Justia Bankruptcy Opinion Summaries

The Eighth Circuit affirmed the district court's judgment affirming a bankruptcy court order holding the Bank and its president in contempt and sanctioning them for violating a final bankruptcy discharge injunction. The court noted that it employed a flexible and pragmatic approach when assessing the preclusive effect of a court's order and held that the bankruptcy court did not issue a ruling that would have preclusive effect.The court held that, while post-discharge forbearance may serve as consideration for a new commitment to repay the present value of a lien, no cases suggested that a lienholder could leverage a security interest to obtain a larger repayment commitment, much less a larger commitment representing a discharged personal debt. Therefore, the district court did not err in finding that the Bank and its president were in contempt for violating a final bankruptcy discharge injunction. View "First State Bank of Roscoe v. Stabler" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's denial of debtor's motion to reconsider the order entered which indefinitely extended the deadlines for payment of the last two installments of her filing fee. The court held that debtor's briefs contained extensive and repetitive factual argument expressing frustration with the bankruptcy process but she failed to identify any clearly erroneous facts or an incorrect application of the law that would entitle her to relief under any of the circumstances identified in Rule 60(b). View "Curran v. Moon" on Justia Law

The Fifth Circuit reversed the bankruptcy court's order requiring debtors, Ultra Petroleum, to pay certain creditors a contractual Make-Whole Amount and postpetition interest at a contractual default rate. In this case, debtors entered bankruptcy insolvent and now are solvent. At issue was whether the creditors were impaired by a plan that paid them everything allowed by the Bankruptcy Code.The court held that a creditor is not impaired by a reorganization plan simply because it incorporates the Bankruptcy Code's disallowance provisions. Because the bankruptcy court found otherwise, it did not address whether the Bankruptcy Code disallows the Make-Whole Amount or post-petition interest, and if not, how much debtors must pay the Class 4 Creditors. Therefore, the court reversed in part, vacated in part, and remanded for the bankruptcy court to answer these issues in the first instance. View "Ultra Petroleum Corp. v. Ad Hoc Committee of Unsecured Creditors of Ultra Resources, Inc." on Justia Law

The Bankruptcy Appellate Panel dismissed debtor's appeal of the bankruptcy court's order granting a motion for relief from the automatic bankruptcy stay filed by Deutsche Bank. The panel held that a foreclosure and sale of the property at issue rendered the issues raised on appeal moot and therefore the panel lacked jurisdiction over the appeal. View "Marshall v. Deutsche Bank National Trust Co." on Justia Law

Plaintiffs brought an adversary proceeding in bankruptcy court, alleging that defendants wrongfully failed to pay debtor for produce held in trust for plaintiffs, in violation of the Perishable Agricultural Commodities Act. The Second Circuit agreed with the bankruptcy judge and district court and affirmed summary judgment for plaintiffs, but held that defendants should receive a pro rata share of assets of the trust established under the Act.Because assets subject to the Act are held in a ʺfloatingʺ trust for the benefit of unpaid produce suppliers and never become part of a bankruptcy estate, when a purchaser of produce files for bankruptcy under Chapter 7, a creditor covered by the Actʹs provisions is entitled to a pro rata share of trust assets, but not to a complete offset of mutual debts between it and the bankrupt. In this case, although defendants did not file a proof of claim after the district court issued a claims process order under the Act, they preserved their claims by providing statutorily required notice to debtor in connection with each pre‐bankruptcy sale of fresh produce; filed a proof of claim with the bankruptcy court before the district court had issued the claims process order; and reasonably, although mistakenly, thought that they could vindicate their rights as creditors using a bankruptcy offset. View "The PACA Trust Creditors v. Genecco Produce Inc." on Justia Law

Before Buccanneer filed for bankruptcy, the company fired its CEO, who then filed a claim for breach of contract in the bankruptcy. The CEO later dropped the claim and filed a tortious interference with contract claim in state court against Buccaneer's secured creditor, Meridian. After Meridian moved to federal court, the bankruptcy court sent the tortious interference claim back to state court.The Fifth Circuit held that the tortious interference claim alleging a direct injury to the CEO was not property of the estate, and thus there was no basis for bankruptcy court jurisdiction. Therefore, the court affirmed the judgment remanding the case back to state court. View "Meridian Capital CIS Fund v. Burton" on Justia Law

Mining’s Chapter 11 bankruptcy proceeding allowed it to continue operating with the goal of restructuring. Its Lenders asserted liens on assets, including cash collateral, 11 U.S.C. 362(c), but consented to the use of cash collateral for operating funds. A “Cash Collateral Order” granted the Lenders super-priority claims and adequate protection liens; it authorizes the use of cash collateral for the costs and expenses of administering the bankruptcy case. The agreement included a "Carve-Out" to give attorneys and other professionals hired for the reorganization priority for payment from cash collateral in case of insolvency. Restructuring failed. The Lenders moved to terminate the use of cash collateral. the bankruptcy court ordered amounts to be budgeted for professional fees to complete asset sales. The Lenders supported asset sales rather than immediate conversion to Chapter 7, agreeing that the cash collateral budgets would be modified to ensure that professionals working on those sales would be paid. The case was converted to Chapter 7. The professionals filed Final Fee Applications for approximately $2.5 million, citing the Carve-Out. The Lenders argued that the sums comprising the Carve-Out did not extend to Lenders’ prepetition liens and cash collateral, but could come only from post-petition liens now that the case had converted. The Sixth Circuit affirmed the bankruptcy court's rejection of their arguments. The Lenders’ reasoning is not supported by the terms of the cash collateral order, their conduct during the proceeding, or precedent. View "In re: Licking River Mining, LLC" on Justia Law

The class representative of federal securities class actions appealed the dismissal of the unsecured creditor claim and amended claim he filed in the pending Chapter 7 bankruptcy proceeding of lead class counsel, Green Jacobson, P.C. The Eighth Circuit held that the claim for the cy pres distribution was no longer an issue because the distribution had been returned by the charity and deposited with the district court clerk for ultimate distribution for the benefit of the NationsBank class; the negligent supervision claim was time-barred; the disgorgement claim was not time-barred by Missouri's five year statute of limitations; and the bankruptcy court did not err in disallowing the bankruptcy claim as premature and lacking in supporting foundation. Accordingly, the court affirmed in part, reversed in part, and remanded. View "Oetting v. Sosne" on Justia Law

Debtor Walter Energy petitioned for Chapter 11 bankruptcy and sought to sell substantially all of its assets as a going concern. The bankruptcy court exercised its authority under the Retiree Benefits Bankruptcy Protection Act of 1988 (RBBPA) and terminated Walter Energy's obligation to pay premiums. The Funds appealed to the district court, which affirmed the bankruptcy court's judgment.The Eleventh Circuit affirmed, and held that the bankruptcy court had the authority to modify the premiums that Walter Energy owed the Funds. The panel held that the RBBPA authorized the bankruptcy court to terminate Walter Energy’s obligation to pay premiums, even though the premiums were imposed by statute and Walter Energy was pursuing liquidation under Chapter 11, not a classic reorganization. View "United Mine Workers of America Combined Benefit Fund v. Toffel" on Justia Law

Gregory and Andrea Chernushin owned a second home in Colorado in joint tenancy with right of survivorship. Eventually, Mr. Chernushin (not Ms. Chernushin) filed for bankruptcy. During the bankruptcy proceedings, Mr. Chernushin died. The bankruptcy trustee, Robertson Cohen, then filed an adversary complaint against Ms. Chernushin, seeking to sell the home. Ms. Chernushin argued the bankruptcy estate no longer included any interest in the home because Mr. Chernushin’s joint tenancy interest ended at his death. The bankruptcy court agreed with Ms. Chernushin, as did the district court on appeal. The trustee appealed, but the Tenth Circuit concurred the bankruptcy estate had no more interest in the home than Mr. Chernushin and Mr. Chernushin’s interest extinguished when he died. View "Cohen v. Chernushin" on Justia Law