Westlaw Topical Highlights: Bankruptcy, June 17, 2013

June 17, 2013

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.

Bankruptcy Estate: Debtors’ use of estate assets to pay “ordinary course” living expenses during Chapter 11 did not warrant surcharge of exemptions.

In re Seely 2013 WL 2456359 (Bkrtcy.C.D.Cal.)

In a case converted from Chapter 11 to Chapter 7, the individual debtors did not engage in any wrongdoing when they expended prepetition and postpetition nonexempt cash to pay their “ordinary course” personal living expenses while they were in Chapter 11 without first obtaining permission from the court to do so. Consequently, there were no “wrongful disbursements” that could be charged against certain settlement proceeds claimed by the debtors as exempt, and the court denied the Chapter 7 trustee’s motion for imposition of a surcharge against the proceeds. “Rather than struggle to invent out of whole cloth a procedure and standard for approving requests by [C]hapter 11 debtors for authority to spend property of the estate for the payment of post-petition living expenses,” the bankruptcy court chose to “give [11 U.S.C.A.] section 363(c)(1) the same interpretation in [C]hapter 11 cases as it has always been understood to have in [C]hapter 13 cases.” In re Seely 2013 WL 2456359  (The full-text of the rest of the Topical Highlights are available within Westlaw Next, subscription required)

Plans: BAP declined to address propriety of two proposed additions to debtor’s plan.  In re McIntosh 2013 WL 2460624 (8th Cir.BAP (Mo.))

Debtor Protections: Discharge injunction barred further prosecution of action against debtor, even nominally, under unique facts and circumstances of case.  In re Daniels 2013 WL 1867475 (Bkrtcy.N.D.Miss.)

Discharge: Debtor need not actually receive funds to commit “defalcation” in connection therewith.  In re Pemstein 2013 WL 2443114 (9th Cir.BAP (Cal.))

Discharge: Assignee could seek non-dischargeability of debt based on promissory notes on grounds of fraud.  In re Pazdzierz 2013 WL 2460415 (C.A.6 (Mich.))

Claims: Fee-shifting provision of Rule 3001 does not apply retroactively. In re Harris 2013 WL 2449171 (Bkrtcy.S.D.Tex.)

Plans: California statute provided appropriate rate of interest payable under Chapter 13 plan on secured tax claim.  In re Fowler 2012 WL 8255545 (Bkrtcy.E.D.Cal.)

Debtor Protections: Chapter 11 debtor was not required to provide mortgagee with adequate protection In re Batista-Sanechez 2013 WL 2403323 (Bkrtcy.N.D.Ill.)

Avoidance: Bankruptcy courts have power to enter final orders in fraudulent transfer proceedings.  In re Tyler 2013 WL 2477274 (N.D.Ga.)

Costs: Debtor, upon prevailing in adversary proceeding, could recover only daily attendance fee and travel allowance for expert.  In re Weihert 2013 WL 2403368 (Bkrtcy.W.D.Wis.)

Jurisdiction: Question of whether laches would apply warranted mandatory withdrawal of the reference in action brought by SIPA trustee.  Securities Investor Protection Corp. v. Bernard L. Madoff Inv. Securities LLC 2013 WL 1944508 (S.D.N.Y.)