Here’s more in the continuing "Year in Review" series, catching up on more of my backlog of twitter posts of case developments in the past 12 months.

Each post in this Year in Review series features a different federal courthouse in each state of the Union. The inset photo is of the US Courthouse for the Bankruptcy Court for the Northern District of California in Oakland, California, which is home to Bankruptcy JudgesEfremsky, Hammond, and Lafferty.

 

 

• B-KY: A chief restructuring officer in a ch 11 case isn’t a trustee so it has no quasi-judicial immunity from suit. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/BlackDiamond-BK-ED-KY-Scott-10-18-11.pdf …

• 8-BAP sides with view that a ch. 13 dbtr ineligible for discharge can strip off a wholly unsec lien on princip. resid. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Fisette-8-BAP-Schermer-8-29-11.pdf …

• 8-BAP agrees w/all Cir. Cts: §1322(b)(2) doesnt bar ch 13 dbtr from stripping off wholly unsec lien on princip. resid. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Fisette-8-BAP-Schermer-8-29-11.pdf …

• B-DE won’t grant leave to amend cplt to add 39 tsfs that cant be reconciled to transactions in the original complaint. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/PowermateHolding-BK-D-Del-Gross-8-18-11.pdf …

• B-DE: Amended cplt alleging more pref. transfers may relate back if tsfs were part of a systematic series of payments. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/PowermateHolding-BK-D-Del-Gross-8-18-11.pdf …

• SDNY: Cir. split re whether landlord that didnt file claim could draw down an L/C for damages beyond §502(b) capped amt https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/PowermateHolding-BK-D-Del-Gross-8-18-11.pdf …

• B-IL: Per 7th Cir, suit is frivolous and "forbidden" if the probability of its succeeding is very low. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/CMGT-BK-ND-IL-Squires-10-18-11.pdf …

• B-IL: FRBP 9011 sanctions motion cant be filed before opposing party given 21 days to withdraw the offending pleading. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/CMGT-BK-ND-IL-Squires-10-18-11.pdf …

• B-IL: Atty req’d to perform reas. investig of law/facts prefiling to avoid "improper purpose" clause of FRBP 9011(b)(1) https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/CMGT-BK-ND-IL-Squires-10-18-11.pdf …

• B-TX: A plan injunction doesn’t prevent a subseq. proceeding ag. debtor in name only to access available ins. coverage. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/SuperiorOffshore-BK-SD-TX-Isgur-10-19-11.pdf …

• B-SDNY: Dbtr cant use §363(f) to obviate compliance w/deed restrictions running w/ land requiring low-income housing. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/InwoodHeightsHousing-BK-SDNY-Glenn-8-25-11.pdf …

• B-PA reminds that a dbtr’s discharge doesn’t bar a suit vs the discharged dbtr as the nominal dfdt. for ins. purposes. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/salemBaptist-BK-ED-Pa-Coleman-8-25-11.pdf …

• B-PA: Dbtr’s unmatured malpractice claim cant be leveraged into an interest in underlying ins. policy or its proceeds. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/salemBaptist-BK-ED-Pa-Coleman-8-25-11.pdf …

• D-CA won’t w/draw ref. of FDIC’s $48M capital maintenance claim per §365(o) bec signif. non-BK laws aren’t implicated. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/ImperialBancorp-SD-CA-Burns-10-14-11.pdf …

• B-SDNY applies Portrait Corp factors in abstaining from enforcing 363 order despite continuing jurisdic. over matter. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/MotorsLiqCo-BK-SDNY-Gerber-8-23-11.pdf …

• B-MT disregards lower expert appraisal of condo complex as apt complex just bec unsold units are rented pending sale https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/CanyonHoldings-BK-D-Mont-Kirscher-8-23-11.pdf …

• B-MT: "New debtor syndrome" (tsf of prop to dbtr shortly before filing) establ prima facie case of bad faith dismissal. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/CanyonHoldings-BK-D-Mont-Kirscher-8-23-11.pdf …

• B-SDNY: Security interest in proceeds of an FCC license may be perfected prior to license’s sale so not barred by §552. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Terrastar-BK-SDNY-Lane-8-19-11.pdf …

• B-SDNY rejects interp of FCC rulings that would direct adjudication of FCC license liens rights outside of the BK Ct. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Terrastar-BK-SDNY-Lane-8-19-11.pdf …

• B-SDNY: Lender can obtain a lien on the economic value of an FCC license, but not on the license itself. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Terrastar-BK-SDNY-Lane-8-19-11.pdf …

• B-IL: §544(b) avoidance pd. extended to 10 yrs IRS limitation if IRS files claim or trustee files claim on IRS’ behalf. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/RepublicWindows-BK-ND-IL-Cox-10-12-11(1).pdf …

• B-IL: §544(b) avoidance pd. in IL may be > 4 yrs; subject to any statute of lim. available to any cr on BK filing date. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/RepublicWindows-BK-ND-IL-Cox-10-12-11(1).pdf

• B-NV: "Tolerance of banal transgressions sends the wrong message to others that such slipshod practices are acceptable" https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Schivo-BK-D-NV-Markell-10-13-11.pdf …

• B-DE: Fact that resolution of dispute requires interpretation of a plan document doesn’t alone provide postconfirm jd. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Acands-BK-D-Del-Fitzgerald-8-8-11.pdf …

• B-MA: §547 insolv. can be proven w/proof of no signif. change in assets & liabs between tsf. & filing of BK schedules. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Mustaq-BK-D-MA-Bailey-8-10-11.pdf …

• D-MD: Insolv. Ch 7 dbtr lacks standing to challenge case admin. bec it lacks pecuniary int. in outcome, incl 363 sales. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Miller-D-MD-Titus-8-24-11.pdf …

• D-NC: Gen. unsec. cr. has standing to assert eq. subord. claim by showing a particul. injury different from other crs. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/BlackPalmDevp-WDNC-Reidinger-10-13-11.pdf …

• B-SDNY: Dgs. for Chrysler’s breach of tax exemption agr. are not priority tax claims bec. agr. doesn’t call them taxes. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/OldCarco-BK-SDNY-Gonzalez-7-25-11.pdf …

• B-IL: Breach of duty claim vs IL dir. for prolonging Dbtr’s life when it should have ceased operating fail per Twiqbal. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/RepublicWindows-BK-ND-IL-Cox-10-12-11.pdf …

• B-IL: Breach of duty claims vs IL dir. based on failure to take action upon discovery of impropriety fail per Twiqbal. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/RepublicWindows-BK-ND-IL-Cox-10-12-11.pdf …

• 8th: DIP’s ordin. course liab. for admin. exp. not limited to day-to-day exp. & includes any failure to perform obligs. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/SanchezvNorthwestAir-8th-Bye-10-14-11.pdf …

• 8th reminds that per SCOTUS’ Reading case, costs incident to bs. operation qualify for admin. priority under § 503(b). https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/SanchezvNorthwestAir-8th-Bye-10-14-11.pdf …

• SDNY: Mere possession of claimant’s property w/out actual use by debtor isn’t enough to warrant an admin. claim. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/KollelMatehEfraim-SDNY-Batts-8-2-11.pdf …

• SDNY: §503(b)(1)(A) admin. claim under "benefit to the estate test" depends on actual estate benefit not creditor loss. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/KollelMatehEfraim-SDNY-Batts-8-2-11.pdf …

• B-SDNY: Contractual setoff/netting rts. (triang. setoff) among mult. affil. not even protected per §561(a) safe harbor. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/LehmanBrosInc-BK-SDNY-10-4-11-Peck.pdf …

• B-SDNY: Contractual setoff/netting rts. (triang. setoff) among multiple affiliates outside of BK not enforceable in BK. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/LehmanBrosInc-BK-SDNY-10-4-11-Peck.pdf …

• B-NY: Stern inapplic. despite fact that dfdt’s concession that matter was core occurred well before Stern was decided. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Citron-BK-EDNY-Rosenthal-10-6-11.pdf …

• B-CA analyzes what Stern held & didnt hold, concluding its narrow & that fr. tsf actions remain core under §§548 & 544. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/HellerEhrman-BK-ND-CA-Montali-9-28-11.pdf …

• D-TX: Per Stern, BK Ct can’t dismiss nondbtr intervenor (& BK Claimant) allegations of fr. inducement in dbtr’s BK acq. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/AIHAcquisitions-ND-TX-McBryde-9-7-11.pdf …

• SDNY: No mand. abstention vs GT per §1334(c)(2) also bec suppl. JD exists over claims based on pending sec. fraud case. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Parmalat-SDNY-Kaplan-8-31-11.pdf …

• SDNY: No mand. abstention vs GT per §1334(c)(2) bec case can’t be timely adjudicated in IL "at the present time". https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Parmalat-SDNY-Kaplan-8-31-11.pdf …

• SDNY holds on remand from 2d Cir: Parmalat ttee’s case vs Grant Thorn not subject to mand. abstention per §1334(c)(2). https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Parmalat-SDNY-Kaplan-8-31-11.pdf …

• B-OH: No SJ re if ben. to ttee from sale per §363(h) of single fam. resid. whose partition is imprac. > harm to owner. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Laurie-BK-ND-OH-Morgenstern-Clarren-8-31-11.doc …

• B-KY: Post-Stern, odd to think BK Ct can do more in a supplemental state-law claim than could do in a related-to case. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/BlackDiamondMining-BK-ED-KY-Scott-9-21-11.pdf …

• B-KY: Post-Stern, BK-Cts lack suppl jd. over claims that are unrelated to BK itself but related to pending case/action. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/BlackDiamondMining-BK-ED-KY-Scott-9-21-11.pdf …

• B-SDNY: Liq trust rts arise under §544 & by assignmt from Bank, so it’s not bound by arbitration prov. of consign. agr. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/SalanderGalleries-BK-SDNY-Morris-7-18-11.pdf …

• B-SDNY: Stern allows denial of stay relief if underlying substance of case dramatically affects BK claim resolution. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/SalanderGalleries-BK-SDNY-Morris-7-18-11.pdf …

• B-MS: Stern’s converse is true: where claim & ctcl. are inextricably tied, the ctcl could conceivably still be core. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/OxfordExpositions-BK-ND-MS-Houston-9-13-11.pdf …

• B-WA: Stern doesnt stop BK Ct. from issuing final ruling on subst. consolidation; it’s core & arises under/in title 11. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/LLSAmerica-BK-ED-WA-Williams-9-8-11.pdf …

• B-OH: Post-Stern, abstention on fraud/negl/conspir claims that predate BK better than sending proposed findings to DCt. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/SouthwestSports-BK-ND-OH-Harris-9-6-11.pdf …

• Read the second installment at the Weil Bankruptcy Blog of cases dealing with the effects of Stern v. Marshall http://business-finance-restructuring.weil.com/jurisdiction/the-stern-files-second-edition/siness-finance-restructuring.weil.com/jurisdiction/t… …

Thanks for reading!  More to follow soon.