Justia Bankruptcy Opinion Summaries

Appellant filed for Chapter 13 bankruptcy protection, and the bankruptcy court set July 19, 2012 as the deadline for creditors to file unsecured claims. The case was dismissed on June 13, 2012 and reinstated on August 1, 2012. On August 7, 2012, Appellee, Appellant’s creditor, sought leave to file an untimely unsecured claim, explaining that it had assumed the July 19 deadline was no longer operative after the case’s dismissal. The bankruptcy court reset the filing deadline to September 6, 2012 and accepted Appellee’s claim. The district court affirmed. The First Circuit affirmed, holding that because the initial statutory ninety-day deadline for Appellee to file an unsecured claim fell in a period between the case’s dismissal and subsequent reinstatement, the claim was timely. View "Gil-De La Madrid v. Bowles Custom Pools & Spa" on Justia Law

Appellant filed for Chapter 13 bankruptcy protection, and the bankruptcy court set July 19, 2012 as the deadline for creditors to file unsecured claims. The case was dismissed on June 13, 2012 and reinstated on August 1, 2012. On August 7, 2012, Appellee, Appellant’s creditor, sought leave to file an untimely unsecured claim, explaining that it had assumed the July 19 deadline was no longer operative after the case’s dismissal. The bankruptcy court reset the filing deadline to September 6, 2012 and accepted Appellee’s claim. The district court affirmed. The First Circuit affirmed, holding that because the initial statutory ninety-day deadline for Appellee to file an unsecured claim fell in a period between the case’s dismissal and subsequent reinstatement, the claim was timely. View "Gil-De La Madrid v. Bowles Custom Pools & Spa" on Justia Law

Steven Fustolo’s affiliate companies issued four promissory notes to Patton Drive, LLC. Fustolo personally guaranteed two of the notes. When the principal debtors defaulted on all four notes, Patton drive sued Fustolo. The Massachusetts state court found Fustolo liable for breach of contract and entered judgment against Fustolo. Fustolo appealed, challenging the interest due. Meanwhile, Patton Drive joined with two of Fustolo’s other creditors to file a petition seeking to place Fustolo into involuntary Chapter 7 bankruptcy. Fustolo, in turn, asserted that Patton Drive was not qualified it to serve as a petitioning creditor because his pending state court appeal subjected Patton Drive’s judgment to “bona fide dispute as to liability or amount.” The bankruptcy court allowed Patton Drive to join in initiating involuntary bankruptcy proceedings against Fustolo. The district court affirmed, finding that Fustolo’s state court appeal could not raise a bona fide dispute as to Patton Drive’s claim. The First Circuit affirmed, holding that because the amount of Fustolo’s liability on the guaranteed notes was not subject to bona fide dispute, and because Patton Drive’s claim on the guaranteed notes could be considered separately from Patton Drive’s claim on the judgment within which its underlying contract claims were submerged, Patton Drive qualified as a petitioning creditor. View "Fustolo v. 50 Thomas Patton Dr., LLC" on Justia Law

Redondo Construction Corporation filed for Chapter 11 bankruptcy. Through the proceedings, Redondo filed three complaints against the Puerto Rico Highway and Transportation Authority for money owed under construction contracts, alleging that it was entitled to damages and prejudgment interest. The bankruptcy court ruled in Redondo’s favor and found that Redondo was entitled to prejudgment interest. The First Circuit vacated the award of prejudgment interest and remanded. On remand, the bankruptcy court awarded Redondo prejudgment interest on its contract claims under Article 1061 of the Puerto Rico Civil Code, accruing through the payment of principal. The Authority moved to amend the judgment. The bankruptcy court denied the Authority’s motion, and the district court affirmed. The First Circuit vacated the judgment, holding (1) Redondo did not forfeit its claim to prejudgment interest under Article 1061; but (2) 28 U.S.C. 1961 exclusively controls awards of postjudgment interest in federal court, and therefore, the bankruptcy court should not have extended the prejudgment interest accrual period past the entry of judgment. Remanded for a calculation of section 1961 interest and a recalculation of Article 1061 interest. View "P.R. Highway & Transp. v. Redondo Constr. Corp." on Justia Law

Debtor filed a chapter 7 bankruptcy petition seeking to discharge nearly $3,500,000 in unsecured debt. The bankruptcy court denied Debtor a discharge, concluding that Debtor had not satisfactorily explained the disposition of his assets during the period leading up to the filing of his bankruptcy petition. The Bankruptcy Appellate Panel upheld the denial of the discharge on the grounds that Debtor had violated both 11 U.S.C. 727(a)(3) and 11 U.S.C. 727(a)(5). The First Circuit affirmed, holding that because Debtor failed, without any objectively reasonable justification, to keep and preserve records, and because Debtor failed to submit any information resembling a satisfactory explanation for his apparent losses and deficiencies, the bankruptcy court did not err in denying Debtor a discharge. View "Harrington v. Simmons" on Justia Law