Bankruptcy Tweets of 2011-2012 Cases – A Year in Review – V.8

By Steve Jakubowski

Posted in Twitter Posts

Here’s more in the continuing "Year in Review" series. Catching up after the long Jewish holiday season. The inset photo is of the Garmatz Federal Courthouse (story here), home to the Bankruptcy Court for the District of Maryland in Baltimore, where Bankruptcy Judges Alquist, Derby, Gordon, Rice, and Schneider sit.

Read the stupidest responses ever (?) by a BK atty to an order to show cause. He’s LUCKY he was suspended only 60 days. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/NewRiverPlus-BK-SD-FL-EnBanc-9-20-11.pdf …
B-TX: Applies Till to cramdown of apt complex lender using blend of sr./mezz/equity rates at diff. % collateral values. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/CampBowie-BK-ND-Tex-Lynn-8-4-11.pdf …
B-TX: Code doesn’t prohibit "artificial impairment" by minimally impairing a cr. class to enable cramdown of others. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/CampBowie-BK-ND-Tex-Lynn-8-4-11.pdf …
7th: Every other circuit rejects the core/noncore distinction for deciding the claim-preclusive effect of BK jdgmts. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Matrix-7th-Sykes-7-28-11.pdf …
7th questions validity of its 1990 case that Ct’s resolution of core claim isnt res judic on noncore claim not brought. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Matrix-7th-Sykes-7-28-11.pdf …
7th: Rulings in equitable subord. lien adversary & 363 Sale are res judicata on separate RICO/fraud suit ag. bank. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Matrix-7th-Sykes-7-28-11.pdf …
B-TN: Small-$ home ct venue exception of § 1409(b) applies to preference action bec. it "arises in" a title 11 case. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/NukoteIntl-BK-MD-TN-Lundin-9-2-11.doc …
SDNY: Pltfs’ Refco fraud claims not barred by in pari delicto/Wagoner bec suit is for their damages, not dgs. to Refco. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/RefcoSecLit-SDNY-Rakoff-9-12-11.pdf …
B-DEL: Settlement Noteholders were temp. insiders of Dbtrs when they got confid. info & participated in settl. negot. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/WAMU-BK-D-Del-Walrath-9-13-11.pdf …
B-DEL agrees w/Adelphia that it can disallow a claim on equitable grounds as a nec. remedy in extreme/rare instances. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/WAMU-BK-D-Del-Walrath-9-13-11.pdf …
B-DEL agrees that Sec. 510(c) plainly permits a creditor’s claim to be subordinated to another claim but not to equity. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/WAMU-BK-D-Del-Walrath-9-13-11.pdf …
B-DEL rejects contention that Stern requires rejection of WAMU reorg plan by improperly settling claims vs JPMC & FDIC. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/WAMU-BK-D-Del-Walrath-9-13-11.pdf …
B-DEL won’t exercise discretion per FRBP 8005 to not consider the WAMU Plan bec it might moot appeal of TPS Adversary. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/WAMU-BK-D-Del-Walrath-9-13-11.pdf …
B-DEL nixes WAMU plan bec. of possible insider trading claims ag. Settlement Noteholders that plan would wipe out. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/WAMU-BK-D-Del-Walrath-9-13-11.pdf …
B-SDNY: §363(n) violated by potential bidders’ agreement to influence sale price directly, not as "by-product" of agr. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/GSC-BK-SDNY-Gonzalez-7-18-11.doc …
B-SDNY: Purchaser meets req’ts of §§363(m)/(n) through integrity of conduct during the course of the sale proceedings. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/GSC-BK-SDNY-Gonzalez-7-18-11.doc …
B-SDNY reminds that consent per §363(f)(2) occurs when agent for lending group properly consents on all lenders behalf. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/GSC-BK-SDNY-Gonzalez-7-18-11.doc …
B-SDNY: §363 sale isn’t a sub rosa plan bec. best interests test not violated & distrib. of sale proceeds not dictated. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/GSC-BK-SDNY-Gonzalez-7-18-11.doc …
B-SDNY: §363 sale should be approved when BK-Ct faces the "melting ice cube" situation & sale nec. to prevents loss. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/GSC-BK-SDNY-Gonzalez-7-18-11.doc …
B-SDNY reviews case law re when prepetition or subordination agreements can/cannot override contrary Code provisions. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/GSC-BK-SDNY-Gonzalez-7-18-11.doc …
B-SDNY: To Designate votes per §1126(e) must prove that sole/primary goal is to benefit position at others’ expense. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/GSC-BK-SDNY-Gonzalez-7-18-11.doc …
B-SDNY: Designating votes per §1126(e) requires proof of voting w/motive to misallocate assets to get > ratable share. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/GSC-BK-SDNY-Gonzalez-7-18-11.doc …
B-MI: Status as a second cousin of debtor’s president does not, by itself, make one the debtor’s insider per §101(31). https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/HarveyGoldman-BK-ED-MI-Shefferly-8-24-11.pdf …
B-TX: Income capitalization approach is most appropriate valuation methodology for a §506 apartment complex valuation. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Amerisouth-BK-ND-TX-Jernigan-8-24-11.pdf …
B-HI: Good faith investors in Ponzi only required to disgorge the profits paid to them by Dbtr, but w/prejudgment int. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Maui-BK-D-HI-Faris-11-14-11.pdf …
B-HI: Ponzi avoidance action timely bec at least one reas diligent cr wouldnt have discovered fraud w/in one year of BK https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Maui-BK-D-HI-Faris-11-14-11.pdf …
D-TX: No error if plan auctions Dbtrs’ member interests by contacting only 19 interested parties, w/out advertising. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/TexasGrandPrairieHotel-ND-TX-McBryde-11-8-11.pdf …
D-TX: No clear error that proper cramdown to sec cr. is over 7 yrs based on 20 yr amort. at 5% interest on hotel props. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/TexasGrandPrairieHotel-ND-TX-McBryde-11-8-11.pdf …
B-MD examines & distinguishes cases where ancillary activities took property outside of Code single asset RE definition https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/LightFootGroup-BK-D-MD-Mannes-11-10-11.pdf …
B-DE: Plan exculpation clauses limited to estate/Dbtr/Comm. fiduciaries serving in ch 11 case & don’t apply to lenders. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/PTLHoldings-BK-D-DE-Shannon-11-10-11.pdf …
B-DE: Rebuttal rpt doesn’t alter fact that Dbtrs met burden w/valuation per accepted methods relying on proper projs. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/PTLHoldings-BK-D-DE-Shannon-11-10-11.pdf …
B-DE: Ct can make "informed judgment" of Dbtr’s value only after multiple steps SCOTUS described in Consolidated Rock. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/PTLHoldings-BK-D-DE-Shannon-11-10-11.pdf …
B-DE: Risk of mgmt’s self interest & bias mandates added scrutiny in reviewing dbtr’s valuation based on its own projs. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/PTLHoldings-BK-D-DE-Shannon-11-10-11.pdf …
B-DE: Plan confirmation standards met under "preponderance of the evidence" test.https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/PTLHoldings-BK-D-DE-Shannon-11-10-11.pdf …
B-DE confirms prepack over 2d lienor’s objection as Dbtrs prove total enterprise value less than 1st priority debt. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/PTLHoldings-BK-D-DE-Shannon-11-10-11.pdf …
1st: Failure to comply w/rule requiring inclusion of statement of issues presented waives the omitted issue on appeal. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/AmCartage-1st-Cir-Selva-8-31-11.pdf …
1st: Per MA law, rt to pursue comm. tort claim can’t passed to a foreclosing sec. cr. as proceeds of orig. collateral. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/AmCartage-1st-Cir-Selva-8-31-11.pdf …
1st:Per MA law, after-acq prop rts in sec. agr. dont create an int. in comm. tort claim unless it exists at time of agr https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/AmCartage-1st-Cir-Selva-8-31-11.pdf …
8th Cir looks at legislative history behind the "improvement in position" test of § 547(c)(5) for floating liens.https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/QualiaClinical-8thCir-Clevenger-8-30-11.pdf …
B-SC: Ad hoc citizens’ comm. concerned of public impact of hospital closing lacks standing to object to its ch 9 filing https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/BarnwellCtyHosp-BK-D-SC-Duncan-10-27-11.pdf …
SDNY: Lehman ADR Order is interlocutory bec. while participation is mandatory, no party must settle its dispute in ADR. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/LehmanBros-SDNY-Buchwald-10-26-11.pdf …
7th: When Ch 7 ttee operates "a losing venture under legal compulsion," resultant torts aren’t admin claims ag. estate. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/RTC-7th-Cir-Posner-10-31-11.pdf …
7th: Tort claims in ch 11 arising from bs ops shd get admin. treatment like other admin claims, but not nec. so in ch 7 https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/RTC-7th-Cir-Posner-10-31-11.pdf …
B-DC: Inadequate & dilatory atty disclosures-though themselves ultimately showing no conflict-justify 40% comp. redux https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Ellipso-BK-D-DC-Teel-10-24-11.pdf …
B-DC: Fees disallowed for resisting creditor discovery that only delayed inevitable and ran up fees against the estate https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Ellipso-BK-D-DC-Teel-10-24-11.pdf …
B-DC: Mere representation of Debtor’s affiliate w/potential claim in Debtor’s BK insufficient to disallow compensation https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Ellipso-BK-D-DC-Teel-10-24-11.pdf …
B-DC: Code doesn’t bar representation of entity w/adverse interest but the representation of an adverse interest itself https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Ellipso-BK-D-DC-Teel-10-24-11.pdf …
"Dangers of Premature Plan Filing" @ Weil Bankruptcy Blog. Even worse, see River East @ BK-ND-IL:http://ur.ly/
B-NJ: Even if §1409(b) applied to prefs, petition date, not ch 7 conversion date, wd be the operative date for §1409(b) https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/BambooAbbott-BK-D-NJ-Kaplan-10-24-11.pdf …
B-NJ: §1409(b) limited to proceedings "arising in" or "related to" & so doesnt apply to preference case "arising under" https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/BambooAbbott-BK-D-NJ-Kaplan-10-24-11.pdf …
11th: Ponzi is exception to gen. rule that fraud-free equity redemption from insolv. co. is not "for value" per §548(c) https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Perkins-11th-Cir-10-27-11-Hodges.pdf …
11th: Ponzi payments to investors redeeming only worthless equity interests (w/no tort claim) provide value per §548(c) https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Perkins-11th-Cir-10-27-11-Hodges.pdf …
11th-In Ponzi, defrauded investor gives "value" in exchange for return of principal invested, but not as to any excess https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Perkins-11th-Cir-10-27-11-Hodges.pdf …
3:03:17 of Beethoven Concertos 1-5 just uploaded to YouTube courtesy of "TheGravicembalo2"http://www.youtube.com/user/TheGravicembalo2#p/u/2/Mg97Gptg628 …
RT @fpileggi who says the op.’s a gem: Ct. of Chancery Clarifies Rts of Minority Shareholders Whose Equity is Diluted http://bit.ly/ru3iAc
B-CO: Assigning "rents, issues, & profits" of mortgaged property to lender doesnt often create sec. int. in hotel revs. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/HTPuebloProps-BK-D-Colo-Romero-10-24-11.pdf …
B-CO: §552(b)(2) security interest in hotel room revs. only applies if enforceable security int. exists per state law. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/HTPuebloProps-BK-D-Colo-Romero-10-24-11.pdf …
B-HI: Stern doesnt address if Bk Ct can oversee pretrial matters & submit findings and recs, so mand. w/drawal not reqd https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/MortgageStore-D-HI-Seabright-10-5-11.pdf …
B-HI sides w/Canopy over Blixseth that BK Ct can enter finding/rec on core matter that it cant constit. enter jdgmt on. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/MortgageStore-D-HI-Seabright-10-5-11.pdf …
B-HI reviews case split re whether Stern deprives BK Ct of ability to enter final judgment in fraudulent transfer case. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/MortgageStore-D-HI-Seabright-10-5-11.pdf …
D-MN: Direct appeal to Cir. Ct approp only if uncertainty among BK Cts or if decision is manifestly correct/incorrect. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/Wagstaff-D-MN-Ericksen-10-26-11.pdf …
B-DE: Cts abstain per §505 if review of prop value & tax due is fact intensive or if ruling cd affect unif, assessment. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/IndyDowns-BK-D-Del-Shannon-10-26-11.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/KPFashion-SDNY-Buchwald-8-29-11.pdf …
SDNY: Prepetition L/C security deposit was properly applied against landlord’s pre-petition claim & not to admin claim. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/KPFashion-SDNY-Buchwald-8-29-11.pdf …
SDNY: Ttee request for nunc pro tunc rejection as of Petition Date seeks relief extending even beyond the minority view https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/KPFashion-SDNY-Buchwald-8-29-11.pdf …
SDNY-Minority view is that rejection is effective when landlord receives unequivocal notice of dbtr’s intent to reject. https://bankruptcylitigationblog.lexblogplatform.com/wp-content/uploads/sites/427/uploads/file/KPFashion-SDNY-Buchwald-8-29-11.pdf …

Thanks for reading!

© Steve Jakubowski 2012