Justia Bankruptcy Opinion Summaries

Diamond filed a chapter 7 bankruptcy petition. February 28, 2012 was the deadline for complaints to determine the dischargeability of certain debts under 11 U.S.C. 523(c). On February 15, Goldstein requested a 60-day “extension of proceedings” and “withholding of the entry of the discharge order,” claiming that he was a creditor but did not receive proper notice. The bankruptcy court found the request to be for “abatement of the case.” Finding no cause for relief, it denied the motion and the request to withhold discharge. The case closed. A year later Goldstein filed a dischargeability complaint in a different jurisdiction, not citing a statute, but captioned “Fraud and Defalcation.” The court transferred the matter to the original court. After a remand, that court entered an order to show cause why the complaint should not be dismissed. Goldstein responded. The court took no action on its show cause order, but scheduled a trial. Diamond filed an answer, requesting dismissal. Goldstein responded; the court dismissed, determining that the debt was not excepted from discharge. The Eighth Circuit affirmed. Goldstein had adequate time to protect his rights. He used that time to file a proof of claim and move for extension. He cannot , long after the fact, claim to have been hindered by his lack of knowledge of the case. View "Goldstein v. Diamond" on Justia Law

Adamson manufactures and sells clothing and accessories. Arnold H. Simon, Adamson's president and CEO, entered into two separate agreements with CIT to guarantee a loan. Adamson subsequently filed for bankruptcy and a Committee was appointed to represent the interests of Adamson's unsecured creditors. The Committee filed this adversary action against Simon under a preference-liability theory. The bankruptcy court entered judgment in favor of Simon, holding that he was exempt from preference liability because he was not a creditor of Adamson. The district court affirmed. The court affirmed, holding that a corporate insider who personally guaranteed his corporation’s loan is absolved of any preference liability to which he might otherwise have been subjected, where he had previously waived his indemnification rights against the corporation, he had a bona fide basis for doing so, and he took no subsequent actions to negate the economic impact of that waiver. The court declined to join several bankruptcy courts in stepping away from the plain language of the Bankruptcy Code and subjecting an insider guarantor to preference liability where a transfer works to his benefit, even if he had unconditionally waived all claims against the debtor. View "In re Adamson Apparel, Inc." on Justia Law

Defendants were creditors of Plaintiff who obtained final judgments against Plaintiff. A levy of execution was made on Plaintiff’s real property. Plaintiff subsequently received a discharge under Chapter 7 of the Bankruptcy Code. Plaintiff did not seek or obtain a ruling from the Bankruptcy Court avoiding any of Defendants’ liens. Thereafter, Plaintiff filed a complaint to remove the judicial liens. The judge entered judgment in favor of all three defendants, including two defaulting defendants, ruling that Defendants’ liens remained. The Supreme Judicial Court affirmed, holding that Defendants’ liens survived the bankruptcy discharge as a matter of federal and state law. View "Christakis v. Jeanne D’Arc Credit Union" on Justia Law

Petters orchestrated a $3.65 billion Ponzi scheme, operating a sham business, PCI, which purportedly purchased electronics in bulk and resold them. Ritchie advanced $189 million to PCI, in exchange for promissory notes. Ritchie assigned notes with face values totaling $25 million to VICIS. PCI and Petters made payments to Ritchie, who used part of the funds to pay VICIS $17,703,227.39 toward the assigned notes. After Petters’s scheme ended in 2008, Kelley was appointed as receiver, sought Chapter 11 bankruptcy relief, and was appointed as trustee. Kelley and the bankruptcy trustee for Petter’s wholly-owned company, Polaroid, entered into a coordination agreement. Kelley commenced an adversary proceeding against Ritchie, VICIS, and others, to recover alleged fraudulent and preferential transfers. VICIS held a claim against PCI for amounts outstanding on the promissory notes. The parties reached a settlement: VICIS paid $7.5 million to Kelley for release of all claims. The unsecured creditors’ committee supported the settlement and Kelley’s allocation, but Ritchie objected to the allocation. The bankruptcy court approved the t agreement, finding the allocation reasonable because Kelley applied an objective mathematical calculation, the unsecured creditors committee participated in the process and approved the allocation, and the circumstances in the case dealt with complex issues, unsettled law, and massively complicated factual disputes. The district court and Eighth Circuit affirmed. View "Ritchie Capital Mgmt., LLC v. Kelley" on Justia Law

After filing for Chapter 13 bankruptcy, Bullard submitted a proposed repayment plan. Bullard’s mortgage lender objected to the plan’s treatment of its claim. The Bankruptcy Court sustained the Bank’s objection and declined to confirm the plan. Bullard appealed to the First Circuit Bankruptcy Appellate Panel, which concluded that denial of confirmation was not a final, appealable order, 28 U.S.C.158(a)(1), but heard the appeal under a provision permitting interlocutory appeals “with leave of the court,” and agreed that Bullard’s proposed plan was not allowed. The First Circuit dismissed for lack of jurisdiction, finding that the order denying confirmation was not final so long as Bullard remained free to propose another plan. A unanimous Supreme Court affirmed. The relevant proceeding is the entire process of attempting to arrive at an approved plan that would allow the bankruptcy case to move forward. Only plan confirmation, or case dismissal, alters the status quo and fixes the parties’ rights and obligations; denial of confirmation with leave to amend changes little. Additional considerations—that the statute defining core bankruptcy proceedings lists “confirmations of plans,” but omits any reference to denials; that immediate appeals from denials would result in delays and inefficiencies; and that inability to immediately appeal a denial encourages the debtor to work with creditors and the trustee to develop a confirmable plan—bolster this conclusion. View "Bullard v. Blue Hills Bank" on Justia Law

The Valones were Florida residents who filed jointly for bankruptcy under Chapter 13 of the Bankruptcy Code. In their petition, they claimed exemptions for personal property (known as the "wildcard" exemption). The issue this case presented for the Eleventh Circuit's review centered on a district court order affirming a bankruptcy court’s disallowance of an exemption claimed by the Valones in their bankruptcy petition. The Chapter 13 trustee, Jon Waage, objected to their personal property exemption, arguing that, as homeowners filing under Chapter 13 of the Bankruptcy Code, the Valones were ineligible for the exemption. The bankruptcy and district courts agreed. The Eleventh Circuit reversed the district court and remanded with instructions to remand to the bankruptcy court for further proceedings. View "Valone v. Waage" on Justia Law

Appellant Robert Templeton invested in certain limited partnerships formed under the auspices of American Housing Foundation (debtor), which was in the business of developing low-income housing projects. American Housing Foundation issued guaranties of Templeton’s investments, and ultimately filed for Chapter 11 bankruptcy. Templeton asserted claims against American Housing Foundation in bankruptcy based on the guaranties and based on various state law causes of action related to his investments. The bankruptcy court issued a judgment subordinating those claims “pursuant to the provisions of 11 U.S.C. [section] 510(b).” The court also voided, as preferential, transfers made to Templeton within 90 days of the bankruptcy filing. However, the bankruptcy court refused to void allegedly fraudulent transfers. Templeton and the bankruptcy trustee, Walter O'Cheskey, cross-appealed to the district court, which affirmed the bankruptcy court’s judgment in its entirety. The parties then cross-appealed to the Fifth Circuit Court of Appeals. After review, the Fifth Circuit affirmed the subordination of Templeton's claims, and reversed the bankruptcy court's rulings on the alleged preferential and fraudulent transfers, and remanded the case for further proceedings. View "Templeton v. O'Cheskey" on Justia Law

Chivalry contracted with Rehtmeyer to develop and manufacture a board game. Chivalry paid Rehtmeyer over $128,000, but the relationship deteriorated. Rehtmeyer never produced the game. Chivalry sued for breach of contract and won a judgment of $168,331.59, plus $621.25 in costs in Illinois state court. Rehtmeyer never paid. Chivalry issued a citation to discover assets. At the citation examination, Rehtmeyer testified that she had no ownership interest in any real estate; securities, stocks, bonds or similar assets; office or electronic equipment; nor a personal checking or savings account. Because Rehtmeryer had not produced required documents, Chivalry continued the citation and filed a motion to compel production, which was granted. She did not comply. The state court twice more ordered her to produce all the documents required by the citation. Months later, Chivalry sought a rule to show cause. The day before the scheduled hearing, Rehtmeyer filed a Chapter 7 bankruptcy petition. Chivalry appeared to object to the discharge of the debt owed to it, claiming that Rehtmeyer had concealed her assets and income during the citation proceedings. The bankruptcy court denied Chivalry’s objection. The district court affirmed. The Seventh Circuit reversed, finding that Rehtmeyer concealed assets with the requisite intent. View "Jacobs v. Marcus-Rehtmeyer" on Justia Law

Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. Thereafter, the Trustee and the Bankruptcy Administrator (collectively, the Trustee) filed a complaint objecting to Debtor’s discharge in bankruptcy. Debtor responded by asserting that the Trustee’s complaint was barred by the applicable statute of limitations. The bankruptcy court granted the Trustee’s motion for summary judgment and entered an order denying Debtor a discharge. The district court affirmed, concluding that the Trustee’s complaint was timely. The Fourth Circuit reversed, holding that the bankruptcy court erred in finding that Trustee’s complaint was timely filed. Remanded. View "Jenkins v. Ward" on Justia Law

Western Insurance Company was insolvent and was being liquidated in Utah state court pursuant to the Utah Insurer Receivership Act. As a part of that liquidation, the Liquidator brought an ancillary proceeding against several of Western's "affiliates" to recover funds Western had transferred to them. The Defendants removed the ancillary proceeding to federal district court pursuant to the court’s diversity jurisdiction. The Liquidator responded by seeking a remand, which the district court granted. Defendants appealed, but concluding that it lacked appellate jurisdiction the Tenth Circuit dismissed the appeal. View "Western Insurance v. A & H Insurance" on Justia Law