Justia Bankruptcy Opinion Summaries

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

This appeal arose from the dismissal of a medical malpractice action filed by plaintiff Nicole Alward against defendants Emery Johnston, M.D., Gary Fleischer, M.D., Tung Thuy Nguyen, M.D., Elliot Hospital, and Southern New Hampshire Medical Center. Following a second back surgery, plaintiff consulted with two different attorneys about a potential medical malpractice claim. Ultimately, both attorneys advised the plaintiff that they were unwilling to represent her in a medical malpractice action against the treating physicians and hospitals. As a result, plaintiff believed that her potential claim had no value. Plaintiff then consulted with a bankruptcy attorney, Mark Cornell, in April 2015. She informed Cornell about her potential medical malpractice claim and that other attorneys had declined to pursue it. When Cornell drafted the plaintiff’s petition for chapter 7 bankruptcy, he did not list the potential medical malpractice claim on the plaintiff’s schedule of assets. Cornell also failed to advise plaintiff that she needed to disclose this potential claim to the bankruptcy trustee. At her ex-husband’s suggestion, in February 2016, plaintiff consulted with a third law firm, Swartz & Swartz, P.C., which agreed to represent her and pursue the medical malpractice claim. Plaintiff filed the underlying medical malpractice action against defendants in June 2016. The bankruptcy court issued its order discharging her case in July 2016. In October, defendants moved to dismiss the medical malpractice action, arguing plaintiff should have been judicially estopped from pursuing her medical malpractice claim because she failed to disclose it on her schedule of assets in the bankruptcy case. Plaintiff immediately consulted with new bankruptcy counsel, who moved to reopen her bankruptcy case to "administer a potential asset" and appoint a new trustee. The bankruptcy court granted the motion and appointed a new trustee. Plaintiff then resisted defendants' motion to dismiss, which was denied by the trial court. The trial court ultimately dismissed the case, holding plaintiff was judicially estopped from bringing her medical malpractice claim. The New Hampshire Supreme Court concluded the trial court erred in applying judicial estoppel to this matter, reversed and remanded for further proceedings. View "Alward v. Johnston" on Justia Law

The Ninth Circuit reversed the district court's denial of debtors' motion under 11 U.S.C. 362(k) for attorneys' fees incurred on appeal in successfully challenging the bankruptcy court's award of attorneys' fees to debtors for a willful violation of an automatic stay. The panel held that section 362(k) also authorizes attorneys' fees and costs to the debtor incurred on appeal in successfully challenging an initial award made pursuant to section 362(k).The panel also held that the district court abused its discretion by denying the motion on the alternative ground that debtors failed to comply with a local rule. In this case, the memorandum of points and authorities filed with the district court sufficiently clarified the attorneys' fees and costs. The panel remanded for further proceedings. View "Easley v. Collection Service of Nevada" on Justia Law

At issue was whether 11 U.S.C. 362(c)(3)(A) terminates the automatic stay as to actions against property of the bankruptcy estate.Maine’s Bureau of Revenue Services (MRS) had a claim for a tax debt owed by Leland Smith, a repeat Chapter 13 bankruptcy filer. At issue int his appeal was the scope of the termination of the Bankruptcy Code’s automatic stay for repeat filers like Smith who file a second petition for bankruptcy within a year of the dismissal of a prior bankruptcy case. Thirty days after the filing of his bankruptcy petition, some part of the stay had terminated under section 362(c)(3)(A). Smith argued that the stay only terminated as to actions against the debtor and the debtor’s property, not as to actions against the property of the bankruptcy estate. The bankruptcy court ruled that the automatic stay had terminated in full, including as to property of the estate, and the district court affirmed. The First Circuit affirmed, holding that section 362(c)(3)(A) terminates the entire stay thirty days after the filing of a second petition. View "Smith v. State of Maine Bureau of Revenue Services" on Justia Law

The Ninth Circuit dismissed objector's appeal of the bankruptcy court's order denying his objection to confirmation of a Chapter 9 petition, by the City of Stockton, as equitably moot. In this case, objector filed an inverse condemnation claim against the City in state court and the plan classified the claim as a general unsecured claim.The panel held that objector did not seek a stay of confirmation at any stage; the plan has been substantially consummated; the relief of undoing plan confirmation would bear unduly on innocent third parties; and the bankruptcy court could not fashion relief without undoing the confirmed plan. On the merits, the panel held that the Takings Clause exempted objector's unsecured claim from reorganization. In reality, objector's purported property interest was a claim for monetary relief. View "Cobb v. City of Stockton" on Justia Law

The Bankruptcy Appellate Panel dismissed appellants' appeal of the bankruptcy court's denial of their "Amended Motion for Determination that Confirmation Order Does Not Bar a State Court Action Relating to the Springfield, Illinois Coal Contract." The panel held that the bankruptcy court's order was not final, and thus the panel did not have jurisdiction to review it. In this case, the bankruptcy court did not direct entry of a final judgment or expressly determine there was no just reason for delay in entering a final judgment. View "Frakes v. Arch Coal, Inc." on Justia Law

For a debt to be "provided for" by a plan under 11 U.S.C. 1328(a), the bankruptcy plan must make a provision for or stipulate to the debt in the plan. The Eleventh Circuit affirmed the bankruptcy court and district court, holding that debtor's bankruptcy plan did not discharge the Credit Union's mortgage. In this case, debtor's plan did nothing more than state that the Credit Union's mortgage would be paid outside the plan, but it was not "provided for" and was not discharged.The court further held that, even if the debt was provided for, discharge of the debt would violate section 1322(b)(2) by modifying the Credit Union's right under the original loan documents to obtain a deficiency judgment against debtor. Finally, the issue of whether the Credit Union's failure to file a proof of claim for its first mortgage resulted in the mortgage's discharge was not preserved for appeal. View "Dukes v. Suncoast Credit Union" on Justia Law