Justia Bankruptcy Opinion Summaries

This was an adversary proceeding arising out of a Chapter 11 bankruptcy of debtors. The trustee filed suit against A&R, the former debtors' counsel, seeking disgorgement of the attorney's fees awarded during the bankruptcy. The bankruptcy court ordered a sanction for A&R's failure to adequately disclose various connections it had to the debtors and creditors, but found that A&R did not have a disqualifying adverse interest. The trustee appealed, arguing that A&R was not disinterested and that all legal fees should have been disgorged. The court held that, under the totality of the circumstances, A&R did not have a disqualifying interest; given the bankruptcy court's factual findings were reasonable based on the record, the court concluded that the bankruptcy court did not commit clear error in ordering disgorgement of only a portion of the retainer; and the bankruptcy's court's decision to deny the amendment was not an abuse of discretion. Accordingly, the court affirmed the judgment. View "Waldron v. Adams & Reese, L.L.P." on Justia Law

This case arose when Mirant, an energy company, sought to expand its European operations by acquiring nine power islands from General Electric. When the power island deal fell through, Mirant made payments pursuant to a guaranty and soon thereafter sought bankruptcy protection. Mirant, as debtor-in-possession, sued Commerzbank and other lenders in bankruptcy court to avoid the guaranty and to recover the funds Mirant paid pursuant to the guaranty. After Mirant's bankruptcy plan was confirmed MCAR, plaintiff, substituted into the case for Mirant. Commerzbank and other lenders, defendants, filed a motion to dismiss based on Rules 12(b)(1) and 12(b)(6). The district court subsequently denied defendants' motion to dismiss based on plaintiff's alleged lack of standing. Thereafter, the district court granted summary judgment for defendants. Both sides appealed. While the court agreed that the district court correctly determined that there was standing to bring the avoidance claim, the court vacated the judgment of dismissal because the district court erroneously applied Georgia state law rather than New York state law to the avoidance claim. View "MC Asset Recovery LLC v. Commerzbank A.G., et al." on Justia Law

This case arose when debtors inherited an IRA worth $170,000. When debtors filed for bankruptcy, they sought to exempt the inherited IRA from the bankruptcy estate pursuant to 11 U.S.C. 522(d)(12). The Chapter 7 trustee objected to the exemption, arguing that inherited IRAs did not qualify for exemption under section 522(d)(12). After the bankruptcy court ruled for the trustee, the district court reversed the bankruptcy court. Because the court held that inherited IRAs were exempt from the bankruptcy estate, upon de novo review, pursuant to section 522(d)(12), the court affirmed the district court's judgment. View "Chilton, et al. v. Moser" on Justia Law

Debtor, a former company officer, allegedly attempted to obtain one million dollars by falsely claiming an ownership interest in the company and threatening public exposure of alleged illegal activity. After the debtor lost an arbitration proceeding, he then filed for bankruptcy. At issue was whether the company's attorneys' fees for the arbitration represented a nondischargeable debt under 11 U.S.C. 523(a)(4) or (a)(6). The court reversed and remanded the summary judgment rendered against creditors because the debt may have arisen for willful and malicious injury and may therefore be excepted from discharge by section 523(a)(6). View "Rapid Settlements Ltd, et al. v. Shcolnik" on Justia Law

In a bankruptcy adversary proceeding, Capco brought claims of fraud and various business torts against Ryder, Tana, TRT, and Tristone. The claims arose out of a transaction in which Capco purchased from Tana certain oil and gas reserves located in the Gulf of Mexico (the Properties). The bankruptcy court granted summary judgment in favor of Ryder, Tana, TRT, and Tristone and dismissed the claims. The court held that Capco failed to present evidence to demonstrate a genuine issue of material fact about whether Ryder was contracted to provide an independent reevaluation of the Properties and advice at the meeting regarding Capco's decision to close on the Properties. The court also held that because the purchase and sale agreement contained a clear intent to disclaim reliance, the lower courts correctly held that Capco was unable to claim fraudulent inducement based on the prior representations of Tana, TRT, and Tristone. Accordingly, the judgment was affirmed. View "Amco Energy, Inc., et al. v. Tana Exploration Co., et al." on Justia Law

IFS and 17 affiliated organizations (collectively, Interamericas) were debtors in a series of Chapter 7 cases. This appeal arose from eight collective adversary proceedings, which a trustee of IFS brought against appellants for avoidance of fraudulent transfers under Chapter 5 of the Bankruptcy Code and Chapter 24 of the Texas Business and Commerce Code. Appellants appealed the district court's affirmance of the bankruptcy court judgment of over $3 million in favor of the trustee. The court held that control could be sufficient to show ownership of what was ultimately a fact-based inquiry that would vary according to the peculiar circumstances of each case. The court also held that the lower courts' findings of ownership were not clearly erroneous and, moreover, comported with precedent and the court's holding today where IFS exercised control over the accounts at issue such that it had de facto ownership over the accounts, as well as the funds contained. The court further held that the record supported the lower courts' findings of fraudulent transfer. Specifically, IFS faced pending lawsuits and mounting debts just as it liquidated nearly all Interamericas' assets and evidence that IFS operated as a fraudulent enterprise at the time of transfer supported this finding of fraudulent intent. Accordingly, the judgment was affirmed. View "Stettner, et al. v. Smith" on Justia Law

Brian and Debra Spurlin were convicted of concealment of bankruptcy estate assets, for knowingly and fraudulently withholding their interests in certain properties from their bankruptcy filings, and false oaths and statements in bankruptcy for a false answer they gave on a bankruptcy questionnaire. Mr. Spurlin was also convicted of bankruptcy fraud for filing bankruptcy to effect and conceal a fraudulent scheme whereby he took money he was supposedly holding in escrow for a company with whom he was doing business. Mr. Spurlin did not appeal his conviction of concealment, but the Spurlins appealed all other convictions. The court affirmed the conviction of Mrs. Spurlin on all counts; affirmed Mr. Spurlin's convictions of concealment of bankruptcy estate assets and of bankruptcy fraud; but reversed Mr. Spurlin's conviction of false oaths and statements in bankruptcy for insufficient evidence. Accordingly, the court vacated Mr. Spurlin's sentence and remanded for resentencing. View "United States v. Spurlin, et al." on Justia Law

Spencer Committee appealed two orders of the district court: (1) the denial of the Spencer Committee's appeal of the bankruptcy court's confirmation order of the reorganization plan (Plan) by debtor on the grounds of equitable mootness and (2) the denial of the Spencer Committee's motion for a new trial de novo of its fraud claims. The court concluded that, (1) the Spencer Committee appeared before the bankruptcy court and did not obtain a stay, (2) the Plan had been substantially consummated, and (3) the Spencer Committee's requested relief would adversely impact the success of the Plan or the rights of third parties not before the court. Accordingly, on the grounds of equitable mootness, the court affirmed the district court's order granting debtor's motion to dismiss.

This case stemmed from SL Management's Chapter 11 bankruptcy petition where Texas Capital appeared as a creditor in SL Management's bankruptcy suit. During the pendency of SL Management's bankruptcy case, Texas Capital filed an action in Texas state court to enforce guarantee agreements between it and plaintiff, a member of SL Management. The Texas state court entered a default judgment against plaintiff and Texas Capital initiated collection proceedings against plaintiff in Louisiana state court and registered the Texas judgment. In response to the collection action, plaintiff filed the instant action seeking a declaration that SL Management's debt to Texas Capital was fully satisfied by the surrender of collateral. The court subsequently held that the Rooker-Feldman doctrine was not implicated and proceeded to consider whether plaintiff's claim for declaratory relief was barred by res judicata. The court held that res judicata barred the assertion of plaintiff's claims for declaratory judgment. Accordingly, the court reversed the judgment of the district court and rendered judgment in favor of Texas Capital.

Spencer Committee appealed two orders of the district court: (1) the denial of the Spencer Committee's appeal of the bankruptcy court's confirmation order of the reorganization plan (Plan) by Idearc on the grounds of equitable mootness and (2) denial of the Spencer Committee's motion for a trial de novo of its fraud claims. The court held that the Spencer Committee appeared before the bankruptcy court and did not obtain a stay; the Plan had been substantially consummated; and the Spencer Committee's requested relief would adversely impact the success of the Plan or the rights of third parties not before the court. Accordingly, on the grounds of equitable mootness, the court affirmed the district court's order granting Idearc's motion to dismiss the Spencer Committee's appeal of the Confirmation Order of the Plan.