And now a few words from our sponsor ...

I'm a week behind in posting this message, but better late than never I suppose. In case you missed it we held a little meeting last Friday and were happy to host about 30 of our Members and guests, along with such speakers as the illustrious Kenneth Gardner, Clerk of the Bankruptcy Court for the Northern District of Illinois, Eastern Division, and representatives from Bankruptcy software manufacturers Westlaw, Best Case Solutions and EZ Filing. As promised there was food, drink and giveaways, including demo copies of software, etc. For those of you who may be wondering, in view of the light turnout at our meetings over the past few years (that is putting it politely -- many of you have not been turning up at all: what does it take to motivate you people?) we consider the meeting to have been a tremendous success. Those of you that have chosen to e-mail me with feedback have said good things, and I welcome any other comments (the good, the bad and the ugly). As usual, the unsung heroes of the meeting were the ladies at the DCBA, take a bow ladies, and Kathryn Harry, our recently appointed Vice Chair and all around good sport. She has been tremendously helpful and will make a great Chair next year. Also present to see how far we've come as a committee were the Chairmen from the last 2-years, Tom Else and Mike Davis, as well as Bar liaison and perennial Bankruptcy guru Kent Gaertner (not to be confused with the Clerk of the Court). I hope they enjoyed the experience as well.Okay then, I'll wind up with a brief plug for our upcoming Seminar on the same general topic area of CM/ECF. This time we would like to bring back the Clerk of the Court for an update, bring back our software speakers for a longer time, get some input from practitioner/users of the system, and if possible bring in a bonus speaker from the Bankruptcy Court. No date has been set yet but of course we will let you know. And a final, final note: this last meeting was attended by some who were not DCBA regulars (or even members per se) but had heard that we would be talking about a subject that was of interest to them. As Federal Court practitioners in a State Court bar association, our Members will always feel a little out of place at the DCBA simply because we are not Courthouse regulars the same way many other bar members are. Accordingly, I think we ought to reach out to other Bankruptcy practitioners in our area, whether in DuPage County, Cook, Will, Kane, etc. I would like to suggest that each of us consider contacting or extending an invitation to our practicing colleagues (and Judges and Court personnel) to attend our Seminar or come to a meeting. At the end of the day, it can only help our Committee by enhancing its reach and adding new voices to its operation. Anyway, that's just my input. Let me know what you think.Thanks for reading everyone. Now back to your regularly scheduled programs. Stay tuned for more Bankruptcy fun ...

AG Fin. Serv. v. Hughes (01/19/05 - No. 04-1028)

Punitive damages are unavailable in Bankruptcy actions.

In re Weinschneider (01/18/05 - No. 04-1828)

Bankruptcy Court properly denied Plaintiff's claim for Attorneys' Fees where such fees may not be recovered as an administrative expense for another party's breach of a covenant not to sue.

Case Roundup

Plan bars punitive damages claim against Debtors

In re A.G. Financial Service Center, Inc. (7th Cir. 2005)

Held: Bankruptcy Court did not err in confirming Plan prohibiting punitive damages against Debtor and its parent.

Facts: Debtor settled potential claims against parent with approval of the Bankruptcy Court. Claimants asserting a right to punitive damages adduced no facts or circumstances that supported said right. A "freakish" pre-Petition punitive damage verdict for other claimants was considered an aberration. Thus there was no denial of a right to trial as alleged by claimants.

Opinion: Bankruptcy Court did not err in requiring disclosure of Debtor's customer list. The list (which was sought by claimants' Attorney to solicit more clients) had been sold as an asset during the Bankruptcy and had value because it was confidential. Lawyers have a right under the First Amendment to solicit Clients; they do not have a right to a subsidy in this endeavor. Counsel could have bid for the list like any other asset, or they could have rented the list from its buyer. Lawyers pay for paper, books, office space and other inputs into their profession; they must pay for mailing lists too.

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What is a corporate "insider" for preferential transfer purposes?

In re Enterprise Acquisition Partners, Inc. (9th Cir. BAP 2005)

Held: Bankruptcy Court erred in holding that an insider of an insider (a corporation wholly owned by a statutory insider) was an insider.

Opinion: A Trustee can avoid transfer of an interest in Debtor's property if the transfer meets certain requirements including the fact that it occurred within the requisite pre-Bankruptcy period per §547(b). Because the transfer at issue in this case, the filing of a UCC-1 to perfect a security interest in Debtor's property, occurred more than 90 days but less than 1 year before Bankruptcy, it is avoidable under §547 only if the transferee was an "insider" per §547(b)(4)(B). State law controls whether it is appropriate for the Bankruptcy Court to pierce the corporate veil. In re Pajaro Dunes Rental Agency, Inc., 174 B.R. 557, 582 (Bankr. N.D. Cal. 1994). In order to pierce the corporate veil the Court must apply the correct legal standard. That requires considering both the unity of interest between the shareholder and the corporation and whether an inequitable result will follow from recognizing the corporate form. Although the Bankruptcy Court considered the unity of interest prong and found that it was met, it failed to consider what inequity would follow if the corporate form were recognized. Piercing the corporate veil requires more than a unity of interests; it also requires some inequity arising out of the use of that form. The Court did not make any finding that there was any such inequity in this case, nor did the Trustee point to any evidence that would support such a finding. Therefore, the court erred.

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ATTY FEES NOT ALLOWABLE IN ABSENCE OF STATUTE OR SETTLEMENT TERMS PROVIDING FOR SAME

In re Weinschneider (7th Cir. 2005)

Where a settlement agreement between a Chapter 7 Trustee and a 3rd party sued by the Trustee did not have an Attorneys' Fees provision and State law contained no entitlement to Attorneys' Fees to the prevailing party in a contract suit, the counterparty to the agreement was not entitled to payment of legal fees incurred in connection with successful litigation against the Trustee regarding the interpretation of the settlement agreement.

Professor to Study Chapter 11 Fees

On December 20, 2004 Seton Hall Associate Law School Professor Stephen J. Lubben was awarded an ABI grant to study Chapter 11 cases. ABI announced that it had awarded the $346,000 to Lubben to study professional fees in Chapter 11 business Bankruptcy cases. The study will provide the most comprehensive, independent look at professional fees in Chapter 11 cases to date. Preliminary work on the study will begin next summer and the final report will be completed by fall 2007.The study is expected to include approximately 1,100 cases -- up to 40 cases will be selected from 33 Districts, 3 from each numbered Federal Circuit, and the study will follow the cases for 2 years. Professional fee and expense data will be collected from retention and compensation applications. A variety of data on the Debtors and their cases will also be collected. This secondary information will be considered in connection with the professional fee and expense data.

MyFico.com

This site contains 51 free calculators running the gamut from an interest calculator (listed under “Loan Calculators”), to mortgage, auto loan, debt and credit card, savings, personal finance, investment and retirement calculators. Handy when calculating interest to be paid on a debt in connection with a Chapter 13 Plan or determining the current FMV of collateral such as a car, as well as length of plan and interest rate.

NOTE: One thing MYFICO.com does not have is a calculator to determine interest and penalties on a delinquent tax liability. An application to do this calculation is available from TimeValue.com for a reasonable price.

Clerk of the Court to speak at January 21 Meeting

The Hon. Kenneth Gardner, Clerk of th Bankruptcy Court for the Northern District of Illinois, Eastern Division, has confirmed his attendance at our scheduled meeting on January 21, 2005 at noon on the subject of CM/ECF. As usual, the meeting will be held at the DuPage County Bar Association at 126 South County Farm Road in Wheaton. This rounds out our speaker list, which now looks as follows:

(a) Bankruptcy Software Vendors (EZ Filing, Best Case, Westlaw);

(b) Kenneth Gardner, Clerk of the Bankruptcy Court; and

(c) Practitioner-speakers including Vice-Chair Kathryn Harry, Esq.

If you have not already RSVP'd or made up your mind to attend, please take a moment to do so now by simply responding to this message with your name and contact information. We look forward to seeing all of our Members and their guests.

Probate exception to Bankruptcy Court jurisdication stands

In re Marshall (9th Cir. 2004)

Bankruptcy Courts are bound by the probate exception to Federal Court jurisdiction.

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Dismissal of Adversary case not de facto grounds for malicious prosecution action

Duzich v. Advantage Finance Corp. (5th Cir 2004)

Dismissal of an Adversary proceeding, but without an explanation of the reasoning for the dismissal, does not constitute a "favorable termination" of the proceeding for malicious prosecution purposes.

Refinance boom brings increase in foreclosures

From 1993 to 2001 refinancings shot up 35%, while from 2000 to 2003 foreclosures climbed 45%. Many economists suggest that with volatile real estate and money markets, pinning your financial future on your house isn't much different than taking a spin at the local casino. And the high stakes don't stop with loans. A recent study by October Research reported that 55% of appraisers often felt 'uncomfortably pressured' to overstate property values. Of those, 46% said they were asked to inflate the value of the subject property by 11% to 30%.

Bankruptcy Reform Act (3rd time's a charm ...)

The consensus in Washington is that the Bankruptcy reform legislation that has failed repeatedly in recent years will be re-introduced soon. Sources say the bill is expected to move quickly through the House and reach the Senate by April, where the majority cannot force issues as easily or as quickly as they could have in the House. In particular, 50 votes are needed to break a filibuster in the Senate and there is no indication that Sen. Schumer has given up on his "poison pill” provision that many Senators who support the bill nonetheless find repugnant. Sources give the bill a 60/40 chance of passing unless the debate drags on past the first session 2005 and into 2006: then it becomes 50/50. Susan Jones with CNSNews.com reports that Sen. John Cornyn's office said likely business in the weeks ahead will include Class Action and Bankruptcy reform (although no Senate bills will be introduced before January 24 in any case).

Online Access to Public Records

While there are many places online where Bankruptcy practitioners can find information about a client's judgments, deeds, assets, tax liens, prior bankruptcies, etc., one of the best is found at accurint.com.This extensive service is economical and appears to be thorough. Among the public records available are the following:

Bankruptcies

Bankruptcy Docket Sheet

Property deeds

Property assessments

Corporate Affiliations

Motor Vehicles

Liens/Judgments and UCC filings

Tax liens

Corporation Filings

Business Registrations

Internet Domain Names Registered to Business

Current and Previous Property Ownership

Current Motor Vehicles at Address

Civil Court Search

Foreclosures Search

Marriages/Divorces Search

Merchant Vessel Search

January 21, 2005 Meeting

Although I'm sure everybody knows this by now, our next committee meeting will take place on Friday January 21, 2005 at noon in the lower floor of the Bar Association. The topic of the meeting will be Practical Aspects of CM-ECF. Thus far we have over a dozen confirmed RSVP's (thank you to those of you who've already done so) and would like to see more so that we can give the speakers and sponsors an idea of how much "stuff" to bring. In case you have not already heard, the highlights of the meeting will be as follows:

• Presentation by multiple Bankruptcy Software vendors (3 and counting);
• Presentation by practitioners talking about the practical problems in the system;
• Presentation by a mystery Court-related figure (based on their availability)
• Food and drink aplenty -- care of Westlaw/Findlaw (thank you Greg Wildman)

Need we say more? Take a moment to RSVP to mhedayat@mha-law.com -- we look forward to seeing everyone on the 21st. By the way, if you have colleagues who do not receive these e-mail messages or do not check the weblog, please let them know about the meeting and ask them to RSVP if possible. Thanks.

Attorney Looking for Position

Sharmila Chatterjee, Esq. 3126 Gresham Lane West Aurora, IL 60504, Ph. (630) 334-8317 schatterjees@hotmail.com EXPERIENCE: Bar Admission: NY State and Federal license in Illinois, 2004 Arnold & Porter Contract Attorney, December 2004 to present Review documents as part of a large scale document production. Robert J Semrad and Associates, Chicago IL Bankruptcy Associate, August 2004 to December 2004 Handled high volume of Chapter 13 and Chapter 7 bankruptcy cases Drafted motions on various issues on Chapter 13 pre and post confirmation cases Attended more than a hundred 341 meetings Represented Debtors on broad range of areas Neal Gerber & Eisenberg, LLP., Chicago IL Temporary Filing Clerk (Securities Litigation Department) October 2003 – August 2004 Systematic maintenance and updating of case files Assist in document production in multi-million dollar claims Handled various projects before and during trial Solutions First Mediation Services, Inc., Chicago IL Law Clerk, October 2002 – March 2003 Appeared in court for status calls, motions and with counsel for pre trial hearings Researched various issues regarding child support, arbitration and real estate Assisted with preparations for depositions and mediation Drafted motions, complaints and settlement agreements Prepared and filed disclosure statements and subpoenas Law Office of Nathaniel Hsieh, Chicago IL Law Clerk, July 2002 – October 2002 Drafted National Interest Waiver petitions to the Immigration and Naturalization Service Prepared and filed applications for Political Asylum Submitted applications for Adjustment of Status Assisted attorney in factual investigation, legal research and pre-trial court appearances Mankus & Marchan Ltd., Lisle, IL Law Clerk, June 2001 - August 2001 Completed Chapter 7 bankruptcy forms and filed in court Organized case files and corresponded with clients LEGAL EDUCATION: Chicago-Kent College of Law, Illinois Institute of Technology, Chicago, IL. LL.M. May 2002 VPM’s Thane Law College, University of Bombay, Mumbai, India LL.B. August 2000 [3 years Law degree, equivalent to J.D.] Moot Court Society UNDERGRADUATE EDUCATION: R. Ruia College, University of Bombay, Mumbai, India Bachelor of Arts Economics, April 1997 SKILLS: Computer: Word Perfect, Westlaw, Lexis, Power Point, Microsoft Front Page, Photoshop Languages: Hindi, Bengali and Marathi

MANKUS & MARCHAN, LTD.

In answer to my last post seeking submissions for the DCBA Brief, committee member Tony Mankus has graciously offered to author up to 2 articles on the subjects of avoidance of judicial liens in Bankrupcy and tax issues related to awards in personal injury and Federal discrimination cases. But is this too much for one soul to handle on their own? Maybe. So I am now seeking contributors and co-authors who wish to be involved in either of these projects. If interested, please contact Tony at tman@irstax.com and cc a copy to myself at mhedayat@mha-law.com. Thank you for your continued support of the Brief, and kudos to you Mr. Mankus.

2005 Case Filing Procedure Change

You may already be in violation ...

Ed. Note Thanks to Tom "Ironman" Else for turning us on to this beauty of a rule. Salute!

Effective January 3, 2005 all documents commencing either a bankruptcy case (petition, lists, schedules, statements, plans, installment agreements, declarations) or adversary proceeding (complaint, cover sheet, summons), not filed via the internet must be submitted on a computer diskette, CDROM, or DVD. The accuracy and completeness of these documents shall be the total responsibility of the debtor and debtor’s attorney. Pro se filers are exempt from this requirement. For your convenience the court has made most of these forms available on our Bankruptcy Forms Web Page in fillable PDF format. Instructions on how to create a PDF document and bookmarks may be obtained from our ECF User’s Manual. Search for PDF and then select Creating PDF and, or Creating Bookmarks in a PDF document. In order to insure that the documents you file can be properly processed by the computer system, we ask that you observe the guidelines attached to this notice. Your cooperation is essential in helping us make improvements to our system and better serve you - the public. If financial constraints and/or the inability to access the equipment necessary to produce a computer diskette would cause an undue hardship on the debtor, a motion must be presented to the Chief Judge. Please continue to visit this page for more information.

Looking for feedback and submissions

While I don't use this blog to tout personal business, my fellow committee members probably won't mind hearing me out on this one. First, I am a member of the DCBA Publication Board and look forward to preparing a series of articles with Susan Castagnoli and Mike Davis about electronic filing. As most of you know, this practice has now become official at the DuPage County Courthouse as well as in the Bankruptcy Court. And lest you think that the two types of electronic filing will be the same or similar -- au contraire. With that in mind, my first request is for feedback from anyone who has had an experience with either the DuPage County or Bankruptcy Court electronic filing or case management system. I am happy to review all feedback anonymously or, with your permission, can use a quote or relate a story in the article(s). Secondly, in connection with my work on the Publication Board I will be the lead articles editor for the June edition of the Brief. While there is no need to assemble a "theme" for my issue, I would not mind, and would welcome, a strong showing of Bankruptcy-related articles, posts, etc. Submissions for the June edition can begin right away but must be in by say April. Then again, why wait? I would like nothing more than to present some quality writing to the Publication Board from our committee. I'm sure you would agree. Finally, if anyone has an article idea but hasn't found time to do it on their own, shoot me an e-mail or give me a call and I can do one of 2 things: pass on your name to other interested parties, or co-author the article with you. Well folks, that's it. Thanks for reading this post. I hope to receive some feedback.

CM/ECF

This simple but useful site provides links to all the CM/ECF (Case Management/Electronic Case Filing) pages in the country. Why? Because CM/ECF is about to become the only means of accessing the Bankruptcy Courts, of course. Enjoy!

NACBA Website

This web site is dedicated to consumer bankruptcy attorneys and carries, among other things, a document bank containing sample briefs, motions and other documents posted by members for the benefit of other members. The document bank presently holds over 200 documents. Other features of the site include bankruptcy news, legislative updates, an attorney directory, a listserv and links to "other resources." The NACBA bills itself as the only national organization dedicated to serving the needs of consumer bankruptcy attorneys and protecting the rights of consumer debtors. Formed in 1992, NACBA boasts more than 1200 members in all 50 States and Puerto Rico. Since 1997 NACBA has been involved in lobbying against anti-debtor legislation in Congress and has played a critical role in numerous cases affecting the rights of consumer debtors by filing amicus briefs in Courts of Appeal and the Supreme Court. NACBA also provides educational programs for consumer bankruptcy attorneys through its annual convention seminars.