Justia Bankruptcy Opinion Summaries

This appeal arose out of a Chapter 7 bankruptcy petition filed by Jeffrey Lavenhar. Jeffrey’s ex-wife, Laurie Lavenhar, filed a proof of claim in Jeffrey’s bankruptcy proceeding for $347,400, claiming this amount was owed to her as a domestic support obligation, and it was entitled to priority under 11 U.S.C. 507(a)(1). First American Title Insurance Company, one of Jeffrey's creditors, filed an objection to Laurie’s proof of claim, asserting that the entirety of the domestic support obligation underlying Laurie’s proof of claim was obtained as a result of collusion between Jeffrey and Laurie in state-court divorce proceedings. First American also sought relief from the automatic stay so it could seek a state-court declaration that the judgment upon which Laurie’s claim was based was obtained by fraud on the court. In an order designed to prevent the state-court proceedings from intruding on the prerogatives of the Chapter 7 Trustee, the bankruptcy court granted First American’s motion to lift the stay. The district court affirmed that order on appeal. Laurie appealed, arguing the bankruptcy court erred in granting First American’s motion to lift the stay. According to Laurie, First American lacked standing to litigate the validity of any component of the state-court judgment because the power to control property of the bankruptcy estate belonged solely to the Trustee. After review, the Tenth Circuit found no reversible error in the bankruptcy court's judgment, and affirmed the narrowly tailored order lifting the stay. View "Lavenhar v. First American Title Insurance" on Justia Law

This case arose out of an alleged power of attorney agreement between appellant and KSRP, which was signed by appellee, an officer and 50% owner of PYK, the general partner of KSRP. On appeal, appellant challenged the district court's order and judgment dismissing his claims against appellee, arguing that the bankruptcy court and district court lacked "related to" jurisdiction under 28 U.S.C. 1331 because appellee's cross-claims for indemnity and contribution against KSRP had no possibility of succeeding. The court concluded that the pleadings are sufficient to support "related to" jurisdiction. In this case, appellee's allegations in his notice of removal and the facts alleged in appellant's pleadings in state court sufficiently show that appellee's contractual indemnity claim against KSRP was not immaterial and made solely for the purpose of obtaining jurisdiction or wholly insubstantial and frivolous. Accordingly, the court affirmed the judgment. View "Collins v. Sidharthan" on Justia Law

Martin filed a chapter 7 bankruptcy petition on January 28. On April 9, the Pecks sought relief from stay to continue state court litigation against Martin. On April 29, the Pecks filed an adversary proceeding seeking nondischargeability of a debt stemming from the same litigation. The court indicated that it would grant relief from stay, noting that the state court discovery process was further along; additional parties are involved in that case; and the Pecks had requested a jury trial. On July 7, the bankruptcy court granted relief from the stay, holding the adversary proceeding in abeyance. On July 17, Martin timely filed notice of appeal. On July 22, Martin sought a stay pending appeal in the bankruptcy court. The Pecks filed opposition. On October 5, Martin filed his appellate brief. The Pecks filed their brief on November 5. Martin filed his reply brief on November 23, requesting oral argument. On November 19, before obtaining a ruling from the bankruptcy court and before completion of briefing, Martin moved, in the Bankruptcy Appellate Panel, for stay pending appeal. On November 30, the Pecks filed a response and the bankruptcy court denied a stay. On December 11, Martin filed an “Emergency” second motion for stay pending appeal. The Panel declined oral argument and affirmed relief from the automatic stay. View "In re: Daniel Martin, Sr." on Justia Law

This appeal concerns the proper application of Section 510(b) of the Bankruptcy Code in the Lehman bankruptcies. LBI, the debtor, was lead underwriter of unsecured notes issued by Lehman Holdings, its affiliates. After the bankruptcy of both the Lehman entity that issued the notes, Lehman Holdings, and the Lehman entity that was lead underwriter on the issuances, LBI, the Junior Underwriters were held to account for the noteholders' losses, and incurred loss for defense and settlements. The Junior Underwriters filed suit asserting claims for contribution or reimbursement against the liquidation estate of Debtor LBI. The bankruptcy court construed the statute to require subordination of the Junior Underwriters’ contribution claims. The court, however, adopted the district court's construction of section 510(b), holding that in the affiliate securities context, “the claim or interest represented by such security” means a claim or interest of the same type as the affiliate security. Claims arising from securities of a debtor’s affiliate should be subordinated in the debtor’s bankruptcy proceeding to all claims or interests senior or equal to claims in the bankruptcy proceeding that are of the same type as the underlying securities. Accordingly, the court affirmed the judgment of the district court. View "ANZ Securities v. Giddens" on Justia Law

Appellant FB Acquisition Property I, LLC appealed a district court order affirming the confirmation of a Chapter 11 plan for Appellees and Debtors Larry and Susan Gentry. The Gentrys were the sole shareholders, officers, and directors of Ball Four Inc., a sports complex in Adams County, Colorado. In 2010, Ball Four filed a voluntary Chapter 11 petition, and a year later, the Gentrys filed this Chapter 11 proceeding. This appeal involved aspects of both bankruptcies. In 2005, Ball Four received a $1.9 million loan from FirsTier Bank to expand its sporting facilities and pay off a previous loan. After four years of struggling with construction defects, underfunding of the project, and an economic downturn, Ball Four stopped making interest payments to FirsTier. Ball Four proposed a plan of reorganization that provided the bank’s allowed claim would be repaid in full, plus interest, and that FirsTier would retain its lien on Ball Four’s property until the claim was paid. Before Ball Four’s Chapter 11 plan was approved in 2011, the Colorado Division of Banking closed FirsTier and the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver. Later, the FDIC conveyed all rights under the original promissory note to 2011-SIP 1 CRE/CADC Venture, LLC (SIP). Neither FirsTier, FDIC, nor SIP objected to the Ball Four Plan, and it was confirmed in August 2011, and Ball Four’s case was closed in 2013. In October 2010, a month after Ball Four filed for bankruptcy, FirsTier sued the Gentrys in Colorado state court to collect on the guaranties. In November 2011, the Gentrys filed this Chapter 11 case. The Gentrys filed the necessary disclosures and an amended plan. The amended plan provided that the Gentrys’ liability on the 2005 loan would be satisfied by Ball Four under its confirmed plan. Despite SIP’s objections, the bankruptcy court confirmed the Gentry Plan in 2013. Because the bankruptcy court's feasibility finding of the Gentrys' plan was based on a permissible view of the evidence, the Tenth Circuit concluded the bankruptcy court’s finding of feasibility was not clearly erroneous. However, the Court found the district court erred with regard to limiting the Gentrys' liability as guarantors to the amount Ball Four owed. In light of the Tenth Circuit's ruling, the matter was remanded back to the bankruptcy court in the event the guaranty issue impacted the plan feasibility assessment. View "In re: Gentry" on Justia Law

Debtor appealed the bankruptcy court's order overruling her objection to the chapter 7 trustee's final report and denying her motion to compel the chapter 7 trustee to abandon $16,893.44 he had received from the Ruth E. Thompson Revocable Trust. The court agreed with the bankruptcy court that pursuant to paragraph 5.3.4 of the trust agreement, debtor's interest in the Trust was fully alienable by her on the petition date, and her interest in the Trust was not excluded from the bankruptcy estate under 11 U.S.C. 541(c)(2). Accordingly, the court affirmed the bankruptcy court's order. View "Thompson-Rossbach v. Doeling" on Justia Law

Creditor appealed from the bankruptcy court's order denying his motion to dismiss debtor's bankruptcy petition. The bankruptcy court ruled that the Bankruptcy Code merely requires the debtor to establish that she had received a briefing regarding credit counseling in compliance with 11 U.S.C. 109(h)(1). The bankruptcy appellate panel concluded that the bankruptcy court properly found that the certificate of counseling was sufficient to meet the statutory requirements and denied creditor's contention to the contrary because it was based on an erroneous interpretation of law. The panel lacked jurisdiction related to creditor's appeal of an order granting debtor's motion to sell certain real property and the panel declined to address creditor's remaining issues because they were not presented to the bankruptcy court in the first instance or are unrelated to the issue on appeal. Accordingly, the panel affirmed the judgment. View "Curtis v. Segraves" on Justia Law

After debtor, a successful surgeon, died during the pendency of his bankruptcy case, debtor's estranged spouse and debtor's personal representative claimed various allowances and exemptions under the Texas Estates Code in debtor’s bankruptcy case pursuant to Bankruptcy Code 501, 502, and 522. The bankruptcy court ruled that neither was entitled to relief. The court dismissed the appeal to the extent that debtor's spouse seeks a probate allowance to be paid out of debtor's bankruptcy estate because the court lacked appellate jurisdiction to decide this issue. The court does not review bankruptcy court orders that have not been reviewed by the district court. The court affirmed in all other respects. View "Brown v. Sommers" on Justia Law

Debtor filed for Chapter 7 Bankruptcy. Debtor claimed an Individual Retirement Account (IRA) he inherited from his mother upon her death as exempt property from the bankruptcy estate. The Trustee of the case objected to Debtor’s claim of exemption. The United States Bankruptcy Court for the District of Montana certified a question to the Supreme Court regarding whether a Debtor may claim an exemption in an IRA pursuant to Mont. Code Ann. 25-13-608(1)(e). The Supreme Court answered the question in the negative, holding that, under Montana’s liberal construction of exemptions, a debtor may not claim an exemption to an inherited IRA under section 25-13-608(1)(e). View "In re Golz" on Justia Law

Mark Lazzo served as legal counsel for Schupbach Investments, L.L.C. in its Chapter 11 bankruptcy case. After confirming a liquidation plan for the debtor, the bankruptcy court entered a final fee order approving certain disputed fee applications Lazzo filed. Creditor Rose Hill Bank and Carl B. Davis, the trustee of the Schupbach Investments Liquidation Trust, appealed the final fee order to the Bankruptcy Appellate Panel (BAP). The BAP reversed those portions of the bankruptcy court’s order that: (1) confirmed post facto approval of Lazzo’s employment, and allowed fees incurred prior to approval of his employment; and (2) allowed postconfirmation fees. The Debtor, Lazzo, and his law firm, Mark J. Lazzo, P.A. appealed the BAP’s decision. Finding no reversible error, the Tenth Circuit affirmed. View "Davis v. Schupbach Investments" on Justia Law