Westlaw Topical Highlights: Bankruptcy, January 27, 2014

January 27, 2014

BankruptcyWestlaw Topical Highlights for Bankruptcy provides summaries of significant federal and state judicial decisions and legislative and administrative activities affecting Bankruptcy law.  A Westlaw subscription is required to access the documents linked from this page.

Avoidance: “Safe harbor” provision did not preempt state constructive fraudulent transfer law.  In re Lyondell Chemical Company, 2014 WL 118036 (Bkrtcy.S.D.N.Y.) A bankruptcy statute barring the trustee from avoiding, as constructively fraudulent to creditors, transfers that were in the nature of margin or settlement payments [11 U.S.C.A. § 546(e)] did not preempt, either expressly or impliedly, state constructive fraudulent transfer laws as invoked by a creditors’ trust, in its capacity as assignee of creditors’ state law avoidance claims, in an effort to avoid payments that were made to Chapter 11 debtors’ former shareholders in connection with a leveraged buyout (LBO) of the debtors’ non-publicly-traded stock. This was a transaction whose avoidance could have no possible effect on the markets which this “safe harbor” provision was meant to protect. The provision, by its express terms, applied only to trustee. Moreover, fraudulent conveyance law was not a field that Congress had manifested any desire to occupy to the exclusion of the states, and there was no conflict between state constructive fraudulent transfer law, as applied in connection with this LBO transaction, and the purposes that the bankruptcy statute was meant to serve. 2014 WL 118036 (The full-text of the rest of the Topical Highlights is available within Westlaw Next, subscription required). 

Debtor Protections: Stay violations by repossessing creditor warranted emotional distress and punitive damages awards.  In re Burns 2013 WL 6713116 (Bkrtcy.S.D.Miss.)

Claims: Oversecured mortgagee was entitled to default interest only at reduced rate.

Avoidance: Liquor license was not “tool of the trade” for lien avoidance purposes.  In re Nickeas 2013 WL 4017940 (Bkrtcy.W.D.Wis.)

Claims: Bank failed to establish debtor’s liability on claim.  In re B-Bar Tavern Inc. 2013 WL 6670542 (Bkrtcy.D.Mont.)

Judgment: Prior determination that debtor breached fiduciary duties precluded relitigating existence of fiduciary relationship.  In re Roussel 2013 WL 6858933 (E.D.Ark.)

Appeals: Appeal of denial of creditor’s statutory counterclaim for value of improvements made to debtor’s house was not moot.  In re C.W. Min.Co. 2014 WL 224368 (C.A.10 (Utah))

Avoidance: Defendant was protected by “de minimis” exception to preference provision.  In re Pierce 2013 WL 6847123 (8th Cir.BAP (Neb.))

Claims: Attorney fees were not reasonably incurred to protected residential mortgagee’s secured position.  In re Wirth 2013 WL 5835875 (Bkrtcy.W.D.Wis.)

Avoidance: Sister of debtor’s business associate was “insider,” for preference-avoidance purposes.  In re Parks 2013 WL 6670546 (Bkrtcy.W.D.Wash.)

Discharge: Quadriplegic Chapter 7 debtor was entitled to “undue hardship” discharge of student loans.  In re Myhre 2013 WL 3872509 (Bkrtcy.W.D.Wis.)

Claims: USDA had enforceable claim against debtor and would be granted stay relief to set off debtor’s tax refund against its claim.  In re Martin 2013 WL 5835900 (Bkrtcy.W.D.Wis.)

Discharge: Debtor’s efforts to divert funds from creditor supported “willful and malicious injury” claim.  In re Wood 2013 WL 4478902 (Bkrtcy.W.D.Wis.)

Bankruptcy Estate: Trustee who sought to sell jointly owned real property qualified as a BFP and acquired debtor’s interest free of any trust interest.  In re Harrison 2013 WL 6859303 (Bkrtcy.N.D.Okla.)

Plans: Chapter 13 plan may treat cosigned consumer debts “differently” but may not unfairly discriminate.  In re Russell 2013 WL 6858133 (Bkrtcy.S.D.Ohio)

Plans: Undistributed plan funds had to be paid out to creditors upon conversion of case.  In re Markham 2013 WL 6903753 (Bkrtcy.D.Mass.)

Discharge: PACA trust satisfies § 523(a)(4)’s requirements of an express trust and a fiduciary relationship.  In re Lundgren 2013 WL 6662791 (Bkrtcy.W.D.Wis.)

Case Administration: Debtor’s ability to step up payments into hypothetical plan warranted dismissal of Chapter 7 case.  In re Johnson 2013 WL 7044901 (Bkrtcy.N.D.Ind.)

Claims: Debtor could not recover any portion of three setoffs made by Social Security Administration during 90-day prepetition period.  In re Damas 2014 WL 32156 (Bkrtcy.D.Mass.)

Bankruptcy Estate: Claims against non-debtor corporation on mere continuation theory of successor liability were property of bankruptcy estate.  In re Emoral, Inc. 2014 WL 259870 (C.A.3 (N.J.))

Jurisdiction: Bankruptcy court had subject matter jurisdiction to determine existence and scope of debtor’s liability on wage claims.  In re Wen Jing Huang 2014 WL 56053 (Bkrtcy.D.Mass.)

Avoidance: County’s tax sales of debtor’s properties were for reasonably equivalent value and not avoidable as fraudulent transfers.  In re Tracht Gut, LLC 2014 WL 29347 (9th Cir.BAP (Cal.))