Justia Bankruptcy Opinion Summaries

This case arose out of a sale-leaseback transaction that occurred in 2001. On July 10, 2011, the seller-lessees' parent company announced plans for a proposed transaction whereby it would seek a new credit facility and undergo an internal reorganization. As part of a subsequent reorganization, substantially all of its profitable power generating facilities would be transferred from existing subsidiaries to new "bankruptcy remote" subsidiaries, except for two financially weakened power plants. On July, 22, 2011, plaintiffs brought this action seeking to temporarily restrain the closing of the proposed transaction on the grounds that it violated the successor obligor provisions of the guaranties and would constitute a fraudulent transfer. The court found it more appropriate to analyze plaintiffs' motion for a temporary restraining order under the heightened standard for a preliminary injunction. Having considered the record, the court held that plaintiffs have failed to show either a probability of success on the merits of their breach of contract and fraudulent transfer claims or the existence of imminent irreparable harm if the transaction was not enjoined. Therefore, the court denied plaintiffs' application for injunctive relief.View "Roseton Ol, LLC, et al. v. Dynegy Holdings Inc." on Justia Law

Appellant Matthew Kundinger received a default judgment against Louis and Linda Frazer (the Frazers) before the Frazers closed a refinance mortgage with Matrix Financial Services Corporation (Matrix).  In Matrix's foreclosure action, the master-in-equity granted Matrix equitable subrogation, giving the refinance mortgage priority over Appellant's judgment lien. Appellant counterclaimed, alleging his judgment had priority over Matrix's mortgage because it had been recorded first.  Matrix, attempting to gain the primary priority position, then sought to have the refinance mortgage equitably subrogated to the rights of its January 2001 mortgage.  The master-in-equity granted Matrix's request, and Appellant appealed that order. Upon review of the applicable legal authority, the Supreme Court found that a lender that refinances its own debt is not entitled to equitable subrogation.  The Court reversed the lower court's decision and remanded the case for further proceedings.View "Matrix Financial Services Corp. v. Frazer" on Justia Law

EB Investments, LLC and Pavilion Development, LLC filed separate appeals to challenge elements of a circuit court order holding that Pavilion was entitled to redeem certain property in Madison County in which EB Investments and other parties held legal interests. In 1997, Pavilion initiated an action to redeem 19 acres of land purchased at a foreclosure sale. In the years since, the Supreme Court has issued three opinions deciding various issues stemming from Pavilion's attempted redemption of that property. The property was subject to bankruptcy protection. In connection with a settlement agreement, three mortgages were executed on the property. Pavilion, as one of the mortgagees, sought to enforce its right of redemption to the property. In 2010, a trial court entered judgment outlining the steps Pavilion needed to take to perfect and complete its redemption. EB Investments and Pavilion took opposing sides on most legal issues in this case; however, they both argued that the trial court's judgment is not an appealable judgment because it does not address all the pending issues and resolve all the pending claims in this case. Other interested parties who filed responses in this case argued that the trial court's order was sufficient and urged the Supreme Court to end this long-running dispute. Upon review, the Supreme Court dismissed the appeals and offered guidance to the trial court to help expedite a resolution.View "EB Investments, L.L.C. v. Pavilion Development, L.L.C." on Justia Law

Debtor Maureen Roberson filed a petition under Chapter 13 of Title 11 of the Bankruptcy Code, alleging that Ford Motor Credit Company wrongfully repossessed her car in the wake of her prior Chapter 7 bankruptcy charge and seeking to recover damages from Ford. During the proceedings, Ford filed a motion for summary judgment. Before the court could rule on the motion, Roberson filed a motion seeking certification of the question of whether a secured creditor is permitted under Maryland law to repossess in a car in which it maintains a security interest when the debtor has filed a bankruptcy petition and has failed to reaffirm the indebtedness, but has otherwise made timely payments before, during, and after bankruptcy proceedings. The Bankruptcy Court granted the motion. The Supreme Court answered the certified question in the positive because the parties agreed that Ford elected Section 12-1023(b) of the Credit Grantor Closed End Credit Provisions, Commercial Law Article, Maryland Code, to govern the retail installment contract in the present case.View "Ford Motor Credit Co., L.L.C. v. Roberson" on Justia Law

Walter and Sylvia Chang and the Walter Chang Trust instituted an action related to the foreclosure of property on which the Changs held a purchase money mortgage. The Chang named as defendants several parties, including Eadean Buffington, the Changs' attorney, and Investors Funding, a mortgagee of the property. After the circuit court action was removed to the bankruptcy court, Integrity Escrow and Title was added as a third party defendant. The bankruptcy court granted the Changs' petition for a determination that their settlement with Investors Funding was made in good faith. Buffington and Integrity appealed the order. The bankruptcy court subsequently remanded the action to the circuit court. The intermediate court of appeals (ICA) dismissed Buffington and Integrity's appeal for lack of appellate jurisdiction. The Supreme Court vacated the ICA's dismissal order, holding the ICA erred in concluding that (1) it lacked jurisdiction over the appeal because one of the parties was in bankruptcy; (2) it lacked jurisdiction over the appeal because the good faith settlement order was not in the record on appeal; and (3) the good faith settlement order entered by the bankruptcy court prior to remand was not properly appealable in the state court system. Remanded.View "Chang v. Buffington" on Justia Law

This case stemmed from a dispute between MBIA Insurance Corporation (MBIA) and certain of its policyholders who hold financial guarantee insurance policies. The principal question presented was whether the 2009 restructuring of MBIA and its related subsidiaries and affiliates authorized by the Superintendent of the New York State Insurance Department precluded these policyholders from asserting claims against MBIA under the Debtor and Creditor Law and the common law. The court held that the Superintendent's approval of such restructuring pursuant to its authority under the Insurance Law did not bar the policyholders from bringing such claims. Accordingly, the court held that the order of the Appellate Division should be modified, without costs, in accordance with the opinion.View "ABN AMRO Bank, N.V., et al. v. MBIA Inc., et al." on Justia Law

This case stemmed from Reliance Group Holdings, Inc.'s ("RGH") and Reliance Financial Services Corporation's ("RFS") voluntary petitions in Bankruptcy Court seeking Chapter 11 bankruptcy protection and the trust that was established as a result. The trust subsequently filed an amended complaint alleging actuarial fraud and accounting fraud against respondents. At issue was whether the trust qualified for the so-called single-entity exemption that the Securities Litigation Uniform Standards Act of 1998 ("SLUSA"), 15 U.S.C. 77p(f)(2)(C); 78bb(f)(5)(D), afforded certain entities. The court held that the trust, established under the bankruptcy reorganization plan of RGH as the debtor's successor, was "one person" within the meaning of the single-entity exemption in SLUSA. As a result, SLUSA did not preclude the Supreme Court from adjudicating the state common law fraud claims that the trust had brought against respondents for the benefit of RGH's and RFS's bondholders. Accordingly, the court reversed and reinstated the order of the Supreme Court.View "The RGH Liquidating Trust v. Deloitte & Touche LLP, et al." on Justia Law

Plaintiff-Appellant Lesa Kensmoe appealed a district court order granting F/S Manufacturing a renewal by affidavit of its 1998 judgment against her. In 1998, F/S Manufacturing obtained a default judgment in the amount of $450,894.78 against Appellant. In 2008, F/S Manufacturing's judgment against Plaintiff was cancelled of record. On March 8, 2010, almost two years after the 1998 judgment was cancelled, F/S Manufacturing filed an affidavit attempting to renew the judgment. After being informed the judgment could not be renewed because it had expired, F/S Manufacturing filed a motion requesting that the district court order the clerk of court to renew the judgment by affidavit. Upon review of the applicable legal authority, the Supreme Court reversed the district court's order, finding that North Dakota law did not permit a cancelled judgment's renewal after the prescribed statute of limitations.View "F/S Manufacturing v. Kensmoe" on Justia Law

Petitioner Monica Ware appealed a summary judgment in favor of Respondent Deutsche Bank National Trust Company, the trustee for HSI Asset Securitization Corporation. The Bank foreclosed on Petitioner and published notice of the foreclosure in a local Birmingham newspaper. The court entered summary judgment against her. Petitioner then filed a motion to amend or vacate the judgment and requested a hearing. The trial court refused to rule on Petitioner’s motion or hold a hearing. The motion was deemed denied by operation of law. On appeal to the Supreme Court, Petitioner challenged the timing and propriety of the summary judgment and its refusal to rule on her motion to amend or vacate. In affirming the trial court’s judgment, the Supreme Court "searched [Petitioner’s] briefs in vain for the argument that she actually made in the trial court, namely, that the foreclosure was "null and void. . . .[A] remand . . . would serve no purpose other than to afford her a 'second bite at the apple.'" The Court affirmed the lower court’s decision.View "Ware v. Deutsche Bank National Trust Co." on Justia Law

EB Investments, LLC and Pavilion Development, LLC filed separate appeals to challenge an a court order that held Pavilion was entitled to redeem certain property in Madison County in which EB Investments, and multiple other parties, held legal interests. In 1997, Pavilion sought to redeem nineteen acres of land purchased by JBJ Partnership at a foreclosure sale. The land was purchased from a development project that went bankrupt. In 1995, the bankruptcy trustee supervised a settlement agreement through which the developer would make payments on the development to its creditors. When the developer defaulted on the settlement agreement, the property was foreclosed and sold. Over the following months and years, a host of counterclaims, cross-claims, and separate lawsuits were filed by various parties who had interests in the property. At issue in this particular case was which party is entitled to redeem the disputed property. The trial court determined that Pavilion was entitled to redeem the property. In its order, the court specified how Pavilion should perfect its redemption. If Pavilion failed to pay all sums required by the court's order, it would waive its right to redeem the property. The court denied the remaining post-judgment motions and certified its judgment as final. EB Investments and Pavilion both appealed that judgment. Though they took opposing sides on most issues in the case, both EB Investments and Pavilions challenged whether the trial court's order was indeed final. They argued that the judgment did not address all other pending issues before the court. JBJ and other parties responded and essentially asked the Court to end this long-running dispute. Upon careful review of the sixteen-year history of the case, the Supreme Court concluded that the trial court's attempt to end it was ultimately insufficient. The Court found that the trial court exceeded its discretion by certifying its judgment as final. Accordingly, the Court reversed the trial court's order, and remanded the case for further proceedings. View "EB Investments, L.L.C. v. Pavilion Development, L.L.C." on Justia Law