Justia Bankruptcy Opinion Summaries

Debtors filed their Chapter 7 bankruptcy petition in Ohio. They had homes in Ohio and Maryland and listed the Ohio Home as their residence, claiming a $265,800 homestead exemption (Ohio Revised Code 2329.66(A)(1)). They asserted their intent surrender their Maryland Home. During the 11 U.S.C. 341 Meeting of Creditors the debtors told the Trustee they wanted to move to Maryland, stating they had been commuting between Ohio and Maryland. They gave confusing responses about where they lived and where they intended to live. Ohio law permits each debtor to claim a $132,9001 exemption in a primary residence, while Maryland limits the exemption to $6,000, which may not be claimed by both spouses in the same proceeding. The bankruptcy court sustained the Trustee’s objection to the homestead exemption because the Ohio home was not their domicile during the 730 days immediately preceding their Chapter 7 filing, as required by 11 U.S.C. 522(b)(3)(A). The Bankruptcy Appellate Panel affirmed. In deciding that the debtors’ domicile was Maryland, the bankruptcy court applied the correct legal standards, noting "the tardy disclosure of an intricate organization that defies all explanation of necessity” and that the “Debtors’ credibility in providing complete and candid answers suffers” and that their “change in heart is a tactic to shield a valuable asset, rather than a valid assertion of domicile.” View "In re Felix" on Justia Law

At issue was whether a provision in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, 11 U.S.C. 526(a)(4), —on advice to incur debt to pay for a lawyer's bankruptcy-related representation—likewise entailed an invalid purpose requirement. The Eleventh Circuit held that a debt-relief agency (including a law firm) violates section 526(a)(4) if it advises a client to incur additional debt to pay for bankruptcy-related legal representation, without respect to whether the advice was given for some independently "invalid purpose"; plaintiff's allegation, in this case, that defendant law firm instructed him to pay his bankruptcy-related legal bills by credit card stated a viable claim under section 526(a)(4); and none of the constitutional arguments that the firm presented to the court warranted invalidating the statute on First Amendment grounds. View "Cadwell v. Kaufman, Englett & Lynd, PLLC" on Justia Law

The Second Circuit vacated the district court's dismissal of plaintiff's personal injury claims against more than fifty corporate defendants, holding that the district court abused its discretion in invoking the equitable doctrine of judicial estoppel to dismiss her claims. In this case, Defendant Boeing argued that plaintiff's failure to disclose her husband's mesothelioma diagnosis during bankruptcy barred the personal injury claims related to the diagnosis. Plaintiff's husband passed away during the pendency of the appeal. The court held that the principles of equity required the courts to entertain plaintiff's personal injury claims where nothing in the record suggested that she withheld her husband's diagnosis from the bankruptcy court in an effort to game the bankruptcy system. View "Clark v. Advanced Composites Group" on Justia Law

Comcast loaned the Network $100 million, secured by a lien on substantially all of the Network's tangible and intangible assets, including an Affiliation Agreement. Pursuant to the Agreement, a Comcast subsidiary agreed to pay the Network to carry the Network's content on its cable systems. The Network involuntarily entered into bankruptcy; Comcast elected to treat its entire claim as secured before a plan or reorganization was confirmed; and then the bankruptcy court conducted a valuation of the Network's assets, including the Agreement. The bankruptcy court concluded that the Agreement had no value and the district court affirmed. The Fifth Circuit held, however, that the district court did not consider the value of Comcast's collateral in light of the reality of the plan of reorganization and accordingly deducted waived Network liabilities from the Agreement's value. Accordingly, the court remanded for further proceedings. View "Houston SportsNet Finance, LLC v. Houston Astros, LLC" on Justia Law

At issue was whether a bankruptcy court may strip off valueless liens on a Chapter 13 debtor's principal residence when no proof of claims have been filed. The district court affirmed the bankruptcy court's refusal to strip the liens. The Fourth Circuit reversed and held that the liens may be stripped regardless of whether proof of claims has been filed. In this case, the liens at issue were entirely without value making the creditor the holder of an unsecured claim under section 1322(b). View "Burkhart v. Grigsby" on Justia Law

Debtor's wife, who was not a party to the bankruptcy court proceedings, appealed several of the bankruptcy court's orders. The Eighth Circuit affirmed the bankruptcy appellate panel's dismissal of her appeal, holding that she was not a "person aggrieved" by the orders and therefore lacked standing. View "Wigley v. Wigley" on Justia Law

In this consolidated appeal stemming from the bankruptcy of nineteen companies that were tenants-in-common of a student housing development called the Reserve, the Fifth Circuit reversed in part and affirmed in part the bankruptcy court's judgment. The court reversed the bankruptcy court's reduction of UTSA's share of net proceeds from 21.17% to 3.14%, based on serious procedural deficiencies, the lack of notice to UTSA regarding the imposition of a constructive trust, and the remedy's violation of the terms of the Code. The court held, however, that the bankruptcy court did not err in reducing Woodlark's proof of claims from $510,475,98 to $410,097.78. The court remanded for further proceedings. View "UTSA Apartments, LLC v. UTSA Apartments 8 LLC" on Justia Law

The Bankruptcy Appellate Panel (BAP) affirmed the bankruptcy court's orders dismissing the trustee's complaint and denying leave to file a further amended complaint. The panel held that the ultimate issue presented was whether the finality of an auction sale order, together with statutory provisions and procedural rules, effectively defeated the trustee's claims. The panel held that the bankruptcy court properly dismissed the adversary proceeding; the trustee's allegations in the amended complaint against defendants were inconsistent with the specific findings of the sale order; the findings regarding proper notice, lack of collusion, good faith, fair and reasonable consideration, etc., were all necessary and integral to the bankruptcy court's approval of the sale; the panel rejected the trustee's claim of privity as irrelevant; the trustee's reliance on Czyzewski v. Jevic Holding Corp., ___ U.S. ___, 137 S. Ct. 973 (2017), where the Supreme Court held that structured dismissals must follow the same priority rules as required for a Chapter 11 plan confirmation, was misplaced; and whether the trustee liked the specific findings of the sale order or not, they were the detailed findings of the bankruptcy court and were not appealed and thus final. The panel rejected the trustee's remaining claims. View "Fulmer v. Fifth Third Equipment Finance Co." on Justia Law

Blake is a below‐median income debtor who filed for Chapter 13 bankruptcy. In her proposed bankruptcy plan, Blake sought to retain her annual earned income tax credit and a portion of her tax over‐withholdings. Trustee Marshall objected to confirmation of Blake’s plan, arguing that Blake is required to turn over her entire tax refund for use as additional plan payments. The bankruptcy court confirmed the plan over Marshall’s objection, reasoning that tax credits are income under the Bankruptcy Code that must be taken into account when calculating the debtor’s projected disposable income for plan payments but that Blake could retain her tax refund if she prorated it as monthly income and offset it with reasonably necessary expenses to be incurred throughout the year. The Seventh Circuit affirmed. Tax credits are income under the Bankruptcy Code; below‐median income debtors may prorate their annual income tax refund and associated expenses. By confirming Blake’s plan, the bankruptcy court implicitly found, based on the totality of the circumstances, that her plan was proposed in good faith. The court’s approach did not make the plan less feasible and promotes the purposes of Chapter 13. View "Marshall v. Blake" on Justia Law

The Eighth Circuit affirmed the district court's decision affirming the bankruptcy court's finding that funds investors transferred to TSF were part of TSF's Chapter 7 bankruptcy estate. The court held that Judge Hastings, the new bankruptcy judge, did not exceed the scope of the BAP's mandate by revisiting Judge Mahoney's, the retired bankruptcy judge, factual findings; Judge Hastings did not abuse her discretion by declining to apply the law-of-the-case doctrine; and Judge Hastings did not clearly err in finding that the investors failed to show, by clear and convincing evidence, that TSF held the funds in trust. View "Allison v. Centris Federal Credit Union" on Justia Law