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.

=====================================================================================DISCHARGE

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.