In re CVEO Corp. Bankr. DE

Where a scheduling order in an avoidance adversary proceeding set a September 10, 2004 deadline for dispositive motions, a cross motion for summary judgment asserted on October 8 2004 in a response to plaintiff's timely summary judgment motion was timely. An insurance claims administrator was not entitled to summary judgment in a preference action where there were material disputed facts regarding whether the administrator had dominion and control over the funds that the debtor had transferred to the administrator to pay claims.

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Mickowski v. Visi-Trak Worldwide LLC 6th Cir.

Defendant, which purchased the remaining assets of a bankrupt corpfsoration, cannot be held liable as a successor to the corporation's liability for an unpaid patent judgment under Ohio law.

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In re Martinez. 11th Cir.

A prevailing debtor in a dischargeability action brought by his creditor can recover his attorney's fees and costs incurred in those dischargeability proceedings if recovery of such are authorized under an enforceable contractual right provided for by State law. Where State law prohibits one-sided "prevailing party" attorney fee clauses, such State law entitles a prevailing debtor in dischargeability litigation to recovery of attorney fees even if no State law issues were litigated in the adversary proceeding.

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In re Lang 10th Cir.

In a bankruptcy action, the failure to comply with the deadline for the filing of a notice of appeal due to the press of other business does not constitute excusable neglect.

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In re Burrell 9th Cir.

Where two potentially preclusive lower court judgments were involved, after appeal became moot through no act of party seeking relief, vacatur was required as to both judgments of district court or Bankruptcy Appellate Panel and bankruptcy court.

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In re American HomePatient, Inc. 6th Cir.

In calculating a rejection damages claim arising from the debtor's rejection of an executory warrant agreement, the bankruptcy court did not err in ruling that damages should be calculated based upon the value of the warrants on the petition date rather than on some later date.

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In re Gurrola 9th Cir. BAP

Bankruptcy discharge cannot be circumvented on equitable grounds. A debtor who failed to assert his discharge as a defense could not be equitably estopped from relying on the discharge to prevent entry of a post-discharge State court judgment on a pre-petition debt

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In re Ramba 5th Cir.

An antecedent debt for goods sold does not lose its antecedent character when the creditor pursues, and then forbears from, action to collect the debt."New value" in a "contemporaneous exchange" must be given to the debtor directly and not indirectly. It is the precise benefit received from the creditor, and not the secondary or tertiary effects thereof, that must fit within one of the five categories of "new value." Thus, a creditor whose forbearance enabled the debtor to obtain funds by selling property was not entitled to a new value defense.

Effect of the New Law -- boom or bust?

Claims that many consumers will no longer have the safety net of bankruptcy once bankruptcy reform goes into effect may be unfounded.A study by the leading provider of bankruptcy preparation software for attorneys indicates that at least 85% of debtors who file for bankruptcy under Chapter 7 would still be eligible for Chapter 7 when the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 goes into effect on October 17.Best Case Solutions, Inc., based in Evanston, IL, analyzed data from over 11,000 actual bankruptcies filed in 45 states between June 15 and July 6, 2005. The study compared each debtor's monthly income as reported in Schedule I of the petition with the state median for his household size, using inflation-adjusted 2003 Census Bureau statistics as the new law requires.85.6% of the Chapter 7 filers in the sample had incomes below the state median, and would likely still be able to file Chapter 7 under the bankruptcy reform law. The remaining 14% would have to submit to a means test in order to file Chapter 7. The information that will be required for the means test is not currently collected in bankruptcy filings, so it was impossible to ascertain how many of that group of debtors would go on to pass the means test.The data also show that 73% of current Chapter 13 debtors' incomes were below the state median. In general, debtors choose Chapter 13 over 7 if they have equity in real estate, since in most states laws exempt only a small amount of the debtor's equity in a home."The data back up what bankruptcy attorneys tell us about their clients: these are not wealthy people trying to scam the system. They're people who are overextended, sometimes due to job loss, car accidents, divorce, or medical problems, and they often have high interest rates on car loans and credit cards that make it hard for them to ever get back in the black," says Lucinda Fox, company spokesperson at Best Case Solutions. "Since most debtors have incomes below the median, bankruptcy will continue to be an option for the vast majority of them. When the dust settles, I don't think you're going to see the bankruptcy rates go down dramatically."____________________IRS TAXPAYER ADVOCATE RELEASES REPORTJuly 8, 2005IR-2005-71 WASHINGTON — National Taxpayer Advocate Nina E. Olson has delivered a report to Congress that discusses the central role taxpayer service plays in facilitating voluntary compliance with our tax laws and cautions that excessive focus on enforcement at the expense of taxpayer service could have the effect of both reducing voluntary compliance and alienating taxpayers.The Advocate’s report, which is required by law, urges the IRS to focus more broadly on steps to increase voluntary compliance. “Today, the IRS’s explicit and primary focus is on increasing its enforcement activity. While this goal is laudable, it is very narrow,” Olson writes. “As Congress noted in RRA 98, the IRS is far more than an enforcement agency — it must serve all taxpayers. Thus, the IRS should specifically state that its primary organizational goal is to increase voluntary compliance.”1. Private Debt Collection Initiative. In the American Jobs Creation Act of 2004, Congress granted IRS the authority to use private debt collectors to collect certain tax debts, and the IRS is working actively to develop and implement the initiative by early 2006.2. Collection Due Process (CDP) Hearings. CDP hearings afford taxpayers a meaningful opportunity to be heard about certain issues, including collection alternatives, between the time the IRS places a lien on the taxpayer’s property and the time the IRS can levy on the property. While many taxpayers use the CDP process for the reasons intended, some taxpayers seek CDP hearings simply to delay the collection process. Olson expresses concern that steps under consideration by the IRS to address CDP abuses may have the effect of impeding legitimate uses of the process.3. Offer-in-Compromise (OIC) Program. The OIC program allows the IRS and taxpayers who are unable to pay their tax liabilities in full to reach agreement on the amount the taxpayer is able to pay and allow the taxpayer to make a fresh start. The OIC program is designed to improve compliance. Research indicates that the IRS only collects 13 percent of tax debts that are more than two years old. By contrast, accepted offers bring in 16 percent of tax debts owed, and a recent study showed that about 80 percent of taxpayers whose offers are accepted remain in compliance during the subsequent five years.

In re Sinclair (5th Cir. 2005) The disposable earning exemption found in LA. REV. STAT. ANN. section 13:3881(1)(a) does not protect wages once they have been deposited into a bank account. ___________________ In re AB Liquidating Corp. (9th Cir. 2005) A landlord is required to deduct the amount of security held under a lease with a debtor from the allowable claim for damages as a result of the debtor's bankruptcy. ___________________ In re SLI, Inc. (Bankr. DE 2005) The pendency of an appeal of the confirmation order precludes the closing of a bankruptcy case.

UAL v. HSBC Bank

United Airlines v. HSBC Bank, No. 04-4203 (7th Cir. July 26, 2005) In a bankruptcy action concerning United Airlines, plaintiff-airline's complex transactions to obtain money to build or improve premises at airports is a secured loan and not a lease for the purpose of Section 365.

2nd Circuit

In Re: Metromedia Fiber Network, Inc. (07/21/05 - No. 04-2112)

A nondebtor release in a plan of reorganization should not be approved absent the finding that truly unusual circumstances render the release terms important to success of the plan.

5th Circuit

Hodge v. Sinclair (07/19/05 - No. 04-30947)

The disposable earning exemption found in LA. REV. STAT. ANN. section 13:3881(1)(a) does not protect wages once they have been deposited into a bank account.

6th Circuit

Bank of Montreal v. Am. HomePatient, Inc. (07/11/05 - No. 04-5771)

The bankruptcy court's determination of the amount of damages resulting from defendant-debtor's rejection of an executory contract during chapter 11 reorganization is affirmed over plaintiff's challenge to the court's adoption of defendant's expert's opinion testimony.

Mickowski v. Visi-Trak Worldwide (07/13/05 - No. 04-3889)

Defendant, which purchased the remaining assets of a bankrupt corporation, cannot be held liable as a successor to the corporation's liability for an unpaid patent judgment under Ohio law.

8th Circuit

Peltz v. Edward Vancil, Inc. (07/13/05 - No. 05-6006)

In a preference action to recover a payment made within 90 days prior to a bankruptcy filing, judgment in favor of plaintiff is reversed where the bankruptcy court erred when it found that the payment was on account of an antecedent debt.

Smith v. Am. Airlines (07/18/05 - No. 04-1405, 04-1757)

In an employment dispute, dismissal of plaintiff's suit under the Railway Labor Act is affirmed over her claim that the transition collective bargaining agreement gave her a right to post-acquisition employment with defendant-employer.

Williams v. Wells Fargo Fin. (07/21/05 - No. 05-6003)

Plaintiff-trustee's complaint to avoid a lien should have been granted where the deed and acknowledgement in issue did not comply with Mississippi law and were not sufficient to provide notice of the defendants' interest in a debtor's property.

Jacobus v. Binns (07/21/05 - No. 05-6008)

In a bankruptcy action, summary judgment in favor of plaintiff is reversed where the district court improperly found that a state court default judgment was entitled to collateral estoppel effect.

9th Circuit

Pilate v. Burrell (07/11/05 - No. 02-16466)

Plaintiff's claims for denial of discharge of debt were rendered moot when the bankruptcy court denied discharge on other grounds while plaintiff's appeal was pending before the district court.

AMB Prop. v. Official Creditors (07/19/05 - No. 03-16979)

A landlord is required to deduct the amount of security held under a lease with a debtor from the allowable claim for damages as a result of the debtor's bankruptcy.

10th Circuit

In re: Lang (07/11/05 - No. 04-4064)

In a bankruptcy action, the failure to comply with the deadline for the filing of a notice of appeal due to the press of other business does not constitute excusable neglect.

11th Circuit

Cadle Co. v. Martinez (07/13/05 - No. 04-11760)

A prevailing debtor in a dischargeability action brought by his creditor can recover his attorney's fees and costs incurred in those dischargeability proceedings if recovery of such are due under an enforceable contractual right provided for by state law.

Out of the frying pan and ...

Brave new world for credit counselors

By: Jim Lovel, Atlanta

The National Foundation for Credit Counseling (NFCC) has hired a PR firm to create a national print campaign scheduled to launch in September and television spots set to begin early next year. ___________________________ UST begins process of approving credit counselors

The United States Trustee Program announced today that on July 5, 2005 it will begin accepting applications for approval as a budget and credit counseling agency or provider of a financial management instructional course for bankruptcy filers, as defined in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Application forms and related materials are posted on the Program's web site at www.usdoj.gov/ust. For additional information, applicants may contact the Program at (202) 514-4100. The Program, which has 21 regions and 95 field offices, does not cover Alabama or North Carolina.

Under the new law, enacted April 20, 2005, all individual debtors the file on or after October 17, 2005 must undergo credit counseling within 6 months and complete a financial management instructional course after filing. With certain exceptions, an individual is not eligible to file bankruptcy without completing credit counseling, and is not eligible to receive a discharge without completing a financial management instructional course.

The new law directs the U.S. Trustee to approve budget and credit counseling agencies and providers of financial management instructional courses according to its criteria. It also directs the Clerk of the Bankruptcy Court to maintain a publicly available list of U.S. Trustee-approved budget and credit counseling agencies and financial management instructional courses.

Your Post-4th of July Case Roundup

3rd Circuit

Sovereign Bank v. Schwab (07/06/05 - No. 03-4625)

In mortgage foreclosure action against bankrupt owners of rental properties, bankruptcy court's order requiring plaintiff-bank to turn over rents to the estate is reversed where those rents were not property of etate to begin with.

4th Circuit

Logan v. JKV Real Estate Serv. (07/06/05 - No. 04-1643)

Bankruptcy court erred when it determined that trustee, assignee of certain creditors, did not have standing to sue to recover damages caused to those creditors by the debtor's alleged co-conspirators. Trustee had standing.

5th Circuit

Baker Hughes Oilfield Operations, Inc. v. Cage (07/07/05 - No. 04-20807)

Trustee may avoid debtor's transfer of funds that constituted preferential payment of a pre-existing debt avoidable under 547(b).

8th Circuit

In re Bock Transp. Inc. (07/05/05 - No. 04-6082)

Bankruptcy court did not abuse its discretion when it denied debtor's motion to dismiss his involuntary Chapter 7 petition.

The High Cost of Bankruptcy

S.P. Dinnenregister Business Writer June 23, 2005

'I'm not so sure where people are going to get the money' to pay the expenses, a lawyer says. It will soon cost more money to go broke. An overhaul of federal bankruptcy laws has lawyers and court personnel trying to figure out how much extra time they'll need to shepherd a debt reorganization or liquidation plan through bankruptcy courts. Estimates from bankruptcy lawyers range from a few hours to as much as a 50 percent jump in the amount of time they allot to an individual case. And since time is money, that means clients will pay higher fees. "Oh, yes, definitely," said John Meyer, a West Des Moines lawyer, when asked whether his fees will rise. He hasn't yet released a pricing schedule for the bankruptcy law that takes effect on Oct. 17, but estimated he might spend half again as much time with clients. "I can't afford to give my time away," he said.

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In re Ruehle (6th Cir 2005)

An order discharging plaintiff-debtor's student loans is vacated where the discharge had been obtained in violation of the creditor's substantial due process rights and is illegal and void.

In re Spearing Tool and Manufacturing Co., Inc. (6th Cir. 2005)

The United States, as an involuntary creditor of delinquent taxpayers, is entitled to special priority over voluntary creditors.

In re Big Mac Marine, Inc. (8th Cir. BAP 2005)

The bankruptcy court did not err in denying the employment application of an attorney for a debtor where the attorney had been approved to represent the debtor in another pending case in the same district.

In re Atlantic Gulf Communities Corp. (DE Bankr. 2005)

Bankruptcy court is not required to affirmatively determine that the bankruptcy estate owns property that is sold pursuant to section 363. Where the estate requests permission to convey disputed property by quit claim deed, the sale can be approved under section 363. Litigation rights can be transferred in a 363 sale.

JP Morgan Chase Bank v. Altos Hornos de Mexico (06/22/05 - No. 04-0450)

In a bankruptcy proceeding, the district court properly abstained from exercising its jurisdiction over plaintiff's claim on the grounds of international comity.

Hall v. Chrysler Credit Corp. (06/22/05 - No. 04-2374, 04-2458)

A creditor is entitled to offset preference payments through the extension of new value to the debtor so long as the debtor does not make an otherwise unavoidable transfer on account of the new value.

Ruehle v. Educ. Credit Mgmt. Corp. (06/23/05 - No. 04-3525)

An order discharging plaintiff-debtor's student loans is vacated where the discharge had been obtained in violation of the creditor's substantial due process rights and is illegal and void.

In Re: Made in Detroit, Inc. (07/01/05 - No. 04-1431, 04-1517)

Plaintiff-debtor's appeal of the bankruptcy court's decision confirming a Liquidation Plan of Reorganization is statutorily moot since the property at issue was sold to a good-faith purchaser.

In the Matter of: UAL Corp. (06/21/05 - No. 04-4128)

In a bankruptcy action, an injunction which blocks the sale of shares by United Airlines' Employee Stock Ownership Plan (ESOP), or any of the investors whose stock came through the ESOP, is vacated.

Muegler v. Bening (06/24/05 - No. 03-15259)

Plaintiff, found guilty in federal district court for committing intentional fraud under Missouri law, is collaterally estopped from challenging the fraud ruling in bankruptcy court.

Jaurdon v. Cricket Communications, Inc. (06/21/05 - No. 02-5127)

Plaintiffs' appeal of the dismissal of their Title VII action is dismissed since defendant-employer filed for Chapter 11 protection while the appeal was pending, and provided the requisite notice to plaintiffs in a timely manner.

In Re: Alderete (06/30/05 - No. 04-2109)

Plaintiffs' student loan debt is reinstated where the bankruptcy court properly determined that their student loans did not impose an "undue hardship" as required by 11 U.S.C. Section 523 (a)(8), and in the absence of such a finding, lacked the power to grant a partial discharge.

Baillie Lumber Co. v. Thompson (06/23/05 - No. 03-15932)

Question of whether a corporate entity in bankruptcy may bring an alter ego action against its former principle is certified to the Supreme Court of Georgia. Roos v. Red (06/28/05 - No. B173506)

In a wrongful death action, the district court did not err when it gave a bankruptcy court's findings collateral estoppel effect.