Justia Bankruptcy Opinion Summaries

Debtor's ex-wife loaned him two sums of money to support his separate business. At issue was whether the debt was dischargeable in bankruptcy. The court affirmed the judgment of the bankruptcy court and concluded that the debt was nondischargeable under Section 523(a)(15) of the Bankruptcy Code, which left it to the state court to decide whether a property right was properly addressed in divorce proceedings, or as a separate contractual claim. View "Kinkade v. Kinkade" on Justia Law

Debtor, an inmate serving a life sentence with no possibility of parole, appealed from a bankruptcy court's order denying his motion for contempt for violation of his discharge injunction. The $45.00 automatically collected from debtor's inmate account was properly forwarded to the State in partial satisfaction of the post-petition costs of incarceration for which debtor remained liable under the Missouri Incarceration Reimbursement Act's, Mo. Ann. Stat. 217.825-217.841, judgment. Debtor's additional arguments lacked merit. Therefore, the bankruptcy appellate panel concluded that the bankruptcy court's decision was not based on clearly erroneous factual determinations or erroneous legal conclusions. The bankruptcy court acted within its discretion and the panel affirmed the judgment. View "Smith v. State of Missouri" on Justia Law

Plaintiffs controlled Mutual Bank. In an effort to save the bank from insolvency, at the request of FDIC-Corporate, they raised about $30 million mostly in the form of note purchases. In 2008, FDIC-Corporate requested another $70 million, which they were unable to raise. In 2009, regulators issued warnings about the bank. The bank’s board voted to redeem the notes and create deposit accounts for plaintiffs, essentially returning their money. Before FDIC-Corporate responded to a request for required approval, 12 U.S.C. 1821(i), the bank was declared insolvent and FDIC was appointed as receiver. Mutual Bank’s branches opened as branches of United Central Bank the next day. The plaintiffs filed proofs of claim, seeking to redeem the notes and obtain depositor-level priority in post-insolvency distribution scheme. FDIC Receiver rejected the claims and the plaintiffs filed suit, alleging that they had been misled into investing in the bank and prevented from getting their money back. The district court dismissed as moot. The Seventh Circuit affirmed, characterizing the claim as an unauthorized request for “money damages,” 5 U.S.C. 702. The plaintiffs did not first seek administrative review of what was essentially a challenge to the FDIC’s regulatory decision not to act on the redemption approval request. View "Veluchamy v. Fed. Deposit Ins. Corp." on Justia Law

Plaintiffs filed a Chapter 7 bankruptcy petition and sought to surrender their home. When Plaintiffs' mortgage lenders (collectively, Beneficial) refused to foreclose or otherwise take title to the residence, Plaintiffs demanded that the mortgage lien be released. After Beneficial also refused to release the mortgage lien, Plaintiffs began an adversary proceeding claiming a discharge injunction violation. The bankruptcy court found Beneficial did not violate the discharge injunction. The bankruptcy appellate panel affirmed. Plaintiffs appealed, arguing that because the facts of this case so closely mirrored those in Pratt v. General Motors Acceptance Corp., the same result should follow. The First Circuit Court of Appeals affirmed the bankruptcy court's judgment, holding that the bankruptcy court's legal conclusions were correct and that the court did not err in its judgment. View "Canning v. Beneficial Me., Inc." on Justia Law

Debtors appealed from a bankruptcy court order requiring them to convey to the bank real property. At issue was whether the bankruptcy court erred in its interpretation of the phrase "abandon the properties to Centennial Bank," as used in its earlier order and in debtors' confirmed Chapter 11 plan, to require debtors to convey real property to the bank. The bankruptcy appellate panel held that the bankruptcy court acted within its discretion when it interpreted its order and the Chapter 11 plan to mean that debtors were required to convey the real property to the bank. View "Kelley, et al v. Centennial Bank" on Justia Law

Porayko entered bankruptcy in 2009, having $10,000 in a checking account at TCF. Crowell, holding a $73,000 judgment against Porayko, served Porayko with a citation to discover assets, asserting a lien. 735 ILCS 5/2-1402(m). Crane, the bankruptcy trustee, argued that only a citation served directly on the bank would establish a lien. The bankruptcy judge lifted the automatic stay, 11 U.S.C. 362(d). The district court and Seventh Circuit affirmed. The statute provides that a citation to discover assets creates a lien on all “nonexempt personal property, including money, choses in action, and effects of the judgment debtor,” including “all personal property belonging to the judgment debtor in the possession or control of the judgment debtor or which may thereafter be acquired or come due to the judgment debtor.” A bank account may be an intangible interest, but intangible rights are personal property and a checking account’s holder controls the right to designate who receives the funds on deposit, which makes its value a form of “personal property” under Illinois law. View "Crane v. Crowell" on Justia Law

This case stemmed from bankruptcy court proceedings between MCI and CNI where MCI sought to recover from CNI allegedly unpaid telecommunications services. CNI counterclaimed. At issue on appeal was whether the district court properly granted relief under Rule 4(a)(6) to CNI when it claimed that it never received the Civil Rule 77(d) notice and therefore failed to file a timely notice of appeal. The court agreed with the district court that CNI met the express preconditions of Rule 4(a)(6). The court held that relief under the rule was discretionary and its grant in this case was inappropriate. The failure to receive Civil Rule 77(d) notice was entirely and indefensibly the fault of CNI's counsel. Granting such relief in these circumstances was at odds with the purposes and structure of the procedural scheme. Accordingly, the court reversed the order granting the motion to reopen and dismissed CNI's appeal as untimely. View "In re: WorldCom, Inc. v. MCI Worldcom Communications" on Justia Law

The issue before the Tenth Circuit in this case was one of first impression: whether the 2005 amendments to the Bankruptcy code exempted Chapter 11 debtors from the absolute priority rule. The bankruptcy court answered this question affirmatively, and therefore confirmed the Debtors' proposed plan of reorganization over certain creditors' objections that the plan violated the absolute priority rule. On appeal, the bankruptcy appellate panel certified the case for direct appeal. The Tenth Circuit reversed the bankruptcy court's order confirming the plan: "here, the statutory language and legislative history lack any clear indication that Congress intended to erode a pillar of creditor bankruptcy protection." The case was remanded for further proceedings. View "Dill Oil Company, LLC, et al v. Stephens, et al" on Justia Law

The Trustee for debtor TRM appealed the dismissal of his adversary action against real estate development companies, alleging that TRM and the development companies engaged in a scheme to sell properties at inflated prices in recently developed subdivisions in North Carolina and South Carolina. The court held that the development companies were potentially independently liable to TRM's purchasers because it participated in TRM's sales and marketing efforts. But, because TRM was not entitled to statutory contribution, the Trustee's action failed as a matter of law. Accordingly, the court affirmed the district court's judgment. View "Total Realty Mgmt. LLC v. R. A. North Development, Inc." on Justia Law

OCV supplies equipment and licenses software for in-room hotel entertainment and sought a judgment of $641,959.54 against Roti, the owner of companies (Markwell, now defunct) that owned hotels to which OCV provided services. The district judge granted summary judgment, piercing the corporate veil, but rejecting a fraud claim. The Seventh Circuit reversed. While the Markwell companies were under-funded, OCV failed to treat the companies as separate businesses and proceed accordingly in the bankruptcy proceedings of one of the companies and made no effort to determine the solvency of the companies. View "On Command Video Corp. v. Roti" on Justia Law