Justia Bankruptcy Opinion Summaries

Expert South Tulsa, a debtor in bankruptcy, sought to set aside as a fraudulent transfer its own sale of real estate that was encumbered by a mortgage far exceeding the sale price. It contended that it did not receive reasonably equivalent value in exchange for the property. Regardless of its motive, the Tenth Circuit rejected Expert South Tula's claim: because the debtor received reasonably equivalent value from the sale of the property, it could not prevail under Oklahoma law or the fraudulent-transfer provision of the Bankruptcy Code. In particular, the Court rejected its contention that it remained liable on the mortgage note after the sale and that the bankruptcy court therefore miscalculated the value it received. The Court therefore affirmed the Bankruptcy Appellate Panel. View "Rebein, Trustee v. Cornerstone Creek Partners" on Justia Law

Appellant filed for Chapter 11 bankruptcy, which was later converted to a Chapter 7 bankruptcy. Prior to filing, Appellant was involved in two personal injury cases. As part of his bankruptcy proceedings, Appellant claimed two personal injury exemptions, one for the personal injury settlement stemming from a dog attack and another stemming from an automobile accident. The bankruptcy court certified to the Supreme Court the question of whether a debtor is entitled to more than one personal injury exemption under Nev. Rev. Stat. 21.090(1)(u) if the debtor has more than one personal injury accident. The Supreme Court held that section 21.090(1)(u) entitles a debtor to an exemption for each personal injury claim, on a per-claim basis. View "Kaplan v. Dutra" on Justia Law

The Centers for Medicare & Medicaid Services (CMS) terminated its Provider Agreement with Parkview Adventist Medical Center after finding that Parkview was no longer a “hospital” under the Medicare statute. Parkview, which had filed for bankruptcy, attempted to use the Bankruptcy Code to challenge the actions of CMS in terminating the agreement. Parkview filed a motion to compel post-petition performance of executory contracts, arguing that the Provider Agreement was an “executory contract” under 11 U.S.C. 365 and accordingly within the bankruptcy court’s jurisdiction and, as such, CMS’s termination of the agreement was a post-petition termination without court authority in violation of the Bankruptcy Code. Further, Parkview argued that CMS’s termination of the Provider Agreement violated the automatic stay in 11 U.S.C. 362(a)(3) and the non-discrimination provision in 11 U.S.C. 525(a). The bankruptcy court concluded that it lacked jurisdiction over the motion and that CMS had not violated either the automatic stay or the non-discrimination provision. The district court affirmed. The First Circuit affirmed, holding (1) the automatic stay did not bar CMS’s termination of the Provider Agreement; and (2) CMS’s termination of the Provider Agreement was not impermissible discrimination. View "Parkview Adventist Medical Center v. United States" on Justia Law

The debtor filed a voluntary chapter 7 petition, listing pre-petition judgment liens incorrectly on Schedule E. His residence was a listed asset. He did not claim an exemption in the property, nor did he seek to avoid the judicial liens; he intended to sell the home. The creditors received notice of the bankruptcy filing and of the discharge. The case was closed in March 2012. In December 2015, the debtor moved to reopen his case in order to avoid the judgment liens so that he could refinance rather than sell. Notice was provided to all interested parties; none objected. Debtor’s counsel admitted that “it was an oversight ... that I didn’t go through with the actual terminations of the liens.” The bankruptcy court denied the motion, noting that the liens were known when the case was open. The Sixth Circuit Bankruptcy Appellate Panel reversed. Neither 11 U.S.C. 350(b) nor FRBP 5010 impose a time limit on motions to reopen. The “[p]assage of time alone . . . does not necessarily constitute prejudice to a creditor sufficient to bar the reopening.” The bankruptcy court did not find that any prejudice would result or the existence of other factors which would bar reopening. The debtor established that avoidance of the liens would provide him relief. View "In re: McCoy" on Justia Law

Timothy Blixseth and his wife, Edra, developed the Yellowstone Mountain Club, an exclusive ski and golf resort in Montana that caters to the “ultra-wealthy.” Edra subsequently filed for bankruptcy on behalf of the Yellowstone entities, and the U.S. Trustee appointed nine individuals to serve as the Unsecured Creditors' Committee (UCC). Blixseth suspected that his attorney, Stephen Brown, used confidential information to Blixseth’s detriment in the bankruptcy proceedings. Brown was one of the UCC members. Blixseth filed suit against Brown, but the district court held that it lacked jurisdiction because Blixseth did not first obtain the bankruptcy court’s permission to sue, as required by Barton v. Barbour. No court of appeals has held that Barton applies to suits against UCC members, but some have extended Barton to actors who are not bankruptcy trustees or receivers. Because creditors have interests that are closely aligned with those of a bankruptcy trustee, the court explained that there is good reason to treat the two the same for purposes of the Barton doctrine. Therefore, the court concluded that Barton applies to UCC members like Brown who are sued for acts performed in their official capacities. The court also concluded that Blixseth does not need permission from the bankruptcy court before bringing his pre-petition claims in district court. In this case, Blixseth's claims of misconduct are so intertwined with and dependent upon Brown's actions as a member of the UCC that it is impossible to separate the pre-petition claims from Brown’s activities on the UCC. However, the court concluded that Blixseth needed the bankruptcy court’s permission before bringing claims challenging conduct related to Brown's actions after he was appointed UCC chair in district court. Finally, the court concluded that the district court’s order did not afford Blixseth anything close to an independent decision by an Article III adjudicator; Stern v. Marshall does not preclude bankruptcy courts from adjudicating Barton claims; and the court remanded for the bankruptcy court to consider whether Brown is entitled to derived judicial immunity for Blixseth’s post-petition claims. Accordingly, the court affirmed in part, vacated in part, and remanded in part. View "Blixseth v. Brown" on Justia Law

The government appeals the bankruptcy court's decision regarding the interest due from defendant for the taxable year 1998. In this case, the tax court never reached the issue of defendant's interest owed on the 1998 tax deficiency. Therefore, the bankruptcy court erred in deferring to the tax court for its calculation of the interest on defendant's underpayment for 1998. Accordingly, the court reversed the district court's judgment affirming the bankruptcy court. The court remanded for further proceedings. View "United States v. Beane" on Justia Law

The Eleventh Circuit Court of Appeals certified two questions of Georgia law to the Georgia Supreme Court, centering on whether Georgia exempts the funds in a health savings account (HSA) from inclusion in a bankruptcy estate. Debtor Denise Mooney filed for Chapter 7 bankruptcy protection, listing a HSA on her petition, but exempting the entire amount in the account. Georgia law exempts the debtor’s right to receive “[a] disability, illness, or unemployment benefit,” and and “payment[s] under a pension, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.” The Chapter 7 trustee in this case objected to the HSA exemption. The Georgia Supreme Court held that an HSA did not constitute a right to receive a "disability, illness or unemployment benefit" under Georgia law, nor did it constitute a right to receive a "payment under a pension, annuity or similar plan or contract." View "Mooney v. Webster" on Justia Law

Debtor appealed from the bankruptcy court's order denying his motion to reinstate his dismissed Chapter 13 bankruptcy case and an order denying his motion to reconsider that order. The panel concluded that the bankruptcy court did not clearly err in concluding that debtor had no meritorious defense to the UST’s motion to dismiss. Therefore, the panel affirmed the bankruptcy court's order denying debtor's motion to reinstate the dismissed case and denying his motion to reconsider. View "Paulson v. McDermott" on Justia Law

In 2010, EFIH borrowed $4 billion at a 10% interest rate, issuing notes secured by its assets; the Indenture states that EFIH may redeem the notes for the principal amount plus a “make-whole premium” and accrued, unpaid interest. It contains an acceleration provision that makes “all outstanding Notes . . . due and payable immediately” if EFIH files for bankruptcy. Interest rates dropped. Refinancing outside of bankruptcy would have required EFIH to pay the make-whole premium. EFIH disclosed to the Securities and Exchange Commission a “proposal [whereby] . . . EFIH would file for bankruptcy and refinance the notes without paying any make-whole amount.” EFIH later filed Chapter 11 bankruptcy petitions, seeking leave to borrow funds to pay off the notes and to offer a settlement to note-holders who agreed to waive the make-whole. The Trustee sought a declaration that refinancing would trigger the make-whole premium and that it could rescind the acceleration without violating the automatic stay. The Bankruptcy Court granted EFIH’s motion to refinance. EFIH paid off the notes and refinanced at a much lower interest rate; the make-whole would have been approximately $431 million. The Bankruptcy Court and district court concluded that no make-whole premium was due and that the noteholders could not rescind acceleration. The Third Circuit reversed. The premium, meant to give the lenders the interest yield they expect, does not fall away because the full principal amount becomes due and the noteholders are barred from rescinding acceleration of debt. View "In re: Energy Future Holdings Corp." on Justia Law

Debtor appealed the bankruptcy court's order denying his third motion to reconsider the order dismissing his chapter 7 case. The Bankruptcy Appellate Panel (BAP) concluded that, although debtor argues in his brief that the dismissal order was erroneous, he failed to file a timely notice of appeal from that order and the panel lacked jurisdiction to review it. The BAP also concluded that the bankruptcy court did not abuse its discretion when it denied his third motion for reconsideration. Accordingly, the BAP affirmed the judgment. View "Lee v. Edwards" on Justia Law