Justia Bankruptcy Opinion SummariesArticles Posted in U.S. 2nd Circuit Court of Appeals
Tze Wung Consultants, Ltd. v. Bank of Baroda
Tze Wung and related appellants moved the bankruptcy court to eliminate or suspend discharge under the bankruptcy plan of a judgment by Trendi Sportswear against debtor, Indu Craft. The bankruptcy court denied the motions and subsequently denied appellants' motions for reconsideration. Appellants then appealed to the district court, which affirmed the bankruptcy court's orders. Tze Wung later appealed the district court's denial of its motion to reconsider under Rule 59(e) after the district court entered its judgment and past the 30-day time limit that was prescribed by Federal Rule of Appellate Procedure 4(a)(1)(A) and incorporated into bankruptcy appeals through Rule 6(b)(1). Bank of Baroda moved to consolidate the three separate appeals, but Bank of Baroda made no mention of the fact that Tze Wung's appeal was untimely. The court concluded that Rule 6(b)(1) is a nonjurisdictional rule. Where an opposing party fails to object to an untimely appeal to a court of appeals from a bankruptcy appellate panel or district court exercising appellate jurisdiction, the opposing party forfeits the objection, and the court has jurisdiction over the untimely appeal. Because Bank of Baroda waived its objection to Tze Wung's untimely appeal by failing to make such an objection, the court acted within its jurisdiction in allowing Tze Wung's appeal to proceed along with that of the other appellants in this matter. View "Tze Wung Consultants, Ltd. v. Bank of Baroda" on Justia Law
Adelphia Recovery Trust v. Goldman, Sachs & Co., et al.
Adelphia Recovery Trust, an entity created to represent the non-whole creditors of a debtor corporation that was part of a bankruptcy proceeding, appealed from a grant of summary judgment dismissing its fraudulent conveyance claim against Goldman. The court affirmed on the grounds of judicial estoppel, concluding that, in such a fraudulent conveyance claim, the Trust may recover only property owned by the parent-company debtor. The various schedules and Chapter 11 plan, which were consummated with the agreement of the Trust and its predecessors in interest in the bankruptcy proceeding, all treated the property transferred as owned by a separate subsidiary. View "Adelphia Recovery Trust v. Goldman, Sachs & Co., et al." on Justia Law
Santiago-Monteverde v. Pereira
Debtor, a New York City tenant, filed for Chapter 7 bankruptcy and listed the value of her apartment lease on Schedule B as personal property exempt from the bankruptcy estate as a "local public assistance benefit." At issue was whether the value inherent in debtor's rent-stabilized lease as a consequence of the protections afforded by New York's Rent Stabilization Code, N.Y. Comp. Code R. & Regs. tit. 9, 2520.1 et seq., made the lease, or some portion of its value, exempt from debtor's bankruptcy estate as a "local public assistance benefit" within the meaning of New York Debtor and Creditor Law 282(2). The court certified this unsettled issue to the New York Court of Appeals. View "Santiago-Monteverde v. Pereira" on Justia Law
DPWN Holdings (USA), Inc. v. United Airlines, Inc.
United appealed the district court's order denying United's motion to dismiss an antitrust complaint brought against it by DHL. At issue was whether DHL had sufficient notice of the availability of the claim against a Chapter 11 debtor to satisfy due process requirements and render the claim discharged. The court concluded that the district court applied an incorrect standard in accepting as true DHL's allegation that it was not aware of, or with due diligence could not have become aware of, sufficient facts to plead an antitrust claim that would survive a motion to dismiss in the context of a bankruptcy proceeding. Therefore, the court remanded for further development of the facts concerning (a) what DHL knew or reasonably should have known in time to present an antitrust claim in the bankruptcy proceeding, or to file a late proof of claim or move to amend the reorganization plan and (b) what United knew or reasonably should have known concerning DHL's claim. View "DPWN Holdings (USA), Inc. v. United Airlines, Inc." on Justia Law
Starr Int’l Co. v. Federal Reserve Bank of New York
Starr, AIG's former principal shareholder, filed suit against the FRBNY for breach of fiduciary duty in its rescue of AIG during the fall 2008 financial crisis. The district court dismissed Starr's claims and Starr appealed. The suit challenged the extraordinary measures taken by FRBNY to rescue AIG from bankruptcy at the height of the direst financial crisis in modern times. In light of the direct conflict these measures created between the private duties imposed by Delaware fiduciary duty law and the public duties imposed by FRBNY's governing statutes and regulations, the court held that, in this suit, state fiduciary duty law was preempted by federal common law. Accordingly, the court affirmed the judgment of the district court. View "Starr Int'l Co. v. Federal Reserve Bank of New York" on Justia Law
In Re: Bernard Madoff
These consolidated appeals arose out of a permanent injunction entered by the Bankruptcy Court and affirmed by the district court, enjoining state law tort actions asserted by appellants, two of Madoff's defrauded investors, against the estate of one of Madoff's alleged co-conspirators and related defendants (Picower defendants). The court concluded that appellants' complaints impermissibly attempted to "plead around" the Bankruptcy Court's injunction barring all claims "derivative" of those asserted by the Trustee. The court also concluded that the Bankruptcy Court operated within the confines of Article III, as recently interpreted by the Supreme Court in Stern v. Marshall. Accordingly, the court held that the Bankruptcy Court did not exceed the bounds of its authority under the Bankruptcy Code or run afoul of Article III. View "In Re: Bernard Madoff" on Justia Law
In re: Douglas Palermo
After debtor filed for bankruptcy under Chapter 7 of the Bankruptcy Code, 11 U.S.C. 701 et seq., the trustee brought proceedings against defendant and others, alleging that these defendants had received fraudulent transfers from debtor prior to debtor's Chapter 7 filing. The court concluded that the district court did not err in declining to dismiss the complaint as untimely, as the bankruptcy court's order constituted a de facto Rule 7021 severance; nor did it err in applying state law to the award of prejudgment interest; in the absence of further explanation, the court remanded for the district court to either exercise its discretion or to explain that it was aware of and in fact exercised its discretion; the district court should articulate its reasons for any grant of interest; and the remainder of defendant's arguments have been considered in the summary order filed along with this opinion. View "In re: Douglas Palermo" on Justia Law
In re: Katherine Elizabeth Bar
Drawbridge appealed from the bankruptcy court's order granting recognition of a foreign main proceeding. 11 U.S.C. 109(a) provides: "Notwithstanding any other provision of this section, only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor under this title." The court vacated and remanded, finding that section 109(a) applies to the debtor in a foreign main proceeding under Chapter 15 of the Bankruptcy Code. View "In re: Katherine Elizabeth Bar" on Justia Law
In Re: Thelen LLP
This case arose when partners of the law firm Thelen LLP, a registered limited liability partnership governed by California law, voted to dissolve the firm. At issue was whether, for purposes of administering the firm's related bankruptcy, New York law treats a dissolved law firm's pending hourly fee matters as its property. The court certified controlling questions of law to the New York Court of Appeals, concluding that the court could not definitely answer the issue without the guidance of the state court. View "In Re: Thelen LLP" on Justia Law
In re: AMR Corp.
U.S. Bank appealed the bankruptcy court's order authorizing AMR and American (collectively, "Debtors") to obtain postpetition financing; authorizing Debtors to repay certain prepetition notes held by U.S. Bank and secured by aircraft; and denying U.S. Bank's request to lift an automatic stay. The court concluded that: (1) under the language of the Indentures, American's voluntary petition for bankruptcy triggered a default and automatically accelerated the debt, the satisfaction of which required no make-whole payment; (2) ipso facto clauses in a nonexecutory contract were not unenforceable under 11 U.S.C. 365(e) or any other Bankruptcy Court provision identified by U.S. Bank; Debtors complied with its 11 U.S.C. 1110(a) elections to perform its obligations under the Indentures and cure any nonexempt defaults by making regularly schedule principal and interest payments; it was not required to cure its Section 4.01(g) default; and (4) the bankruptcy court did not abuse its discretion in denying U.S. Bank's motion to lift the automatic stay. Accordingly, the court affirmed the judgment of the district court. View "In re: AMR Corp." on Justia Law