Westlaw Topical Highlights: Bankruptcy, October 14, 2013

October 14, 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.

Avoidance: Debtors did not receive “reasonably equivalent value” for excess payments made to earlier investors in Ponzi scheme.  In re Petters Co., Inc. 2013 WL 5457466 (Bkrtcy.D.Minn.)  Chapter 11 debtors allegedly used by their principal to operate a massive Ponzi scheme received “reasonably equivalent value,” for constructive fraudulent transfer avoidance purposes, for payments that they made to earlier, upstream investors using sums advanced by subsequent, downstream investors, to the extent that these payments were merely a return of sums previously advanced by upstream investors, but not to the extent that these payments exceeded the amounts previously advanced by the upstream investors. It did not matter whether the excess payments were denominated as profits, as interest on loans, or otherwise. Furthermore, the trustee’s allegation that the challenged payments were made in furtherance of the Ponzi scheme plausibly alleged that they were made with fraudulent intent even as to transfers in repayment of documented loans. 2013 WL 5457466. (The full-text of the rest of the Topical Highlights is available within Westlaw Next, subscription required).

Plans: Designee’s sales of properties to homeowners were not transfers “under a plan confirmed” within meaning of § 1146.  In re T.H. Properties, LP 2013 WL 5464245 (Bkrtcy.E.D.Pa.)

Debtor Protections: Debtor-wife was bound by recorded order granting in rem stay relief in prior bankruptcy case of debtor-husband.  In re Alakozai 2013 WL 5478501 (9th Cir.BAP (Cal.))

Avoidance: Prepetition payments to senior lienholder improved position of junior lienholder, for preference avoidance purposes.  In re Vassau 2013 WL 5488478 (Bkrtcy.S.D.Cal.)

Case Administration: Appropriate remedy was for bankruptcy court to strike, not dismiss, case of individual who was ineligible to be a debtor.  In re England 2013 WL 5397703 (Bkrtcy.M.D.Fla.)

Injunction: Bankruptcy court would enjoin pursuit of fraudulent transfer claims in state court proceedings supplemental. In re Fundamental Long Term Care, Inc. 2013 WL 4866336 (Bkrtcy.M.D.Fla.)

Discharge: Continuous concealment doctrine applied to extend the § 727(a)(2)(A) look-back period.  In re Vidro 2013 WL 5377847 (Bkrtcy.E.D.N.Y.)

Debtor Protections: Applicability of automatic stay to unrecovered property that is subject of fraudulent transfer claim—Certiorari Denied Rajala v. Lookout Windpower Holding Co., LLC 2013 WL 2903501 (U.S.)

Avoidance: “Strip off” is available even in Chapter 7 cases.  Roberts-Dude v. JP Morgan Chase Bank, N.A. 2013 WL 5530049 (S.D.Fla.)

Plans: Mortgage loan servicer’s response to notice of final cure was deficient.  In re Nieves 2013 WL 5376544 (Bkrtcy.D.Puerto Rico)

Claims: FDCPA claim may arise from debt collector’s communications to debtor in a pending bankruptcy proceeding.  Simon v. FIA Card Services, N.A. 2013 WL 5508868 (C.A.3 (N.J.))

Attorney Fees: Court had discretion whether to deny compensation to law firm with undisclosed conflict of interest.  In re Mitchell 2013 WL 5304091 (Bkrtcy.E.D.N.C

Settlements: Proposed settlement would be approved as fair and equitable and in estate’s best interest.  In re Residential Capital, LLC 2013 WL 4874346 (Bkrtcy.S.D.N.Y.)

Plans: Plan confirmation process could not be used to skirt specific Code limitations on severance payments to insiders.  In re AMR Corporation 2013 WL 5193099 (Bkrtcy.S.D.N.Y.)

Bankruptcy Estate: Chapter 13 debtors “received the benefit” of homestead exemption and were not entitled to enhanced Florida personal property exemption.  In re Valone 2013 WL 4757842 (Bkrtcy.M.D.Fla.)

Case Administration: Debtor’s failure to move to modify plan was not “cause” to dismiss Chapter 13 case.  In re Garajau 2013 WL 5442379 (Bkrtcy.D.Mass.)

Discharge: Uncounselled judgment was entitled to issue preclusive effect on dischargeability issue.  In re Kooyomjian 2013 WL 5488717 (Bkrtcy.D.Mass.)

Claims: Postpetition lapse of financial statement did not affect secured status of claim.  In re Highland Construction Management Services, LP 2013 WL 3957504 (Bkrtcy.E.D.Va.)

Business Relationships: Litigation trustee had no cause of action against debtor’s former CEO for money had and received.  In re Corus Bankshares, Inc. 2013 WL 1752701 (N.D.Ill.)

Discharge: Debtor did not fail to preserve his company’s business records.  In re Joslin 2013 WL 5442381 (Bkrtcy.D.Mass.)

Plans: Chapter 11 plan’s proposed third-party release was impermissible.  In re Charles Street African Methodist Episcopal Church of Boston 2013 WL 5493271 (Bkrtcy.D.Mass.)