The Bankruptcy Appellate Panel for the Tenth Circuit found that the bankruptcy court erred when it declined to exercise its exclusive jurisdiction to determine whether state causes of action raised by investors in the debtor’s pre-bankruptcy Ponzi scheme belonged to the Debtor’s bankruptcy estate: an issue which the panel found was “central to whether the investors had standing to pursue those claims and whether they violated the discharge injunction” by doing so. Hafen v. Adams (In re Hafen), No. 19-31 (B.A.P. 10th Cir. July 30, 2020). [Read more…] about Standing to Bring Claims in State Court Relating to Estate Property
9th Circuit Equates Lease Assumption with Waiver of Discharge
The Ninth Circuit found that a debtor who assumes a lease under Section 365(p) of the Bankruptcy Code waives her right to discharge of debt arising out of that lease. Bobka v. Toyota Motor Credit Corp., No. 18-55688 (9th Cir. Aug. 3, 2020).
The debtor filed her chapter 7 petition in 2016. She had an ongoing lease with Toyota Motor Credit on her Toyota Rav4. The trustee opted not to assume the lease. In September 2016, the debtor called Toyota about keeping the vehicle. Toyota agreed and sent her and her attorney a lease assumption agreement. She did not return the agreement until December 5, well more than 30 days after she orally told Toyota she wanted to keep the vehicle. The next day, the debtor received her bankruptcy discharge. [Read more…] about 9th Circuit Equates Lease Assumption with Waiver of Discharge
Great Decision on Judicial Estoppel
In a lengthy decision addressing a challenge to its order reopening the debtor’s chapter 13 case, a Bankruptcy Court for the District of South Carolina found that the debtor had no duty under the Bankruptcy Code or Rules to disclose a lawsuit that accrued and was filed post-confirmation. In the face of a judicial estoppel defense raised by the Defendants in the debtor’s state personal injury lawsuit, the court stated, “[w]ithout such a duty or knowledge that one existed, Debtor cannot be found to have acted intentionally to mislead this Court.” In re Boyd, No. 13-2924 (Bankr. S.C. July 17, 2020). [Read more…] about Great Decision on Judicial Estoppel
Lienholder May Seek Value for Post-Discharge Release of Lien
The discharge injunction does not prohibit a lienholder from seeking value for release of its lien so long as, under the specific facts of the case, its conduct is not an improper attempt to coerce repayment of the discharged debt. Bentley v. OneMain Financial Group, No. 19-8026 (B.A.P. 6th Cir. July 8, 2020). [Read more…] about Lienholder May Seek Value for Post-Discharge Release of Lien
Debtor’s Service of Objection to the IRS’s Proof of Claim was Proper
The bankruptcy court had personal jurisdiction over the IRS when the debtor mailed a copy of his objection to the address given with the proof of claim in accordance with Rule 3007, rather than serving the IRS through the Attorney General as required for contested motions under Rules 9014 and 7004. Nicolaus v. United States, No. 19-1155 (8th Cir. July 6, 2020). [Read more…] about Debtor’s Service of Objection to the IRS’s Proof of Claim was Proper
“Good Reason” Required to Not Revest Property in Debtor after Plan Confirmation
Finding that “[a] bankruptcy court may confirm a plan that holds property in the estate only after finding good case-specific reasons for that action,” and signaling exasperation with the whole topic, Judge Easterbrook of the Seventh Circuit reversed the bankruptcy court’s order of confirmation of the debtors’ plan in which they opted not to have their vehicles revest in themselves post-confirmation. Cherry v. City of Chicago, No. 19-1558 (7th Cir. July 6, 2020). [Read more…] about “Good Reason” Required to Not Revest Property in Debtor after Plan Confirmation
Chapter 13 Plan Need not Be of Fixed Duration
In an important win for debtors, the Ninth Circuit held that “no express provision of Chapter 13, even when viewed in the context of its broader structure, prohibits plans with estimated lengths.” In re Sisk, No. 18-17445 (9th Cir. June 22, 2020) (reported below as In re Escarcega). In an opinion in which the circuit court adopted the bulk of the debtors’ arguments, the court reversed and vacated the BAP’s holding that the Bankruptcy Code imposes an implied temporal requirement on all initial Chapter 13 plans. [Read more…] about Chapter 13 Plan Need not Be of Fixed Duration
Bankruptcy Court May Not Limit Debtor’s Right to Modify as Condition of Confirmation
The Fifth Circuit held that the bankruptcy court improperly required a chapter 13 debtor to amend his plan to pledge 100% payment to unsecured creditors with no right to modify unless the modification likewise paid 100% or the debtor relinquished his right to discharge. Brown v. Viegelahn (In re Brown), No. 19-50177 (5th Cir. June 8, 2020). [Read more…] about Bankruptcy Court May Not Limit Debtor’s Right to Modify as Condition of Confirmation
Uncashed Retirement Loan Check Not Exempt
The debtor’s uncashed loan check from her retirement account was property of the estate and was not exempt under section 522(d)(12). Ostrander v. Brown (In re Brown), No. 19-24 (B.A.P. 1st Cir. May 21, 2020).
Prior to filing her bankruptcy petition, the debtor received, but did not cash, an $18,000 check representing a loan from her retirement account. The chapter 7 trustee sought turnover of the check. The bankruptcy court denied the turnover motion finding that, because the funds were from an exempt retirement account and the debtor had not yet cashed the check, the check was likewise exempt. [Read more…] about Uncashed Retirement Loan Check Not Exempt
Arbitration Clause Not Enforced in Discharge Violation Case
In the absence of intervening legislative or Supreme Court directive, the Second Circuit followed its precedent finding that a debtor could not be compelled to arbitrate his contempt motion for violation of the discharge injunction. Belton v. GE Capital Retail Bank, No. 19-648 (2d Cir. June 16, 2020) (consolidated with Bruce v. Citicorp Inc., No. 19-655). [Read more…] about Arbitration Clause Not Enforced in Discharge Violation Case