Westlaw Topical Highlights: Bankruptcy, September 23, 2013

September 23, 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.

Plans: permits modification of interest rate on claim secured by lien on debtor’s principal residence.  In re Hubbell 2013 WL 4511640 (Bkrtcy.E.D.N.C.)  The Bankruptcy Code’s exception to the general prohibition on home mortgage modifications applicable when the last payment on the mortgage loan becomes due prior to the end of the Chapter 13 plan, 11 U.S.C.A. § 1322(c)(2), permits modification of the interest rate accruing on a claim secured by a lien on real property serving as a debtor’s principal residence, a North Carolina bankruptcy court held. Provided that § 1325(a)(5) is satisfied, courts, including several in the district, have permitted claims subject to modification under § 1322(c)(2) to be restructured at an interest rate more favorable to the debtor than the rate on the original note, the bankruptcy court observed. The Fourth Circuit decision relied upon by the creditor in opposing the proposed interest rate modification, In re Witt, 113 F.3d 508, merely prohibited bifurcation of an undersecured claim into secured and unsecured portions, and did not prevent a debtor from restructuring the interest rate and other payment terms pursuant to § 1322(c)(2)2013 WL 4511640.   (The full-text of the rest of the Topical Highlights is available within Westlaw Next, subscription required).

Plans: Plan confirmation order was not binding on agency, precluding discharge of debtor’s student loan debt.    In re Greer 2013 WL 4460632 (Bkrtcy.S.D.Miss.

Bankruptcy Estate: Debtor’s misleading valuation prevented abandonment of estate asset.  In re Underhill 2013 WL 5042056 (6th Cir.BAP (Ohio))

Plans: Debtor was not entitled to have her case reconverted from Chapter 7 to Chapter 13 or to reimposition of automatic stay.  In re Harris 2013 WL 4482427 (Bkrtcy.D.Mass.)

Case Administration: did not warrant withdrawal of reference of fraudulent transfer proceeding.  Weiss v. Lockwood 2013 WL 4780066 (D.Mass.)

Avoidance: Hedge funds’ prepetition redemption payments to investors in funds’ Ponzi scheme fell within § 546(e) “safe harbor.”   Peterson v. Somers Dublin Ltd. 2013 WL 4767495 (C.A.7 (Ill.)

Claims: Judgment creditor voluntarily relinquished its citation lien.   In re Tires N Tracks, Inc. 2013 WL 4525219 (Bkrtcy.N.D.Ill.)

Sanctions: Noncompliance with “safe harbor” provisions precluded award of Rule 9011 sanctions.  In re Miller 2013 WL 5067575 (C.A.3 (Pa.))

Claims: Net equity claims of broker-dealer’s customers did not include time-based damages such as interest or adjustments for inflation.  Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities LLC 2013 WL 4833942 (Bkrtcy.S.D.N.Y

Claims: Creditor without notice of debtor’s bankruptcy was entitled to participate in distribution to creditors filing timely claims.   In re Jemal 2013 WL 4804420 (Bkrtcy.E.D.N.Y.)

Leases and Contracts: Letters of credit were not “executory contracts” of debtor-beneficiary.   Rafool v. Evans 2013 WL 4855976 (C.D.Ill.)

Avoidance: Pawnbroker’s security interest became ownership interest not avoidable on exemption-impairment grounds.   In re Chastagner 2013 WL 4048197 (Bkrtcy.S.D.Ga.)

Debtor Protections: Court had to evaluate totality of circumstances when determining whether disciplinary board was entitled to relief from stay.   In re Feingold 2013 WL 5194272 (C.A.11 (Fla.))

Plans: “Unfair discrimination” prohibition modified debtor’s rights under cure-and-maintenance provision. In re Precise 2013 WL 5201264 (Bkrtcy.E.D.Pa.)

Bankruptcy Estate: Belated claim of exemption in unscheduled asset could be denied on “bad faith” grounds.   In re Gray 2013 WL 5200021 (Bkrtcy.D.Ariz.)

Parties: Ad hoc committee of bondholders lacked standing to participate in jointly administered Chapter 11 cases.

Plans: Unnoticed compromise of treatment of creditor’s claim in plan was unenforceable.  In re Vogt 2013 WL 4571897 (Bkrtcy.M.D.Fla.)

Discharge: Discharge order, not plan, determined scope of debtor’s Chapter 13 discharge.  In re Reichartz 2013 WL 4502094 (E.D.Wis.)

Case Administration: Debtor who was sole member of LLC lacked authority to file bankruptcy petition on LLC’s behalf.   In re B & M Land and Livestock, LLC 2013 WL 5182611 (Bkrtcy.D.Nev.)

Jurisdiction: Chapter 13 debtor’s fraud claim was barred by doctrine.   Schmid v. Bank of America, N.A. 2013 WL 4525613 (W.D.Wis.)

Avoidance: Trustee was entitled to avoided unrecorded interest in exercise of strong-arm powers.   In re First Mortg. Fund, Inc. 2013 WL 4807164 (E.D.Mich.)

Bankruptcy Estate: Debtors were not entitled to Texas homestead exemption in property where they resided, but had only future interests.   In re Brunson 2013 WL 4657656 (Bkrtcy.W.D.Tex.)

Debtor Protections: Fee award for violation of discharge injunction could not be made if debtor was not liable for such fees.   In re Hyman 2013 WL 5229834 (Bkrtcy.E.D.Pa.)

Avoidance: Bank was not “entity for whose benefit” alleged fraudulent transfers were made.  In re Payroll America, Inc. 2013 WL 4548382 (D.Idaho)

Bankruptcy Estate: Puerto Rico exemption for “wearing apparel” may include jewelry.   In re Rivera 2013 WL 5201401 (Bkrtcy.D.Puerto Rico)

Case Administration: Gross mismanagement was “cause” to convert Chapter 11 case.   In re Nicholson Holdings, Inc. 2013 WL 2455953 (Bkrtcy.E.D.Pa.)

Professionals: Attorney who accepted agreement to be paid under hybrid contingency and hourly compensation arrangement did not take big risk.   In re Market Center East Retail Property, Inc. 2013 WL 5273135 (C.A.10 (N.M.))