Westlaw Topical Highlights: Bankruptcy, August 11, 2014

August 11, 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: Preferential transfers occurred as debtor earned commissions to which garnishment lien could attach.  In re Fairweather 2014 WL 3784281 (Bkrtcy.D.Md.) A “transfer” of an interest of the debtor in property pursuant to a prepetition writ of garnishment did not occur only when the writ of garnishment was served on a real estate brokerage firm that employed the debtor as a licensed real estate associate, and that was indebted to the debtor for real estate commissions at the time the writ was served, but each time that the debtor earned commissions to which the lien created by the writ of garnishment could attach. Accordingly, the fact that the writ of garnishment was served more than 90 days prepetition did not prevent the debtor from pursuing a preference avoidance claim to recover garnished commissions that he earned within 90 days of the petition date. 2014 WL 3784281. (The full-text of the rest of the Topical Highlights is available within Westlaw Next, subscription required).     

Jury: Litigation trust for corporation’s bankruptcy estate did not have right to jury trial on fraudulent transfer claim.  U.S. Bank Nat. Ass’n v. Verizon Communications, Inc. 2014 WL 3746476 (C.A.5 (Tex.))

Claims: Amended proof of claim, filed after debtors’ completion of plan payments, was too late.  In re Martinez 2014 WL 3767401 (Bkrtcy.D.Puerto Rico)

Professionals: Percentage fee collected by Chapter 13 trustee must be returned to debtor if case is dismissed before confirmation of a plan.  In re Dickens 2014 WL 3767402 (Bkrtcy.E.D.Ark.)

Avoidance: Amended exemption amount applied on motion to avoid lien on exemption-impairment grounds.  1256 Hertel Ave. Associates, LLC v. Calloway 2014 WL 3765864 (C.A.2 (N.Y.))

Avoidance: Family members could not assert “ordinary course of business” defense to preference claims.  In re Miszkowicz 2014 WL 3697538 (Bkrtcy.N.D.Ill.)

Discharge: Judgment on conversion count was entitled to preclusive effect on dischargeability issue.  In re Feldman 2014 WL 3695375 (Bkrtcy.E.D.Pa.)

Judges: Bankruptcy judge’s refusal to appoint financial group as advisor did not constitute judicial misconduct.  In re Complaint of Judicial Misconduct 2014 WL 3824249 (C.A.9)

Bankruptcy Estate: Life insurance policies’ “spendthrift” provisions did not protect cash surrender value from trustee.  In re Lee 2014 WL 3695361 (Bkrtcy.C.D.Ill.)

Claims: USDA regulation governing amount claimable against PACA trust found to be arbitrary, capricious, or manifestly contrary to PACA.  In re Veg Liquidation, Inc. 2014 WL 3845206 (Bkrtcy.W.D.Ark.)

 Professionals: Creditor that failed to correct its loan records as required by court order would be subject to limited contempt sanctions.  In re Dibling 2014 WL 3827818 (Bkrtcy.S.D.Ohio)

Plans: Adversary proceeding is required to accomplish “strip off.”  In re Smith 2014 WL 3697377 (Bkrtcy.S.D.Ga.)

Bankruptcy Estate: Sale had to be viewed as including sale of assets necessary to transferred business.  In re Lehman Bros. Holdings Inc. 2014 WL 3822868 (C.A.2 (N.Y.))

Damages: Debtor-contractor’s damages for extended overhead would be calculated under “percentage of direct costs” approach.  In re Redondo Const. Corp. 2014 WL 3534700 (Bkrtcy.D.Puerto Rico)

Claims: State court could not recognize that Korean bankruptcy proceeding discharged breach of warranty claim without federal bankruptcy court order.  Kumkang Valve Mfg. Co. Ltd. v. Enterprise Products Operating LLC 2014 WL 3765818 (Tex.App.-Hous. (1 Dist.))

Jurisdiction: Permissive abstention and equitable remand to state court were warranted with respect to non-core claims only remotely related to bankruptcy.  In re Houston Regional Sports Network, L.P. 2014 WL 3697530 (Bkrtcy.S.D.Tex.)

Appeals: Bankruptcy court’s substantive consolidation order did not involve “matter of public importance” warranting direct appeal.  WestLB AG v. Kelley 2014 WL 3724263 (D.Minn.)

Plans: Belated filing of amended claim was barred by terms of confirmed plan.  In re Galindez 2014 WL 3767412 (Bkrtcy.D.Puerto Rico)

Avoidance: Debtor law firm had no property interest in hourly fee matters.  In re Thelen LLP 2014 WL 3844145 (C.A.2 (N.Y.))

Professionals: Permissive adverse inference jury instructions were proper sanction for defendants’ spoliation of evidence.  In re Black Diamond Min. Co., LLC 2014 WL 3611329 (E.D.Ky.)

Debtor Protections: Creditor willfully violated automatic stay in bringing third-party action against debtor in affiliated case.  In re Adkins 2014 WL 3700682 (Bkrtcy.N.D.Tex.)

Claims: Mortgage borrower could assert claim in loan servicer’s Chapter 11 case for emotional distress damages under RESPA.  In re Residential Capital, LLC 2014 WL 3702665 (Bkrtcy.S.D.N.Y

 Judgment: Prior default judgment was entitled to issue preclusive effect.  In re Reecher 2014 WL 3700498 (Bkrtcy.D.Md.)

Leases and Contracts: Ancillary agreements were part of single integrated transaction, and could not be rejected separately.  In re Trinity Coal Corp. 2014 WL 3784244 (Bkrtcy.E.D.Ky.)

Debtor Protections: Movant did not violate conditions imposed on stay relief.  In re Kvassay 2014 WL 3791006 (C.D.Cal.)

Pleading: Trustee did not state plausible breach of fiduciary duty claim against minority shareholder.  In re PMTS Liquidating Corp. 2014 WL 3737937 (D.Del.)