Justia Bankruptcy Opinion Summaries

Draiman filed for Chapter 11 bankruptcy in 2009, but converted to a Chapter 7 bankruptcy one day short of two years after his initial filing. That same day Fogel was appointed interim trustee. He became the permanent trustee by default more than two years after the initial filing. The statute of limitations governing avoidance is two years from filing bankruptcy, 11 U.S.C. 546(a)(1)(A), but the period is extended to one year from the “appointment or election of the first trustee under section 702…if such appointment or such election occurs before the expiration of the period.” The issue was whether the date of Fogel’s appointment was when he became permanent trustee, more than two years after the initial filing, or =when he became interim trustee. The bankruptcy court held that ambiguity is best resolved by allowing the extension when the trustee is an interim trustee who, because creditors never elected a permanent trustee, became permanent trustee by default. The Seventh Circuit reversed, reasoning that creditors could “game” the system in similar conversion cases. They might put off their meeting to elect a permanent trustee until two years were nearly up, to obtain the maximum limitations period, knowing that if they waited too long they could meet without electing a trustee, so that the period would be extended by one year from the date of appointment of the interim trustee. The statute as written discourages creditors from dawdling after conversion. If, without fault, creditors cannot procure appointment of a permanent trustee within the deadline, equitable tolling would permit an extension. View "In re: Draiman" on Justia Law

FHFA, as conservator of Fannie Mae and Freddie Mac, sued UBS for fraud and misrepresentation in connection with the marketing and sale of mortgage-backed securities. The district court denied UBS's motion to dismiss and certified its decision for interlocutory appeal. The court held that the "extender statute" in section 4617(b)(12) of the Housing and Economic Recovery Act of 2008 (HERA), Pub. L. No. 110-289, 122 Stat. 2654, applied to this action, and thus concluded that the district court correctly denied UBS's motion to dismiss for untimeliness. The court further held that FHFA had standing to bring this action and the district court correctly denied UBS's motion to dismiss for lack of standing. View "Federal Housing Fin. Agency v. UBS Americas Inc." on Justia Law

Georgina Stephens and Andrew Alexander appealed from the district court's decision affirming an order of the bankruptcy court giving possession of disputed property to the trustees of the individual bankruptcy estates of Ms. Stephens and Larry Alexander. Ms. Stephens and Mr. Alexander were previously married, Andrew is their son. This case stemmed from the separate bankruptcy petitions that Ms. Stephens and Mr. Alexander filed during their marriage and concerned the ownership and possession of certain property. Because Andrew had not challenged the district court's determination that he lacked standing to appeal the bankruptcy court's decision, the court deemed the issue waived; the court had jurisdiction to evict Ms. Stephens; the court rejected Ms. Stephens' res judicata and collateral estoppel arguments; and the court court rejected Ms. Stephens' remaining claims. Accordingly, the court affirmed the judgment of the district court. View "Alexander, et al v. Jensen-Carter, et al" on Justia Law

Appellant, a former TWL employee, commenced a class action adversary proceeding within TWL's bankruptcy suit, alleging violations of the Worker Adjustment and Retraining Notification Act, 29 U.S.C. 2101-2109. The district court affirmed the bankruptcy court's order denying appellant's related motion for class certification and dismissed the adversary proceeding. Because the reasons for the bankruptcy court's order were unclear, the court vacated in toto the orders and remanded to the district court to remand to the bankruptcy court for reconsideration. The court expressed no view as to the outcome the bankruptcy court should reach on remand in reconsidering appellant's motion for reclassification and the Trustee's motion to dismiss the adversary proceeding. View "Teta v. TWL Corp., et al" on Justia Law

During Appellee's chapter 13 bankruptcy, Educational Credit Management Corporation (ECMC) filed a proof of claim based on Appellee's allegedly unpaid student loans. Appellee objected to the claim because she believed her loans had been repaid. The bankruptcy court sustained Appellee's objection. After the bankruptcy concluded, ECMC resumed collection efforts. Appellee reopened her case and filed an adversary complaint against ECMC, alleging that it had violated the order sustaining her objection. The bankruptcy court concluded the order reflected the prior judge's determination that the obligation remaining on ECMC's claim was zero and therefore sanctioned ECMC for attempting to collect on the debt. The bankruptcy appellate panel affirmed. ECMC appealed, arguing that the bankruptcy court never adjudicated the amount outstanding on Appellee's student loans. The First Circuit Court of Appeals affirmed, holding (1) during bankruptcy proceedings, the issue of the amount ECMC would get from Appellee's estate was resolved by way of the subsidiary factual issue of whether the debt had already been repaid; and (2) the bankruptcy court did not err in imposing sanctions, as ECMC's conduct was an abuse of the bankruptcy process. View "Hann v. Educ. Credit Mgmt. Corp." on Justia Law

Pro se appellant John Schoppe petitioned the Tenth Circuit for review of a Tax Court decision that found him liable for tax deficiencies for the years 2002-2007. While the case was proceeding before the Tenth Circuit, Petitioner filed a voluntary bankruptcy petition. That filing prompted the Court to request a supplemental briefing from the parties on whether the automatic bankruptcy stay would apply to appellant's appeal before the Tenth Circuit. Finding that 11 U.S.C. 362(a)(1) of the Bankruptcy Code did not stay this appeal, the Court reviewed the Tax Court decision and affirmed it. View "Schoppe v. CIR" on Justia Law

Debtors filed a Chapter 13 petition and the Trustee objected to debtors proposed bankruptcy plan on the ground that it was not proposed in good faith because of the "miniscule" payments to unsecured claims while debtors were living in a $400,000 home, making payments on various luxury and unnecessary items, and failing to commit one hundred percent of their disposable income to the plan. The bankruptcy court overruled the objection and the bankruptcy appellate panel (BAP) affirmed. The court concluded that Congress's adoption of the Bankruptcy Abuse Prevention and Consumer Protection Act, 11 U.S.C. 1325(a), foreclosed a court's consideration of a debtor's Social Security income or a debtor's payments to secured creditors as part of the inquiry into good faith under section 1325(a). Accordingly, the court affirmed the judgment of the BAP. View "In re: David Welsh, et al" on Justia Law

NABC appealed from the bankruptcy court's order granting summary judgment in favor of the Chapter 7 Trustee. The bankruptcy appellate panel (BAP) concluded that the bankruptcy court did not err in holding that NABC lost its possessory lien when it turned debtor's account funds over to the Trustee without first seeking adequate protection. Accordingly, the court affirmed the order. View "North American Banking Co. v. Leonard" on Justia Law

The Debtors, five single-asset limited partnerships holding apartment complexes developed under the Low-Income Housing Tax Credit Program, 26 U.S.C. 42, filed for relief under Chapter 11 in 2010. The properties were put into service in 2005 and 2006, and their tax credit recapture periods expire in 2019 and 2020. The bankruptcy court conducted a valuation hearing and concluded that, for purposes of determining the value of the secured portion of the (mortgage holder) Bank’s claims under 11 U.S.C. 506(a), a determination of the fair market value of the properties included consideration of the remaining federal low-income housing tax credits. The Bankruptcy Panel affirmed the bankruptcy court’s Valuation Order. The Debtors failed to amend their plan or disclosure statement to reflect the values set by the bankruptcy court until ordered to do so in 2012. The court ultimately dismissed the petitions, based on continuing loss to or diminution of the estate, coupled with absence of a reasonable likelihood of rehabilitation; the Debtors’ inability to effectuate a plan; and bad faith under 11 U.S.C. 1112(b). The Sixth Circuit Bankruptcy Appellate Panel affirmed. View "In re: Creekside Senior Apts." on Justia Law

Debtor appealed the order of the bankruptcy court denying his motion for reconsideration of a previous order dismissing his chapter 7 case. The bankruptcy court, in issuing the previous order dismissing his case, denied debtor's request for a temporary waiver of the credit counseling requirement on his bankruptcy petition. The bankruptcy appellate panel (BAP) granted debtor's motion for rehearing and considered the merits of his appeal. Debtor had not identified anything in the record to suggest that the bankruptcy court, in denying his motion for reconsideration, failed to consider any relevant factors, considered or gave significant weight to any irrelevant or improper factors, or committed a clear error of judgment in weighing the proper factors. Consequently, the BAP found no abuse of discretion and affirmed the judgment. View "Bourgeois v. Bank of America" on Justia Law