Case Roundup

Trustee need not settle case

In re Consolidated Industries Corporation (7th Cir. 2005)

A Trustee does not abuse his discretion when he refuses to settle an $8 million claim for $20,000 where settlement of the claim might jeopardize a prior multi-million dollar §544(b) judgment against a third party.

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Employer may not fire worker exclusively based on his/her Bankruptcy

White v. Kentuckiana Livestock Market, Inc. (6th Cir. 2005)

While §525 prohibits a private employer from terminating a Debtor when Bankruptcy is the sole cause of termination, the fact that Bankruptcy is a substantial factor is not sufficient to make the firing inappropriate.

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Clayton Act lawsuit not a violation of the Stay

Lockyer v. Mirant Corp. (9th Cir. 2005)

A State Attorney General's suit under the Clayton Act to force a Debtor In Possession to divest assets was an exercise of police or regulatory powers that was not subject to the Automatic Stay.

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Administrative expenses need not be paid out of specific funds

In re Farmland Industries, Inc. (8th Cir. 2005)

Neither §330 nor §503 provides that payments to professionals that qualify as administrative expenses must be paid from any specific funds of the Debtor. When the Bankruptcy Court determines that two advisors representing two competing classes of Creditors are "necessary to the administration of the case," §330(a)(4)(A)(ii) does not preclude the Court from providing at the outset that the contingent portion of each advisor's fees will be paid out of the recovery enhanced by that advisor's services.

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Secured creditor entitled to proceeds plus repaired collateral

In re Tower Air, Inc. (3rd Cir. 2005)

Scured Ceditor in a Chapter 7 case may recover the insurance proceeds intended to pay for damage to its collateral, while retaining the fully repaired collateral

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Ruling on Fair Debt Collections Practices Act

Schmitt v. FMA Alliance (8th Cir. 2005)

For FDCPA purposes, a Creditor's knowledge of a Debtor's Bankruptcy, acquired prior to the time an account is assigned to a third-party debt collector, will not be imputed to the debt collector.