Westlaw Topical Highlights: Bankruptcy, September 22, 2014

September 22, 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.

Plans: BAPCPA modified, but did not eliminate, the absolute priority rule in individual Chapter 11 cases.  In re Lucarelli, 2014 WL 4388250 (Bkrtcy.D.Conn.) Addressing an issue of apparent first impression in both the district and the circuit, a Connecticut bankruptcy court has held that the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) modified, but did not eliminate, the absolute priority rule in individual Chapter 11 cases. Therefore, an individual Chapter 11 debtor whose plan proposes not to pay a class of rejecting unsecured claimants in full may retain only the postpetition property and earnings referred to in 11 U.S.C.A. § 1115, the section of the Bankruptcy Code governing property of the estate in the Chapter 11 case of an individual debtor, and nothing more. “[T]he ambiguity of the statutes, the established canon disfavoring implied repeal, and the lack of any useful legislative history leave this court with little alternative but to adopt the narrow view,” the court explained, adding that its holding “should not be read as a dismissal of very real concerns and reservations regarding the practical impact and implications of adopting the narrow view,” which had the effect of making confirmation of a nonconsensual plan in an individual Chapter 11 case highly unlikely, if not virtually impossible, and so would make Chapter 11 reorganization far less attractive to individual debtors. Nevertheless, “[a]lthough cases advocating each approach exist across the country, the present trend and weight of authority, particularly at the circuit level, clearly favors the narrow view,” the court stated. 2014 WL 4388250.  (The full-text of the rest of the Topical Highlights is available within Westlaw Next, subscription required).      

Case Administration: Debtor’s inability to pay legal debt did not make that debt “contingent.”  In re FMB Bancshares, Inc. 2014 WL 4346967 (Bkrtcy.M.D.Ga.)

Settlements: Terms of proposed settlement would not be sealed.  In re Hart 2014 WL 4352174 (Bkrtcy.D.Idaho)

Debtor Protections: Deed of trust creditor’s action did not violate discharge injunction.  In re Tucker 2014 WL 4346279 (Bkrtcy.W.D.Va.)

Bankruptcy Estate: Trustee had standing to pursue veil-piercing claim to increase estate.  In re Madison Bentley Associates, LLC 2014 WL 4354449 (S.D.N.Y.)

Discharge: No “fiduciary” relationship existed between debtor and his former spouse.  In re Humphries 2014 WL 4346695 (Bkrtcy.N.D.Miss.)

Claims: Bankruptcy court erred on remand in reaffirming re-characterization of debtor’s transfer as a return of equity.  In re Bataa/Kierland LLC 2014 WL 4260789 (D.Ariz.)

Claims: Claimants lacked standing to pursue claims against debtor.  In re Lehman Brothers Holdings Inc. 2014 WL 4086037 (Bkrtcy.S.D.N.Y.)

Plans: Petition date is proper valuation date for “strip off” purposes.  In re Putman 2014 WL 4388423 (Bkrtcy.N.D.Miss.)

Discharge: Debtor had no pre-existing “fiduciary” obligation to make matching contributions to employee’s retirement plan.  In re Hesse 2014 WL 4536273 (Bkrtcy.S.D.Ohio)

Discharge: Debtor’s concealment of equitable ownership of business warranted denial of discharge.  In re Carl 2014 WL 4365314 (Bkrtcy.N.D.N.Y.)

Plans: Plan of reorganization proposed by LLC that owned historic inn was feasible.  In re Wetdog, LLC 2014 WL 4402831 (Bkrtcy.S.D.Ga.)

Judgment: Fact issues on open and obvious nature of defects precluded summary judgment.  In re New Bern Riverfront Development, LLC 2014 WL 4253125 (Bkrtcy.E.D.N.C.)

Claims: Contractor could not obtain indemnity for debtor’s claims against it.  In re New Bern Riverfront Development, LLC 2014 WL 4180184 (Bkrtcy.E.D.N.C.)

Process: Court authorizes substitute service by e-mail.  In re Barkats 2014 WL 4437483 (Bkrtcy.D.Dist.Col.)

Estoppel: Debtor’s action and testimony against licensee were not clearly inconsistent with bankruptcy testimony, as would warrant judicial estoppel.  Vehicle Market Research, Inc. v. Mitchell Intern., Inc. 2014 WL 4627852 (C.A.10 (Kan.))

Appeals: Appellant was not entitled to stay pending appeal from orders granting motions for Rule 2004 examinations.  In re Braxton 2014 WL 4386118 (E.D.N.C.)

Professionals: Law firm could not contractually “unbundle” services with court approval.

 Settlements: Bar order prevented court from approving proposed compromise.  In re Fundamental Long Term Care, Inc. 2014 WL 4068229 (Bkrtcy.M.D.Fla.)

Bankruptcy Estate: Court would not maintain continued oversight over proceeds of corporate debtors’ D & O policies.  In re MF Global Holdings Ltd. 2014 WL 4375687 (Bkrtcy.S.D.N.Y.)

Discharge: State court judgment preclusively established amount of debt, but not its nondischargeability.  In re Soliman 2014 WL 4364525 (Bkrtcy.S.D.N.Y.)