Merit Management Group, LP v. FTI Consulting, Inc.

(U.S. Sup. Ct. Feb. 27, 2018)

The Supreme Court holds that the safe harbor of 11 U.S.C. § 546(e) applies only to the transfer that is sought to be avoided, and is not applicable based solely on intermediary transfers. Section 546(e) exempts from a trustee’s avoidance powers certain types of transfers (e.g., settlement payments as defined in § 101) to certain protected parties, including financial institutions. If the transfer sought to be avoided is between two non-protected parties, the safe harbor does not apply, even if there is an intermediary or conduit party that is a protected party. Opinion below.

Justice: Sotomayor

2018-02-27 – merit management v. fti consulting

Author: Matt Lindblom

Spradlin v. Wrigley’s 7-711, Inc. (In re Licking River Mining, LLC)

(Bankr. E.D. Ky. June 21, 2017)

The bankruptcy court grants the defendant’s motion to dismiss the trustee’s complaint, which sought to avoid transfers from debtors to the defendant. The complaint failed to state a claim, in part because the defendant could not be deemed an “insider” of the debtor. The court additionally finds that the complaint contains insufficient facts to support various other claims. Opinion below.

Judge: Wise

Attorneys for Trustee: Bingham Greenbaum Doll LLP, Claude R. Bowles, Jr., Daniel J. Donnellon, James R. Irving, April A. Wimberg

Attorneys for Defendant: Stites & Harbison, PLLC, Brian H. Meldrum, Brian R. Pollock

2017-06-21 – in re licking river mining

Author: Matt Lindblom

Kendrick v. Rister (In re Rister)

(Bankr. E.D. Ky. May 18, 2017)

The bankruptcy court grants the defendant’s motion for judgment on the pleadings in this vehicle lien avoidance action. The debtor entered into a sale contract for purchase of the vehicle on the day before the petition was filed, but the certificate of title was not transferred to the debtor until after the petition was filed. Accordingly, the court finds that the vehicle is not property of the estate and the complaint should be dismissed. The court permits the trustee a period of time in which to file an amended complaint based on the trustee’s assertion that the estate may include rights under the sale contract. Opinion below.

Judge: Wise

Attorney for Trustee: Michael B. Baker

Attorneys for Defendants: Steiden Law Offices, Eric A. Steiden; Frost Brown Todd LLC, Paige Leigh Ellerman, Adam J. Webb; Aaron J. Nash; Patricia L. Johsnon

2017-05-18 – in re rister

Author: Matt Lindblom

In re McCoy

(6th Cir. B.A.P. Nov. 29, 2016)

The Sixth Circuit B.A.P. reverses the bankruptcy court’s order denying the debtor’s motion to reopen his Chapter 7 case. Four years after filing the bankruptcy and receiving a discharge, the debtor filed a motion to reopen his case to avoid judicial liens. No creditors objected. However, the bankruptcy court denied the motion based primarily on the delay in filing the motion. The B.A.P. holds that the mere passage of time does not necessarily cause prejudice to a creditor sufficient to bar reopening of a case. The bankruptcy court did not find prejudice and thus the motion should have been granted. Opinion below.

Judge: Harrison

Attorney for Debtor: Carlo A. Ciccone

2016-11-29-in-re-mccoy

Author: Matt Lindblom

Spradlin v. Khouri (In re Bruner)

(Bankr. E.D. Ky. Mar. 7, 2016)

The bankruptcy court grants the defendants’ motion to dismiss the trustee’s action to avoid the transfer of $50,000 to the defendant law firm. The trustee had previously brought an action seeking turnover of the funds and lost. That decision was appealed to the B.A.P. The bankruptcy court here holds that res judicata bars the avoidance action because the prior action resulted in a final decision on the merits, the current case was between the same parties, the issues in the current action were litigated or should have been litigated in the prior action, and there was an identify of the causes of action. Opinion below.

2016-03-07 – in re bruner

Author: Matt Lindblom

Lynn v. Pry

(S.D. Ind. Feb. 3, 2016)

The district court affirms the judgment of the bankruptcy court, avoiding the post-petition transfer of real property. The debtor’s father had transferred real estate to the debtor’s entity prior to the bankruptcy to avoid attachment by creditors. Post-petition, the debtor’s father recorded a deed transferring title back to himself. The father claimed that it was never his or the debtor’s intent for the debtor to have title to the property. The fact that title was transferred to avoid the father’s creditors was sufficient evidence of intent to transfer title, and thus the post-petition transfer from the estate was improper. Opinion below.

2016-02-03 – lynn v pry

Author: Matt Lindblom

Walro v. Lee (In re Lee)

(Bankr. S.D. Ind. June 16, 2015)

The bankruptcy court held that certain transfers of real property and shares of stock were fraudulent transfers. The debtor had transferred the property to his wife without receiving adequate consideration. The court orders that the trustee is entitled to recover title to the real property and a money judgment against the defendant. Opinion below.

2015-06-16 – walro v lee
2015-06-16 – walro v lee judgment

Author: Matt Lindblom

Brown v. Raygoza (In re Addington)

(Bankr. E.D. Ky. May 27, 2015)

The bankruptcy court holds that the debtor made a fraudulent transfer to his sister when he sold her $150,000 worth of mineral rights for $20,000 prepetition. The court discusses the evidence at trial that established the value of the mineral rights, and then awards to the trustee the value of the property transferred. Opinion below.

2015-05-27 – brown v raygoza

Author: Matt Lindblom

1756 W. Lake Street LLC v. American Chartered Bank

(7th Cir. May 15, 2015)

The Seventh Circuit affirms the order granting summary judgment to the defendant lender in the adversary proceeding. The debtor sought to avoid the lender’s affiliate’s recording of a deed following the debtor’s default on the loan. The debtor had agreed to place the deed in escrow in exchange for the lender forbearing on its right to foreclose on the property. When the debtor defaulted again, the deed was recorded. The debtor argued that the property was worth $1.7 million, while the loan balance was only $1.5 million. Thus, the debtor argued it did not receive reasonably equivalent value. The Court disagrees, finding the additional security served as consideration for forbearance. Opinion below.

2015-05-15 – 1756 w lake street llc v am chartered bank

Author: Matt Lindblom

Johnson v. Santander Consumer USA, Inc. (In re Bryant)

(Bankr. W.D. Ky. Dec. 8, 2014)

The bankruptcy court grants summary judgment in favor of the secured lender in this lien avoidance action. The lender’s lien was properly notated on the original vehicle title. The debtor then applied for a duplicate title, which listed “Santander Consumer,” rather than the lender’s full name, as a second lienholder. The new title incorrectly listed a bank as a first lienholder (there was no other lienholder). The original title was surrendered and then destroyed. The trustee sought to avoid the lien based on failure to perfect the lien. The court holds that the erroneous listing of the first lienholder only means that the lender’s lien was deemed the first lien. Further, the court holds that the shortened name was not seriously misleading, as the address and other information were accurate and would have led to the correct lienholder. Opinion below.

2014-12-08 – johnson v santander consumer