We have blogged previously about the intersection of fraud and bankruptcy. A recent decision from the U.S. District Court for the Central District of California justifies an addition to that series of posts.
Thomas...more
Publicly, Diamond Finance Co. (“Diamond”) provided car loans to individuals with less-than-stellar credit. While Diamond did have “some actual business,” its purpose “quickly became a front to lure unsuspecting investors.”...more
Bankruptcy Judge James J. Tancredi appeared to give a chapter 7 debtor one last chance to avoid being incarcerated.
In adversary proceedings arising out of the bankruptcy of a thrice-convicted former stockbroker, In re...more
An appeals court ruled recently that chapter 5 avoidance actions are property of a debtor’s bankruptcy estate that can be sold in section 363 sales. In re Simply Essentials, LLC, No. 22-2011, 2023 U.S. App. LEXIS 21814 (8th...more
Section 544(b)(1) of the Bankruptcy Code enables a trustee to step into the shoes of a creditor and avoid a transfer “of an interest of the debtor in property” that an unsecured creditor could avoid under applicable state...more
7/31/2023
/ Appeals ,
Bankruptcy Code ,
Bankruptcy Court ,
Bankruptcy Trustees ,
Chapter 7 ,
Class Action ,
Commercial Bankruptcy ,
Creditors ,
Debtors ,
Fraudulent Transfers ,
Sovereign Immunity ,
Trustees
Persuading a bankruptcy judge to find “excusable neglect” after missing a filing deadline is usually a tough sell. You’d think it would be particularly hard when the party seeking relief was “belligerent and disrespectful to...more
This post is about a junkyard, hogs getting slaughtered, and a bankruptcy judge poised to sanction a creditor and her counsel. The message from the case to would-be claimants in other cases is simple: do not “overreach.” In...more
A bankruptcy court ruled that a creditor didn’t need to seek derivative standing to sue a liquidating trustee. The creditor, himself a trustee of the debtor’s employee stock-option plan, had standing to sue without prior...more
A Delaware bankruptcy court recently held that Texas’s “trust fund doctrine” remains applicable for companies that have not availed themselves of Texas’s formal dissolution process. Nonetheless, fiduciary claims by a...more
6/30/2022
/ Bankruptcy Court ,
Breach of Duty ,
Business Litigation ,
Chapter 7 ,
Debtors ,
Delaware ,
Fiduciary Duty ,
Texas ,
Trust Funds ,
Trustees ,
TX Supreme Court
Some courts permit debtors to designate vendors crucial to their business as “critical vendors.” These vendors supply debtors with necessary goods or services. Debtors are permitted to pay them amounts owing when a...more
A recent case before bankruptcy judge Karen B. Owens of the United States Bankruptcy Court for the District of Delaware, In re Dura Auto. Sys., LLC, No. 19-12378 (KBO), 2021 WL 2456944 (Bankr. D. Del. June 16, 2021), provides...more
A creditor in bankruptcy must normally file a proof of claim by a certain specified time, known as the bar date, or have its claim be barred. Bankruptcy Rule 3002(c)(6)(A) provides a narrow exception to this rule when a...more
A recent case shows how even late payments can be used to satisfy the ordinary course of business defense in a preference avoidance action. Baumgart v. Savani Props Ltd. (In re Murphy), Case No. 20-11873, Adv. Pro. No....more
A discharge of debt in bankruptcy “operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of...more
It is well-settled that if you are a debtor in chapter 11, you do not have the unfettered right to convert the case to a chapter 7 liquidation. A recent 10th Circuit decision shows why. Kearney v. Unsecured Creditors...more
Every so often, we post an article on case law discussing proofs of claim. The decisions often contain basic but important information about the timing and manner of claim filing.
One set of cases concerns whether a claim...more
Section 303 of the Bankruptcy Code allows creditors to initiate an involuntary bankruptcy case against a debtor. The petition initiating the case must be filed by creditors holding claims aggregating to at least $10,000, and...more
Section 548 of the Bankruptcy Code enables trustees to avoid certain pre-bankruptcy transfers of “an interest of the debtor in property,” where the transfer was intended to defraud creditors or where the transfer was made...more
9/23/2019
/ Acquisitions ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 7 ,
Commercial Bankruptcy ,
Fraudulent Transfers ,
Mergers ,
Motion for Reconsideration ,
Popular ,
Trustees ,
UFTA
Successful bankruptcy cases typically end with a court order releasing a debtor from liability for most pre-bankruptcy debts. This order, generally known as a “discharge order,” prohibits the debtor’s creditors from trying to...more
6/17/2019
/ Appeals ,
Attorney's Fees ,
Bankruptcy Appellate Panel (BAP) ,
Bankruptcy Code § 524(a) ,
Bankruptcy Discharge Order ,
Chapter 7 ,
Civil Contempt Orders ,
Concurrent Litigation ,
Creditors ,
Dischargeable Debts ,
Injunctive Relief ,
Money Judgment ,
Reasonable Belief Test ,
Remand ,
Reversal ,
SCOTUS ,
Standard of Review ,
Statutory Violations ,
Taggart v Lorenzen ,
Vacated
Creditors’ recoveries often hinge on claw-back lawsuits that trustees bring under bankruptcy law and non-bankruptcy law. Trustees can file claims based on non-bankruptcy law because Bankruptcy Code section 544(b) allows them...more
5/16/2019
/ Appeals ,
Avoidance ,
Bankruptcy Code ,
Chapter 7 ,
Clawbacks ,
Debtor-Creditor ,
Debtors-in-Possession ,
FDCPA ,
Fraudulent Transfers ,
SBA ,
Trustees ,
UFTA
Two weeks ago, we discussed asset sales under Bankruptcy Code section 363. As that post noted, section 363 requires court approval for asset sales outside the ordinary course of business, with courts ensuring that sales...more
5/6/2019
/ 363 Sales ,
Appeals ,
Auction ,
Bankruptcy Code ,
Bankruptcy Court ,
Breach of Contract ,
Chapter 11 ,
Chapter 7 ,
Commercial Bankruptcy ,
Creditors ,
Debtors ,
Fiduciary Duty ,
Private Sales ,
Sale of Assets ,
Settlement Agreements ,
Trustees
When a party files for bankruptcy, the Bankruptcy Code imposes an automatic stay of litigation against a debtor for claims arising prior to the commencement of the bankruptcy case. See 11 U.S.C. § 362(a). Where there is a...more
If the National Labor Relations Board (“NLRB”) fines an employer for unlawfully firing workers who tried to unionize, can the employer discharge the fine in bankruptcy, or will the exception to discharge found in Bankruptcy...more
2/7/2019
/ Administrative Law Judge (ALJ) ,
Affirmative Defenses ,
Appeals ,
Back Pay ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 7 ,
Debtors ,
Dischargeable Debts ,
Employee Rights ,
Employer Liability Issues ,
Hiring & Firing ,
Just Cause ,
NLRA ,
NLRB ,
Personal Liability ,
Section 7 ,
Union Organizers ,
Willful Violations
When a bankruptcy petition is filed, an automatic stay comes into effect staying proceedings against the debtor or the debtor’s property. 11 U.S.C. § 362(a). The stay centralizes litigation regarding the debtor and its...more
10/1/2018
/ Automatic Stay ,
Bankruptcy Code ,
Bankruptcy Court ,
Borrowers ,
Chapter 11 ,
Chapter 7 ,
Consumer Lenders ,
Debtors ,
Liquidation ,
Loans ,
Mandatory Arbitration Clauses ,
Motion for Relief
On June 4, the Supreme Court decided Lamar, Archer & Cofrin, LLP v. Appling, No. 16-1215, in a unanimous opinion by Justice Sotomayor. The Court affirmed the Eleventh Circuit and resolved a circuit split about the meaning of...more
6/15/2018
/ Adversary Proceedings ,
Appeals ,
Bankruptcy Code ,
Business Assets ,
Chapter 7 ,
Commercial Bankruptcy ,
Congressional Intent ,
Debtors ,
Dischargeable Debts ,
False Statements ,
Judgment Creditors ,
Lamar Archer & Cofrin LLP v Appling ,
Oral Communications ,
Reaffirmation ,
SCOTUS ,
Tax Returns