Justia Bankruptcy Opinion Summaries

The Liquidating Trustee filed a federal income tax refund claim in bankruptcy court. The bankruptcy court ruled that the Liquidating Trustee was entitled to a $3.8 million tax refund, and that the reorganization extinguished the government's setoff rights. The district court affirmed the refund but reversed the setoff rights. On appeal, the Liquidating Trustee sought a mandate directing affirmance of the final order of the bankruptcy court in toto, and argued that the issue of the bankruptcy court's subject matter jurisdiction over the refund claim was waived when the government withdrew its own appeal in this case. The court held that the bankruptcy court lacked jurisdiction over the Liquidating Trustee's refund claim and that the jurisdictional defense was not waived by the government's withdrawal of its appeal. The bankruptcy court lacked jurisdiction to award the refund because Congress authorized a bankruptcy estate, not a plan-appointed estate representative, to administratively exhaust a refund claim before bringing that claim in bankruptcy court, and because the refund claim here was not filed with the IRS by a bankruptcy trustee. View "United States v. Bond" on Justia Law

Thomas Hale filed for bankruptcy in 2005. During the course of that bankruptcy, he allegedly lied under oath and attempted to conceal from the bankruptcy trustee an agreement to sell property. After his relationship with the trustee became antagonistic, Hale sent her a package with unidentified material and a note that said, "Possible Haz-mat? Termites or Hanta virus [sic] from mice?" In 2013, Hale was convicted of making a materially false statement under oath in a bankruptcy case, concealing a contract from the bankruptcy trustee and creditors, and perpetrating a hoax regarding the transmission of a biological agent. Upon review of Hale's appeal, the Tenth Circuit affirmed in part and reversed in part: "instead of charging Hale with 'making a false declaration, certificate, verification, or statement under penalty of perjury' with regard to his representations in [his bankruptcy petition,] Hale was charged with falsely answering a temporally ambiguous question that inquired about numerous filings and was asked nearly a year after the documents were submitted. We do not think it proper to condone the prosecution’s creation of this ambiguity. We thus conclude that the error 'seriously affects the fairness, integrity, or public reputation of judicial proceedings.'" The Court reversed the conviction with regard to the false statement, but affirmed in all other respects. View "United States v. Hale" on Justia Law

Debtor, a managing member of Twister's Iron Horse Saloon, appealed the bankruptcy court's order determining that a debt arising from a civil judgment in favor of appellees for copyright infringement was excepted from discharge under 11 U.S.C. 523(a)(6). Some of the music played or performed at Twister's was in the repertoire of the American Society of Composers, Authors, and Publishers (ASCAP). Appellees granted ASCAP a nonexclusive right to license public performance rights of their works. Twister's did not hold a public performance license. In this case, the court agreed with the bankruptcy court that debtor had willfully failed to obtain an ASCAP license and maliciously disregarded the rights of ASCAP's members and Federal copyright law. Therefore, the debt was excepted from discharge and the court affirmed the judgment. View "Sailor Music, et al. v. Walker" on Justia Law

The Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS) and the bankruptcy estate of Bernard L. Madoff, initiated adversary proceedings seeking to block the settlement of three lawsuits, none of which involved BLMIS or the Madoff estate as a party. The Trustee argued that the settlements in these cases would hinder his ability to recoup fraudulent transfers he alleged BLMIS made to the settling defendants. The court affirmed the district court's dismissal of the Trustee's claims because the Trustee was not entitled to declaratory and injunctive relief and the district court did not abuse its discretion in denying his requests for injunctive relief. View "Picard v. Fairfield Greenwich Ltd." on Justia Law

The United States Bankruptcy Court for the District of Nevada certified three questions of law to the Supreme Court regarding the mechanic’s lien priority law, specifically, the visible-commencement-of-construction aspect of the law, which states that a mechanic’s lien takes priority over other encumbrances on a property that are recorded after construction of a work of improvement visibly commences. The Supreme Court answered (1) the Court’s holding in J.E. Dunn Northwest, Inc. v. Corus Construction Venture, LLC does not preclude a trier of fact from finding that grading property for a work of improvement constitutes visible commencement of construction; (2) the contract dates and permit issuance dates are irrelevant to the visible-commencement-of-construction test, even in this case where dirt material was placed on a future project site before building permits were issued and the general contractor was hired; and (3) the Court declined to answer the third certified question because it asked the Court to make findings of fact that should be left to the bankruptcy court. View "Byrd Underground, LLC v. Angaur, LLC" on Justia Law

This appeal involves a dispute between the Trustee, appointed to protect public customers and creditors in the liquidation of LBI, and purchasers of LBI's assets over the entitlement to two sets of LBI assets: (1) the Margin Assets and (2) the Clearance Box Assets (CBAs). The district court held that Barclays was entitled to both the Margin Assets and the CBAs, and was conditionally entitled to the Rule 15c-3 Assets. The Trustee appealed from the Margin Assets and CBA rulings. Barclays cross-appealed from the Rule 15c3-3 Assets ruling but the settlement had disposed of that issue and cross-appeal. The court concluded that the transfer of the Margin Assets to Barclays was contemplated in the Asset Purchase Agreement and confirmed in the Clarification Letter. The court agreed with the district court that extrinsic evidence showed an intent to transfer the CBAs to Barclays. Accordingly, the court affirmed the judgment of the district court. View "In Re: Lehman Brothers Holdings Inc." on Justia Law

Pinpoint and Atlas filed federal court actions against each other based on a 2009 contract between them. Two months after answering and counterclaiming Pinpoint in the Virginia action, Atlas filed for bankruptcy under Chapter 7 of the Bankruptcy Code. Atlas's filing automatically stayed the Virginia and Puerto Rico actions. At issue was Pinpoint's appeal from the Bankruptcy Appellate Panel's judgment dismissing Pinpoint's challenge to the bankruptcy court's no-stay-relief order. The court rejected the blanket-rule approach and, like the Third Circuit, held that it was possible that in some cases an order denying stay relief may lack finality. Because the order denying stay relief in this case was not final, the court dismissed Pinpoint's appeal for lack of jurisdiction. View "Pinpoint IT Services, LLC v. Atlas IT Export, Corp." on Justia Law

The New York State Legislature amended N.Y. C.P.L.R. 5206 in 2005, increasing the state's homestead exemption from $10,000 to $50,000. At issue was whether the 2005 Amendment's increased homestead exemption applied to judgment liens perfected prior to the amendment's effective date and, if so, whether application of the law to pre-enactment judgment liens violates the Takings Clause of the Fifth Amendment. The court held that the 2005 Amendment applies to all creditors and all obligations, including pre-existing obligations, regardless of whether the debt was reduced to a judgment lien prior to the statute's enactment; and (2) that retroactive application of the exemption does not constitute an uncompensated taking of pre-enactment judgment liens in violation of the Takings Clause. Accordingly, the court affirmed the judgment of the district court affirming the bankruptcy court's conclusion that there was been no taking of claimant's property. View "1256 Hertel Avenue Associates v. Calloway" on Justia Law

Idearc, a corporation spun-off from its parent corporation, Verizon, filed for bankruptcy protection and the confirmed plan of reorganization created a litigation trust. In this case, the trustee filed suit against Verizon and others, alleging various federal and state law claims in connection with the spin-off. The court concluded that the trustee was not entitled to a jury trial where the trustee's fraudulent transfer claims against Verizon are integral to the restructuring of the debtor-creditor relationship through the bankruptcy court's equity jurisdiction; resolution of Verizon's proof of claim in the bankruptcy court would necessarily resolve the fraudulent transfer issue; and, therefore, the court affirmed the district court's order granting the motion to strike the jury. The court affirmed the district court's denial of reconsideration of its holding that Idearc was a wholly-owned subsidiary of Verizon because the request to reconsider was untimely, based entirely on evidence that was available at the summary judgment stage, and lacked merit. Finally, the court rejected the trustee's challenges to the district court's evidentiary rulings; affirmed the district court's finding that Idearc was worth at least $12 billion on the date of the spin-off; and affirmed the district court's conclusions of law. View "U.S. Bank Nat'l Assoc. v. Verizon Communications, Inc., et al." on Justia Law

Debtor filed for Chapter 7 bankruptcy and his former business associate, David Heide, challenged certain debts debtor owed to Heide as nondischargeable. The court reversed the BAP and reinstated the bankruptcy court's judgment that the debt was non dischargeable under 11 U.S.C. 523(a)(2)(A) because debtor obtained and lost more than $300,000 in loans by false representation. View "Heide v. Juve" on Justia Law