Justia Bankruptcy Opinion Summaries

The Eleventh Circuit affirmed the bankruptcy court's order revoking the discharge of debtors' debt. Debtors claimed that the trustee had pre-discharge knowledge of the alleged conduct that resulted in the revocation.The court held that the "lack-of-knowledge" requirement that is explicitly contained in one subsection of the bankruptcy statute, 11 U.S.C. 727(d)(1), cannot be read into the adjacent subsection of the same statute, 11 U.S.C. 727(d)(2), thereby barring revocation. The court need not reach the factual determination of whether the trustee had prior knowledge of the fraud issue, because it would be inappropriate to rewrite section 727(d)(2) to include that requirement. Therefore, the court held that the bankruptcy court and district court correctly interpreted section 727(d)(2). View "Thompson v. Gargula" on Justia Law

The Eleventh Circuit affirmed the bankruptcy court's denial of debtor's second motion for sanctions against Nationstar. Debtor alleged that Nationstar's conduct of sending a monthly statement to Roth to collect discharged mortgage debt was in violation of the bankruptcy code.The court held that the Informational Statement sent by Nationstar was not an improper attempt at debt collection in violation of 11 U.S.C. 524(a)(2), because there were several bases to conclude that the objective effect of the statement was not to pressure debtor to repay a discharged debt. Therefore, sanctions were not appropriate under 11 U.S.C. 105. The court noted that, even if there was a section 524 violation, sanctions under section 105 were unavailable under the Supreme Court's recent decision in Taggart v. Lorenzen, 139 S. Ct. 1795, 1801 (2019), because there was more than a fair ground of doubt as to whether the discharge order barred Nationstar's conduct. Finally, the court held that the bankruptcy court did not err by failing to hold an evidentiary hearing. View "Roth v. Nationstar Mortgage, LLC" on Justia Law

Debtor Walter Energy petitioned for Chapter 11 bankruptcy and sought to sell substantially all of its assets as a going concern. The bankruptcy court exercised its authority under the Retiree Benefits Bankruptcy Protection Act of 1988 (RBBPA) and terminated Walter Energy's obligation to pay premiums. The Funds appealed to the district court, which affirmed the bankruptcy court's judgment.The Eleventh Circuit affirmed, and held that the bankruptcy court had the authority to modify the premiums that Walter Energy owed the Funds. The panel held that the RBBPA authorized the bankruptcy court to terminate Walter Energy’s obligation to pay premiums, even though the premiums were imposed by statute and Walter Energy was pursuing liquidation under Chapter 11, not a classic reorganization. View "United Mine Workers of America Combined Benefit Fund v. Toffel" on Justia Law

For a debt to be "provided for" by a plan under 11 U.S.C. 1328(a), the bankruptcy plan must make a provision for or stipulate to the debt in the plan. The Eleventh Circuit affirmed the bankruptcy court and district court, holding that debtor's bankruptcy plan did not discharge the Credit Union's mortgage. In this case, debtor's plan did nothing more than state that the Credit Union's mortgage would be paid outside the plan, but it was not "provided for" and was not discharged.The court further held that, even if the debt was provided for, discharge of the debt would violate section 1322(b)(2) by modifying the Credit Union's right under the original loan documents to obtain a deficiency judgment against debtor. Finally, the issue of whether the Credit Union's failure to file a proof of claim for its first mortgage resulted in the mortgage's discharge was not preserved for appeal. View "Dukes v. Suncoast Credit Union" on Justia Law

The Eleventh Circuit affirmed the Bankruptcy Court's order dismissing a fraudulent conveyance claim by the trustee of the liquidating trust of Teltronics against Harris and RPX. The court held that the Bankruptcy Court made no material error in ruling on the admissibility of evidence, and there was no error in the conclusion that the trustee failed to prove that Teltronics was insolvent at the time of the transfer. In this case, having accepted that the value of the assets listed on the balance sheet, as presented by an expert who testified for the trustee, was incomplete without the inclusion of the value of the three maintenance contracts, the burden was on the trustee to prove that the value of those contracts was so small as to leave the expert's opinion as to insolvency unaffected. The trustee offered no such evidence. Therefore, the court did not reach the lower courts' decisions and dismissed the cross-appeals as moot. View "O'Halloran v. Harris Corp." on Justia Law

The doctrine of equitable mootness, which permits courts sitting in bankruptcy appeals to dismiss challenges when effective relief would be impossible, applies in the Chapter 9 context. The Eleventh Circuit held that it would be appropriate to note federalism concerns when deciding whether the doctrine should bar an appeal in a particular bankruptcy case. In this case, equitable mootness barred the ratepayers' appeal because they have never asked any court to stay the implementation of the plan that the bankruptcy court confirmed and thus no court has ever stayed the implementation of the plan. Furthermore, the County and others have taken significant and largely irreversible steps in reliance on the unstayed plan confirmed by the bankruptcy court. Finally, after considering notions of fairness by looking at the merits and the public interest, the court held that dismissing the ratepayers' appeal was appropriate. Therefore, the court reversed the district court's order and remanded for dismissal of the ratepayers' appeal from the plan confirmed by the bankruptcy court. View "Bennett v. Jefferson County" on Justia Law

After debtor filed for bankruptcy under Chapter 11, the trustee filed an adversary proceeding against Blue Bell to recover from Blue Bell more than $500,000 in a series of payments that Blue Bell had received from debtor during the 90-day period preceding debtor's bankruptcy filing. Blue Bell acknowledged that the payments it received from debtor constituted preferences under 11 U.S.C. 547(b), but that it had a new-value defense.The Eleventh Circuit vacated the bankruptcy court's judgment and held that the language in Charisma Investment Company, N.V. v. Airport Systems, Inc. (In re Jet Florida System, Inc.), 841 F.2d 1082 (11th Cir. 1988), relied on by the bankruptcy court was dictum and, as such, it did not bind the court. The court construed section 547(c)(4) anew, and held that it did not require new value to remain unpaid. Therefore, the court remanded for a new calculation of Blue Bell's preference liability. View "Kaye v. Blue Bell Creameries, Inc." on Justia Law

The Eleventh Circuit affirmed the district court's decision affirming the bankruptcy court's denial of debtors' motion to convert their Chapter 7 case to a Chapter 11 proceeding and approving a compromise agreement between the trustee and a judgment creditor (72 Partners, LLC). The court held that the bankruptcy court properly denied the request to convert to Chapter 11 because cause existed to either dismiss the case or convert it back to a Chapter 7, based on substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation under 11 U.S.C. 1112(b)(4)(A). Furthermore, other section 1112(b)(4) causes for denying conversion to Chapter 11 existed, such as failure to comply with an order of the court, failure timely to provide information or attend meetings reasonably requested by the United States trustee, and inability to effectuate substantial consummation of a confirmed plan. Another cause not listed in the statute was debtors' lack of good faith. View "Daughtrey v. Rivera" on Justia Law

In this consolidated appeal, plaintiff alleged that the district court abused its discretion by dismissing his two lawsuits based on the doctrine of judicial estoppel as a result of his failure to disclose them in his bankruptcy proceeding. Applying a two-part test to guide district courts in applying judicial estoppel, the court held that plaintiff took an inconsistent position under oath in a separate proceeding and the inconsistent positions were calculated to make a mockery of the judicial system. In this case, plaintiff not only failed to include the two lawsuits in his initial bankruptcy filings but he also failed to include them in any of the six separate amendments that he made to his schedules and filings during the bankruptcy proceeding. Plaintiff only disclosed the lawsuits after defendants had relied on plaintiff's failure to disclose as grounds for dismissal. View "Weakley v. Eagle Logistics" on Justia Law

After plaintiff filed an employment discrimination case against US Steel, she filed a Chapter 7 bankruptcy petition that did not disclose the employment-discrimination claims. The Chapter 7 Trustee was treating the bankruptcy as a “no asset” case. U.S. Steel moved the district court for dismissal. An Eleventh Circuit panel initially affirmed the district court in holding that judicial estoppel required dismissal of the bankruptcy case. Upon rehearing en banc, the Eleventh Circuit overruled precedent “that permitted the inference that a plaintiff intended to make a mockery of the judicial system simply because he failed to disclose a civil claim” and remanded for a determination of whether a plaintiff’s inconsistent statements were calculated to make a mockery of the judicial system. When the plaintiff’s inconsistent statement is an omission in bankruptcy disclosures, the court may consider such factors as the plaintiff’s level of sophistication, whether and under what circumstances the plaintiff corrected the disclosures, whether the plaintiff told his bankruptcy attorney about the civil claims before filing the bankruptcy disclosures, whether the trustee or creditors were aware of the claims before the plaintiff amended the disclosures, whether the plaintiff identified other lawsuits to which he was party, any findings or actions by the bankruptcy court after the omission was discovered, and any other fact relevant to the intent inquiry.” View "Slater v. United States Steel Corp." on Justia Law