Electing” Debate: In re Virissimo, 332 B.R. 208 (Bankr. D. Nev., 10/31/05).
BAPCPA – Homestead Exemption – Fraudulent Intent: In re Maronde, 332 B.R. 593 (Bankr. D. Minn., 11/8/05).
BAPCPA – Utilities – Adequate Assurance: In re Lucre, Inc., 2005 WL 3111078 (Bankr. W.D. Mich., 11/9/05).
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Continue Reading Some BAPCPA Decisions from October/November 2005

Professor Elizabeth Warren provides a cup of bitter coffee at the TPM Cafe Blog in her post entitled “The Bankruptcy Wars Continue.” Here, she summarizes current attacks on BAPCPA’s harsher anti-consumer provisions, including a citation to an article from the Yale Law Journal in support of the proposition that “despite the claims of the bill’s supporters that the bankruptcy laws would help those trying to collect child support, no one has been fooled by the rhetoric; the new law undermines the relative position of support claimants.”
Professor Warren’s conclusion surely will not sit well with Volokh’s Professor Todd Zywicki’s, whose recent post strongly disagreed with the conclusions drawn in that same student note (and made elsewhere, including recent updates to bankruptcy casebooks).
In Professor Zywicki’s post, he first describes the argument that BAPCPA’s provisions will disadvantage those seeking to collect domestic support obligations from their divorced spouses or parents as “going something like this”:

Continue Reading Professors Warren and Zywicki Clash on BAPCPA’s Effects on the Rights of “Support Claimants”

Below are some notable blog posts for the week ended 12/2/05 on the following topical bankruptcy issues of interest to the bankruptcy litigator and practitioner:
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Calpine’s Distress
Delphi’s Bankruptcy
Hedge Funds under Scrutiny
More Professional Feasting in Bankruptcy
Substantive Consolidation
The Workout Business Today
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Continue Reading Weekly Blog Roundup on Bankruptcy-Related Topics for the Week Ended 12/2/05

Below are some notable news posts for the week ended 12/2/05 on the following topical bankruptcy issues of interest to the bankruptcy litigator and practitioner:
Calpine News
Delphi’s Bankruptcy
Delta Bankruptcy
Subprime Mortgages
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Continue Reading Weekly News Roundup on Bankruptcy-Related Topics for the Week Ended 12/2/05

Add an all-star lineup of bankruptcy gurus to the chorus of voices (including our own government) lining up in support of Anna Nicole Smith’s position before the US Supreme Court in her continuing efforts to wrestle money from the flush estate of her late husband, the oil tycoon J. Howard Marshall II (at least she got half his ashes!).
The list of bankruptcy luminaries signing on to the brief (thus insuring their invitation to Anna’s victory celebration) are: Richard Aaron, Jagdeep S. Bhandari, Susan Block-Lieb, Ralph Brubaker, Erwin Chemerinsky, Robert D’Agostino, S. Elizabeth Gibson, Robert M. Lawless, Charles Mooney, C. Scott Pryor, Nancy Rapoport, Robert K. Rasmussen, Keith Sharfman, Ettie Ward and Robert M. Zinman.
They say they submit this amicus brief (<a href="pdf), pro bono, because of their deep concern that the Court get it right (though the real reason could be a concern that she have enough money so that she doesn’t feel a need to produce shows like these). They write:

The Amici Curiae are law professors who have devoted their careers to the study and teaching of bankruptcy law and bankruptcy jurisdiction. They are deeply interested in this case because of the important effect its outcome could have on the scope of bankruptcy jurisdiction. The Amici file this pro bono brief to offer what assistance they can to the Court as it considers and decides whether the broad and unqualified jurisdiction specially conferred by Congress on the courts of bankruptcy is cut down by the judicially-created probate exception so as to exclude from their jurisdiction any matter that might affect a decedent’s legatees or heirs.

In supporting Petitioner and seeking reversal of the decision of the Circuit Court, the Amici urge the Court to hold that the probate exception does not limit the bankruptcy jurisdiction broadly conferred by 28 U.S.C. § 1334, and that the bankruptcy-related abstention provisions in 28 U.S.C. § 1334(c), which include the role of state courts and state law among its relevant abstention considerations, govern the circumstances in which bankruptcy jurisdiction shall not be exercised. This brief focuses on the issue by emphasizing the special nature of the bankruptcy jurisdiction and abstention statutes, whereas the Circuit Court viewed this bankruptcy case from the vantage point of a decedent’s heirs and legatees and state probate courts.

Their “Summary of Argument,” in true professorial style, is long, but compelling. It states:

Continue Reading Bankruptcy Professors Hop on Anna Nicole Smith Bandwagon in Amicus Brief Filed with the US Supreme Court