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The district court did not abuse its discretion in denying Appellant’s motion for extension of time to file notice of appeal pursuant to Bankruptcy Rule 8002(d)(1)(B) for failing to show excusable neglect. Appellant filed her motion one business day late as a result of her attorney’s preoccupation with his second job as a church’s music director. The district court concluded that counsel’s explanation for the delay amounted to mere inadvertence and did not constitute excusable neglect. The First Circuit affirmed, holding that the district court did not abuse its discretion in finding that Appellant’s counsel’s inadvertence did not constitute excusable neglect and that Appellant was bound by counsel's carelessness. View "Sheedy v. Bankowski" on Justia Law

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The Bankruptcy Appellate Panel affirmed the bankruptcy court's order remanding an adversary proceeding brought against debtor by the Law Firm. The panel held that the bankruptcy court did not abuse its discretion by committing a clear error of judgment in weighing the listed criteria. In this case, the bankruptcy court's analysis demonstrated its exercising jurisdiction would not resolve any bankruptcy issue or serve any bankruptcy purpose that was not at least equally well-served by remanding the matter to the state court. The court rejected debtor's arguments to the contrary and affirmed. View "Zahn Law Firm, P.A. v. Baker" on Justia Law

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The First Circuit affirmed an order of the bankruptcy court denying Appellant Chapter 7 discharge on the grounds that she made material, knowing, and fraudulent false oaths in the course of her bankruptcy proceedings. The bankruptcy judge concluded that the failure of Appellant, an attorney, to disclose two lawsuits to which she was a party indicated that she had not filed her bankruptcy case in good faith. The United States Bankruptcy Appellate Panel for the First Circuit affirmed. Thereafter, the bankruptcy judge denied Appellant’s discharge, concluding that she had acted with reckless indifference to the truth by failing to disclose the two lawsuits in a timely manner. The district court affirmed. The First Circuit also affirmed, holding that the bankruptcy judge did not clearly err in finding that Appellant had made false statements with reckless indifference to the truth. View "Zizza v. Harrington" on Justia Law

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The Supreme Court reversed the judgment of the trial court in favor of Defendant on Plaintiff’s complaint and Defendant’s counterclaim for damages and declaratory judgment. This case stemmed from a purchase agreement entered into by the parties in which Plaintiff was to provide various equipment and services to Defendant for a telecommunications switch room. The Supreme Court held (1) the trial court incorrectly concluded that Plaintiff breached the purchase agreement by filing a petition for bankruptcy protection under chapter 11 of the United States Bankruptcy Code; and (2) the trial court erred in determining that Defendant was within its rights to terminate the purchase agreement upon Plaintiff’s initiation of bankruptcy proceedings. View "CCT Communications, Inc. v. Zone Telecom, Inc." on Justia Law

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The Supreme Court reversed the order of the district court granting Burlington Northern and Santa Fe Railway Company’s (BNSF) motion for summary judgment on Kelly Watson’s asbestos-related disease claim, brought under the Federal Employers’ Liability Act, holding that the bankruptcy court’s order enjoining claims against W.R. Grace and other “affiliated entities,” including BNSF, tolled the statute of limitations on Watson’s claim. Thus, the district court erred in concluding that the bankruptcy court’s order expanding a previous injunction barring the commencement or filing of new claims to include BNSF as a nondebtor affiliate did not bar the commencement of new actions against BNSF. View "Watson v. BNSF Railway Co." on Justia Law

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Fadden earned over $100,000 per year but did not submit tax returns. After an audit, the IRS garnished his wages. Fadden filed for bankruptcy, triggering an automatic stay. Fadden claimed that he had no interest in any real property nor in any decedent’s life insurance policy or estate. Fadden actually knew that he would receive proceeds from the sale of his mother’s home (listed by the executor of her estate for $525,000) and would receive thousands of dollars as a beneficiary on his mother’s life insurance policies. A week later, Fadden mentioned his inheritance to a paralegal in the trustee’s office and asked to postpone his bankruptcy. When Fadden finally met with his bankruptcy trustee and an attorney, he confirmed that his schedules were accurate and denied receiving an inheritance. The Seventh Circuit affirmed his convictions under 18 U.S.C. 152(1) for concealing assets in bankruptcy; 18 U.S.C. 152(3) for making false declarations on his bankruptcy documents; and 18 U.S.C. 1001(a)(2) for making false statements during the investigation of his bankruptcy. Counts 1 and 2 required proof of intent to deceive. Fadden proposed a theory-of-defense instruction based on his assertion that his conduct was “sloppiness.” The Seventh Circuit upheld the use of pattern instructions, including that “knowingly means that the defendant realized what he was doing and was aware of the nature of his conduct and did not act through ignorance, mistake or accident.” View "United States v. Fadden" on Justia Law

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Pursuit, managed by its founders, Schepis and Canelas, created and was the general partner in two funds to “acquire securities for trading and investment appreciation.” They invested in offshore entities formed in the Cayman Islands. Pursuit voluntarily petitioned for Chapter 7 bankruptcy in 2014, after it became liable for legal judgments of $5 million. Pursuit listed no assets but indicated that it had a “[p]otential indemnification claim” against one of the funds it managed and claims connected to other cases. Financial statements revealed that Pursuit’s 2011 gross income, $645,571.22 from one fund, was transferred to Pursuit’s members in 2013. Creditors Group claimed Schepis and Canelas enriched themselves at the expense of creditors and sought avoidance, 11 U.S.C. 544, 547, 548. The Trustee obtained court approval of an agreement to “settle, transfer and assign” the avoidance claim and other potential claims. The Pursuit Parties objected, seeking to purchase the claims themselves. The Trustee sold the claims to Creditors Group for $180,001. The Bankruptcy Court approved the sale. The Pursuit Parties did not seek a stay. Creditors Group sued on the claims in the Bankruptcy Court. The Third Circuit affirmed the district court’s dismissal of an appeal as moot under 11 U.S.C. 363(m), because the Pursuit Parties the requested remedy, if entered, would affect the validity of the sale. View "In re: Pursuit Capital Management" on Justia Law

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Pursuit, managed by its founders, Schepis and Canelas, created and was the general partner in two funds to “acquire securities for trading and investment appreciation.” They invested in offshore entities formed in the Cayman Islands. Pursuit voluntarily petitioned for Chapter 7 bankruptcy in 2014, after it became liable for legal judgments of $5 million. Pursuit listed no assets but indicated that it had a “[p]otential indemnification claim” against one of the funds it managed and claims connected to other cases. Financial statements revealed that Pursuit’s 2011 gross income, $645,571.22 from one fund, was transferred to Pursuit’s members in 2013. Creditors Group claimed Schepis and Canelas enriched themselves at the expense of creditors and sought avoidance, 11 U.S.C. 544, 547, 548. The Trustee obtained court approval of an agreement to “settle, transfer and assign” the avoidance claim and other potential claims. The Pursuit Parties objected, seeking to purchase the claims themselves. The Trustee sold the claims to Creditors Group for $180,001. The Bankruptcy Court approved the sale. The Pursuit Parties did not seek a stay. Creditors Group sued on the claims in the Bankruptcy Court. The Third Circuit affirmed the district court’s dismissal of an appeal as moot under 11 U.S.C. 363(m), because the Pursuit Parties the requested remedy, if entered, would affect the validity of the sale. View "In re: Pursuit Capital Management" on Justia Law

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Three groups of creditors appealed MPM's substantially consummated plan of reorganization under Chapter 11 of the Bankruptcy Code. The Subordinated Notes holders challenged the lower courts' conclusions that their claims were subordinate to the Second-Lien Notes holders' claims; the Senior-Lien Notes holders contended that the lower courts erroneously applied a below-market interest rate to their replacement notes; the Senior-Lien Notes holders challenge the lower courts' rulings that they were not entitled to a make-whole premium; and debtors argued that the court should dismiss these appeals as equitably moot. The Second Circuit found merit only in the Senior-Lien Notes holders' contention with respect to the method of calculating the appropriate interest rate for the replacement notes. The court held that the Second-Lien Notes stand in priority to the Subordinated Notes; held that the Senior-Lien Notes holders were not entitled to the make-whole premium; declined to dismiss any of the appeals as equitably moot; and remanded to the bankruptcy court to assess whether an efficient market rate could be ascertained, and if so, applied to the replacement notes. View "In re MPM Silicones, LLC" on Justia Law

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Represented by Folkenflik, Plaintiffs, victims of Bressman’s manipulation of stock prices, brought civil securities fraud and RICO claims against Bressman and others. Bressman filed for Chapter 11 bankruptcy. Plaintiffs then filed the adversary complaint. The civil securities fraud and RICO claims continued against Bressman’s co-defendants. In 1998, some of those claims were settled for $6,250,000. Folkenflik received the funds. The approved Settlement Agreement included a confidentiality order. Months later, Plaintiffs sought a default judgment against Bressman. Folkenflik submitted an affidavit that indicated that the damages totaled $5,195,081, provided a comprehensive account of the underlying proceedings, but did not mention the settlement. The bankruptcy court entered a default judgment against Bressman. Plaintiffs later sought RICO damages and attorneys’ fees, again not mentioning the settlement. The bankruptcy court entered a RICO judgment for treble damages: $15,585,243 plus $910,855.93 in attorneys’ fees. More than 10 years later, Folkenflik learned that Bressman might receive $10 million, and filed ex parte applications on behalf of Plaintiffs to appoint a receiver to search for and seize Bressman’s assets. Searches and seizures were executed. Flolkenflik did not disclose the settlement and made misleading representations to the courts and Bressman’s attorney. When the courts learned about the settlement, the orders were vacated and the seized materials returned. The bankruptcy court found that Folkenflik’s conduct constituted fraud on the court, vacated the default judgment, and dismissed the adversary complaint with prejudice. The Third Circuit affirmed. Bressman’s motion was not barred by laches. Folkenflik’s failure to disclose the settlement constituted intentional fraud. Even if he believed that the confidentiality order prohibited him from disclosing the existence of the Agreement, he could have so stated in his affidavit and asked the courts for guidance. View "In re: Bressman" on Justia Law