Westlaw Topical Highlights: Bankruptcy, June 20, 2016

June 20, 2016

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.

Case Administration: Chapter 13 debtors did not need court authorization to incur postpetition debt and obtain postpetition credit.  In re Fields, 2016 WL 3085872 (Bkrtcy.D.Minn.) Court approval is not necessary for a Chapter 13 debtor who is not “engaged in business” to incur postpetition debt and obtain postpetition credit, a Minnesota bankruptcy court concluded, recognizing a split of authority and denying the motion of Chapter 13 debtors who sought to obtain such authorization following a post-confirmation car wreck and the reluctance of dealerships to sell them a car without a letter from the trustee indicating that specific loan terms were agreeable to him, which the trustee refused to provide. “There is nothing in the Bankruptcy Code that requires court authorization for a debtor in chapter 13 who is not ‘engaged in business’ to incur post-petition debt or to obtain credit,” the court explained. “The absence of language allowing such, especially in light of the clear route set forth under § 1304 accorded to a debtor ‘engaged in business,’ shows a sufficient lack of congressional intent to the contrary.” The court also relied on the statutory framework of the Code, including § 1305, pursuant to which the holder of a claim for postpetition “necessary debt” can seek allowance of its claim, and such claim can be disallowed if the holder of the claim knew or should have known that “prior approval by the trustee” of the debtor’s incurring the obligation was practicable and was not obtained. 2016 WL 3085872.  (The full-text of the rest of the Topical Highlights is available within Thomson Reuters Westlaw, subscription required).    

Discharge: Chapter 7 debtor engaged in “evasive conduct” by not filing income tax returns or paying taxes on his business income during tax period at issue.  United States v. Major 2016 WL 3211768 (M.D.Fla.)

Bankruptcy Estate: Debtor, while not named on certificate of title, owned motorcycle on petition date.  In re Chesley 2016 WL 2616747 (Bkrtcy.M.D.Fla.)

Debtor Protections: Creditor’s attempt to collect on a domestic support obligation cannot constitute a willful violation of the discharge injunction.  In re Spencer 2016 WL 3228324 (8th Cir.BAP (Mo.))

Discharge: Debtor failed to satisfy second prong of test for “undue hardship” discharge of student loan debt.  In re Johnson 2016 WL 3185361 (Bkrtcy.M.D.Ala.)

Discharge: Converting nonexempt proceeds into homestead was fraudulent transfer.  In re Chesley 2016 WL 2620196 (Bkrtcy.M.D.Fla.)

Bankruptcy Estate: “Interests in property” are not limited to in rem interests.  United Mine Workers of America Combined Benefit Fund v. Walter Energy, Inc. 2016 WL 880205 (N.D.Ala.)

Leases and Contracts: Flat fee retainer agreement was executory contract.  In re Boates 2016 WL 3213665 (9th Cir.BAP (Ariz.))

Discharge: Debtor-farmer’s transfer of equipment to joint-owner did not warrant denial of discharge based on fraudulent transfer.  In re Borstad 2016 WL 2343382 (Bkrtcy.D.N.D.)

Discharge: Judgment debt owed to creditors who paid debtor’s mortgage to avoid foreclosure of her home was dischargeable.  In re Lewis 2016 WL 1690011 (Bkrtcy.E.D.Cal.)

Discharge: Creditor failed to show that debtor made misrepresentations concerning his address with intent to deceive.  In re Hampton 2016 WL 1626756 (Bkrtcy.E.D.Ark.)

Discharge: Debtor’s fraudulent disposal of estate property warranted denial of his discharge.  Weddell v. Landis 2016 WL 2347853 (D.Nev.)

Plans: New Jersey’s Condominium Act provided limited priority to association’s lien for unpaid assessments, not merely payment priority.  In re Rones 2016 WL 632231 (D.N.J.)

Claims: Cause existed to consider untimely administrative expense claim.  In re Silver Spring Family Medical Center, LLC 2016 WL 827387 (D.Md.)

Bankruptcy Estate: Sale of residential property can proceed free and clear of legally blind girlfriend’s one-half interest.  In re Labbee 2016 WL 2354890 (Bkrtcy.D.Idaho)

Discharge: Nearing top of pay scale was not “additional circumstance” in student loan dischargeability case.  ECMC v. Acosta-Conniff 2016 WL 1737742 (M.D.Ala.)

Settlements: Settlement gave corporation designated as liquidating agent to trustee standing to sue.  In re Old Canal Financial Corporation 2016 WL 1328086 (C.D.Cal.)