Justia Bankruptcy Opinion Summaries

In August 2007, C.W. Mining, an entity operating a coal mine in Utah, deposited $362,000 with the Bank of Utah; in turn, the Bank issued a certificate of deposit to C.W. Mining for that same amount. In January 2008, creditors filed an involuntary Chapter 11 bankruptcy petition against C.W. Mining. The Chapter 11 proceeding was converted to a Chapter 7. The Bank liquidated the certificate of deposit, which then had a value of $383,099. Utilizing its common-law right of offset, it applied the proceeds to the balance owing on two of three promissory notes executed by C.W. Mining in favor of the Bank in 2005, 2006, and 2007. Although the Bank knew of the bankruptcy proceeding when it liquidated the certificate of deposit, it did not inform the Trustee. The Trustee became aware of the transfer after the Bank assigned its remaining secured interest in the promissory notes and loan agreements to a third party and the third party sought payment from the Estate. The Trustee then commenced an adversary proceeding seeking to recover $383,099 from the Bank. The parties filed cross-motions for summary judgment. In his motion, the Trustee argued the transfer should be avoided under 11 U.S.C. 549 as an unauthorized post-petition transfer and he should have been permitted to recover the $383,099 pursuant to 11 U.S.C. 550. In the alternative, he sought a declaration the transfer was void as a violation of the automatic stay under 11 U.S.C. 362(a) and an order for turnover pursuant to 11 U.S.C. 542. After considering all of these arguments, the bankruptcy court entered summary judgment in favor of the Bank. Finding no reversible error, the Tenth Circuit affirmed the grant of summary judgment to the Bank. View "C.W. Mining Company, et al v. Bank of Utah, et al" on Justia Law

This appeal concerned a heavily contested Chapter 11 bankruptcy proceeding. After the bankruptcy court determined a secured creditor’s entitlement to post-petition interest under 11 U.S.C. 506(b) and confirmed the debtors’ Chapter 11 plan, the secured creditor appealed to the Bankruptcy Appellate Panel for the First Circuit (“BAP”). The BAP reversed in part, vacating and remanding the confirmation order and significantly increasing the secured creditor’s entitlement to post-petition interest under section 506(b). The City of Boston, as a junior creditor, and the debtors appealed. The First Circuit Court of Appeals (1) vacated the BAP’s section 506(b) order, holding that the BAP erred in reversing the bankruptcy court’s post-petition interest determination; and (2) vacated the BAP’s confirmation order because it was based solely on the BAP's erroneous interest determination. View "SW Boston Hotel Venture, LLC v. Prudential Ins. Co." on Justia Law

The trustee filed an adversary proceeding to recover as voidable preferences two payments that Momar received from debtor during the 90 days prior to filing a bankruptcy petition. On appeal, the trustee challenged the district court's grant of summary judgment excepting the second transfer. The court cautioned district courts and parties in future preferential transfer cases that the Seventh Amendment right to jury trial must be respected and therefore, unless a proper demand for jury trial has been waived, the normal rules limiting the grant of summary judgment applied. On the merits, the district court did not clearly err in finding that the preferential transfer at issue, a payment made to a regular supplier 26 days after the supplier's invoice, was made in the ordinary course of business between debtor and Momar. Accordingly, the court affirmed the judgment of the district court. View "Cox v. Momar Inc." on Justia Law

Tze Wung and related appellants moved the bankruptcy court to eliminate or suspend discharge under the bankruptcy plan of a judgment by Trendi Sportswear against debtor, Indu Craft. The bankruptcy court denied the motions and subsequently denied appellants' motions for reconsideration. Appellants then appealed to the district court, which affirmed the bankruptcy court's orders. Tze Wung later appealed the district court's denial of its motion to reconsider under Rule 59(e) after the district court entered its judgment and past the 30-day time limit that was prescribed by Federal Rule of Appellate Procedure 4(a)(1)(A) and incorporated into bankruptcy appeals through Rule 6(b)(1). Bank of Baroda moved to consolidate the three separate appeals, but Bank of Baroda made no mention of the fact that Tze Wung's appeal was untimely. The court concluded that Rule 6(b)(1) is a nonjurisdictional rule. Where an opposing party fails to object to an untimely appeal to a court of appeals from a bankruptcy appellate panel or district court exercising appellate jurisdiction, the opposing party forfeits the objection, and the court has jurisdiction over the untimely appeal. Because Bank of Baroda waived its objection to Tze Wung's untimely appeal by failing to make such an objection, the court acted within its jurisdiction in allowing Tze Wung's appeal to proceed along with that of the other appellants in this matter. View "Tze Wung Consultants, Ltd. v. Bank of Baroda" on Justia Law

A non-debtor spouse contended that her homestead rights in the Texas residence that she shares with her husband, the debtor in bankruptcy, precluded a forced sale of the property and alternatively, that if a sale occurred, she must be compensated for the loss of her homestead interest in the property. The bankruptcy court held that the non-debtor spouse's homestead rights were limited to the dollar amount of the exemption in 11 U.S.C. 522(p) and that there was no unconstitutional taking of the value of the non-debtor spouse's interest in the homestead. The court affirmed the district court's affirmance of the bankruptcy court's holdings. View "Kim, et al. v. Dome Entertainment Center, Inc." on Justia Law

Former GM and Chrysler dealers, whose franchises were terminated in the 2009 bankruptcies of those companies, sued, alleging that the terminations constituted a taking because the government required them as a condition of its providing financial assistance to the companies. The Bankruptcy Code, 11 U.S.C. 363, 365, authorizes certain sales of a debtor’s assets and provides that a bankruptcy trustee “may assume or reject any executory contract or unexpired lease of the debtor.” Debtors-in-possession in chapter 11 bankruptcies, like GM and Chrysler, generally have a trustee’s powers. The Claims Court denied motions to dismiss. In interlocutory appeals, the Federal Circuit remanded for consideration of the issues of the “regulatory” impact of the government’s “coercion” and of economic impact. While the allegations of economic loss are deficient in not sufficiently alleging that the economic value of the franchises was reduced or eliminated as a result of the government’s actions, the proper remedy is to grant to leave to amend the complaints to include the necessary allegations. View "A&D Auto Sales, Inc. v. United States" on Justia Law

Adelphia Recovery Trust, an entity created to represent the non-whole creditors of a debtor corporation that was part of a bankruptcy proceeding, appealed from a grant of summary judgment dismissing its fraudulent conveyance claim against Goldman. The court affirmed on the grounds of judicial estoppel, concluding that, in such a fraudulent conveyance claim, the Trust may recover only property owned by the parent-company debtor. The various schedules and Chapter 11 plan, which were consummated with the agreement of the Trust and its predecessors in interest in the bankruptcy proceeding, all treated the property transferred as owned by a separate subsidiary. View "Adelphia Recovery Trust v. Goldman, Sachs & Co., et al." on Justia Law

The Creditor appealed from the bankruptcy court's denial of its motion for relief from the automatic stay in the Chapter 13 bankruptcy case of debtors. At issue was whether the bankruptcy court abused its discretion when it denied the Creditor's motion for relief from the stay. The court concluded that the bankruptcy court abused its discretion by denying the Creditor's request to stay relief in light of the debtors' failure to comply with their obligations under their plan (and therefore, the relevant loan documents), by being significantly behind in their payment to the Creditor. Accordingly, the court reversed and remanded. View "CitiMortgage, Inc. v. Borm, et al." on Justia Law

Debtor, a New York City tenant, filed for Chapter 7 bankruptcy and listed the value of her apartment lease on Schedule B as personal property exempt from the bankruptcy estate as a "local public assistance benefit." At issue was whether the value inherent in debtor's rent-stabilized lease as a consequence of the protections afforded by New York's Rent Stabilization Code, N.Y. Comp. Code R. & Regs. tit. 9, 2520.1 et seq., made the lease, or some portion of its value, exempt from debtor's bankruptcy estate as a "local public assistance benefit" within the meaning of New York Debtor and Creditor Law 282(2). The court certified this unsettled issue to the New York Court of Appeals. View "Santiago-Monteverde v. Pereira" on Justia Law

Debtors filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code. At issue was whether above-median-income debtors with negative disposable income were obligated to maintain Chapter 13 bankruptcy plans that last for five years when their unsecured creditors have not been paid in full. The court held that a plain reading of the Bankruptcy Code, and Section 1325 in particular, mandates that an above-median-income debtor maintain a bankruptcy plan for five years unless all unsecured creditor claims are paid in full and irrespective of projected disposable income. Debtors, as above-median-income debtors, were obligated to maintain a five-year plan. The bankruptcy court therefore did not err in deeming the early termination language in debtors' proposed plan void as a matter of law and in extending the duration of debtors' proposed plan. The court affirmed the bankruptcy court's order but remanded in order for debtors to have an opportunity to present evidence regarding the feasibility of their monthly payments. View "Pliler v. Browning" on Justia Law