Justia Bankruptcy Opinion Summaries

Debtors filed a pro se Chapter 13 bankruptcy in order to stop a pending foreclosure of their residential unit. On appeal, debtors challenged the bankruptcy court's order denying their motion for violation of an automatic stay, violation of a homestead exemption, violation of discharge, and creditor misconduct. Debtors also challenged the order dismissing their case and imposing a 180-day refiling. The panel concluded that debtors failed to provide the panel with transcripts of the relevant hearings pursuant to Federal Rules of Bankruptcy Procedure 8006 and 8009(b). Even if the panel were able to ascertain from debtors' briefs on appeal what factual errors, if any, they assert the bankruptcy court committed, the panel was unable to review the bankruptcy court's orders where debtors failed to provide an adequate record of the bankruptcy court's decision. To the extent the panel can consider debtors' legal arguments without having been provided with their factual basis, none of those legal arguments have merit. Accordingly, panel affirmed the orders. View "Carlson v. U.S. Bank, N.A." on Justia Law

In 2012 Schmidt, a former shareholder in Genaera, a biotechnology company that dissolved in 2009 and liquidated its assets, brought suit on behalf of himself and other former shareholders against the liquidating trustee (Argyce); the Genaera Liquidating Trust; Argyce’s CEO and Genaera’s former CFO; former major Genaera shareholders Xmark and BVF; former Genara directors and officers (D&O defendants); and the purchasers of certain Genaera assets. The complaint alleged that the liquidating trustee and the D&O defendants breached their fiduciary duties by disposing of promising drug technologies in tainted insider deals for far less than their true value and that Xmark and BVF aided and abetted this behavior so that companies they controlled could acquire Genaera’s assets at fire sale prices. Schmidt did not dispute the applicability of the two-year statute of limitations and that he filed suit more than two years after the assets were sold, but argued that the limitations period should be tolled under Pennsylvania’s discovery rule because he could not have been aware of the insider nature of the sales or that the assets were sold for below actual value until he learned the details of the sales, and subsequent market events suggested to him that the assets were quite valuable. The district court dismissed. The Third Circuit reversed in part, stating that it was premature to determine whether Schmidt exercised reasonable diligence. View "Schmidt v. Skolas" on Justia Law

Debtor filed for bankruptcy under Chapter 7 and the bankruptcy court refused to apply collateral estoppel to a state judgment, finding all the debt dischargeable. The district court reversed, finding all the debt nondischargeable, but remanded the attorney-fee debt. Debtor appealed. The court dismissed the appeal for lack of jurisdiction under 28 U.S.C. 158(d) because the district court's order was not final. In this case, the district court remanded to the bankruptcy court to determine whether the operating agreement connects the attorney fees to the nondischargeable fiduciary debt, delay does not harm the aggrieved party, and a later reversal would not require a new proceeding. View "Clear Sky Properties, LLC, et al. v. Roussel" on Justia Law

Respondent obtained a home mortgage loan from Lender. Lender obtained a mortgage lender bond from Petitioner and later filed for bankruptcy under Chapter 11 of the United States Code. Respondent subsequently filed a complaint naming Petitioner as defendant solely as surety for Lender. At the time this suit was filed, Lender was bankrupt and judgment proof. Petitioner filed a motion to dismiss, arguing that the bond conditions had not been satisfied because Respondent had not obtained a judgment against the bond principal, Lender. The circuit court certified a question of law to the Supreme Court, which answered that the bond at issue was a judgment bond and that the unambiguous bond language requires an aggrieved party to obtain a judgment against the principal before maintaining an action against the surety of the bond. View "Fidelity & Deposit Co. of Md. v. James" on Justia Law

Debtors filed a Chapter 7 petition and received a discharge in February 2008. On July 3, 2008, Debtors filed a Chapter 13 case to pay an auto loan and tax obligations, to cure the default on a first mortgage, and to avoid a wholly unsecured second home mortgage. The Amended Chapter 13 Plan was confirmed in September 2008 and provided: Debtors will avoid the mortgage and/or judgment liens of Amerifirst Finance, Squires Construction, and the Ohio Department of Taxation, which are wholly unsecured under 11 U.S.C. 506(a), 1322(b)(2) and 1325(a)(5)(B), and which impair Debtors’ exemption in their home (11 U.S.C. 522(f)); those unsecured claim shall be disallowed as discharged in Debtors’ Chapter 7 Bankruptcy unless otherwise allowed by separate order. Because Debtors had received a Chapter 7 discharge within the preceding four years, they were ineligible for discharge under Chapter 13, 11 U.S.C. 1328(f)(1). Upon completion of plan payments, the Chapter 13 Trustee sought an Order Releasing Wages and Closing Case Without Discharge, which was granted on May 6, 2013. The Debtors sought to avoid Amerifirst’s lien to effectuate the confirmed Chapter 13 Plan. The residence was valued at not more than $100,800 and was encumbered by a first mortgage of $106,306.38 and by Amerifirst’s second mortgage of $9,415.28. No party objected, but the Bankruptcy Court denied the motion, stating that the lien stripping power of 11 U.S.C. 506 was unavailable. The Sixth Circuit Bankruptcy Appellate Panel reversed and remanded, holding that the wholly unsecured status of Amerifirst’s claim, rather than eligibility for a discharge is determinative.View "In re: Cain" on Justia Law

In 2008, plaintiff filed for Chapter 13 bankruptcy. During the proceeding, LVNV filed a proof of claim to collect the Heilig-Meyers debt, notwithstanding the limitations period had expired four years earlier. At issue on appeal was whether a proof of claim to collect a stale debt in Chapter 13 bankruptcy violates the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692-1692p. The court answered in the affirmative. The FDCPA's broad language, the court's precedent, and the record compelled the conclusion that defendants' conduct violated a number of the Act's protective provisions. Accordingly, the court reversed the orders of the bankruptcy court and the district court dismissing the adversary proceeding.View "Crawford v. LVNV Funding, LLC, et al." on Justia Law

Debtor filed a bankruptcy petition under Chapter 13, made regular payments from his wages to the trustee under a confirmed Chapter 13 plan, and eventually converted his case to Chapter 7. At issue was whether the undistributed payments held by the Chapter 13 trustee at the time of conversion should be returned to the debtor or distributed to creditors under the Chapter 13 plan. The court concluded that the creditors' claim to the undistributed funds is superior to that of the debtor. Accordingly, the payments must be distributed to creditors in this case. The court reversed and remanded.View "Viegelahn v. Harris, III" on Justia Law

Debtor served as the trustee of a consolidated case (NWFX). As a result of debtor's fraud, the NWFX court entered judgment against debtor in favor of the bankruptcy estate for $199,979.26 plus interest. After debtor filed his own petition for Chapter 11 bankruptcy relief, plaintiff filed a complaint to determine the dischargeability of the debt underlying the judgment. On plaintiff's motion for summary judgment under 11 U.S.C. 523(a)(4), the bankruptcy court concluded that the debt was nondischargeable and entered a judgment to that effect. Reviewing the matter de novo, the panel determined that there was no genuine issue of material fact and that plaintiff was entitled to judgment as a matter of law. The panel rejected debtor's arguments that it was unclear whether plaintiff complied with Arkansas law for reviving the judgment. Accordingly, the panel affirmed the judgment of the bankruptcy court.View "Shaffer v. Bird, II" on Justia Law

In 2006, the Affiliated Group, including AmTrust, entered into a tax-sharing agreement (TSA) to allocate tax liability. In 2009, AFC, the parent of AmTrust, filed for Chapter 11 bankruptcy. The Office of Thrift Supervision closed AmTrust and placed it into FDIC receivership. AFC filed a consolidated 2008 tax return for the Affiliated Group showing a net operating loss of $805 million, with AmTrust’s losses accounting for $767 million of that total. After AFC claimed that any refund would belong to its bankruptcy estate, the parties agreed to deposit refunds in a segregated account pending adjudication. The IRS issued the Affiliated Group’s $194,831,455 refund to AFC. The FDIC claimed that $170,409,422, plus interest, belonged to AmTrust because that portion resulted from offsetting AmTrust’s 2008 net operating loss against its income in prior years. AFC concedes that AmTrust’s tax situation generated the refund. The FDIC sought a declaratory judgment. The district court granted AFC summary judgment, stating that the TSA’s use of terms such as “reimbursement” and “payment” established a debtor-creditor relationship between AFC and its subsidiaries as to tax refunds. The FDIC offered extrinsic evidence that the parties intended to create an agency or trust relationship under Ohio law with respect to tax refunds, but the district court rejected those arguments without analysis. The Sixth Circuit reversed and remanded for consideration of the FDIC’s evidence.View "Fed. Deposit Ins. Corp. v. AmFin Financial Corp." on Justia Law

The Diaz Defendants challenged the bankruptcy court's and district court's orders invalidating the transfer to them of a Mexican coastal villa owned by debtors and requiring them to convey the property to Kismet for the benefit of debtors' bankruptcy estate. The court concluded that, notwithstanding the local action doctrine, 28 U.S.C. 1334(e) granted the bankruptcy court exclusive in rem jurisdiction over the Villa interest; given the court's ruling that H&G was debtors' alter ego and its substantive consolidation of H&G with the bankruptcy estate, the Villa interest was property of the estate as of the petition date; the bankruptcy court properly declined to honor the forum selection clauses in the Mexican contracts and declined to abstain from ordering recovery of the property based on international comity; Mexico was not a necessary party and the bankruptcy court could enter judgment without Mexico; the bankruptcy court properly applied U.S. law rather than Mexican law; and the bankruptcy properly found that Martha Barba de la Torre purchased the property in bad faith. Accordingly, the court affirmed the bankruptcy court's judgment with respect to the postpetition transfer action; the fraudulent conveyance action is moot as a result; and the district court granted Kismet's and the Diaz Defendants' requests for judicial notice.View "In re: Icenhower" on Justia Law