(Bankr. W.D. Ky. Nov. 20, 2015)
The bankruptcy court grants the defendant’s motion to dismiss the adversary proceeding because it lacks jurisdiction over the claim asserted. The debtor listed the claim in his schedules, but the trustee effectively abandoned the claim upon filing his report of no distribution. The debtor then filed the adversary proceeding. The court finds that there is no “related to” jurisdiction because the claim was abandoned, outside the estate, and owned by the debtor. Opinion below.
2015-11-20 – sturgeon v hart county finance
Author: Matt Lindblom
(U.S. Sup. Ct. May 26, 2015)
The Supreme Court holds that certain claims entitled to Article III adjudication (i.e. Stern claims) may be decided by bankruptcy judges when the parties knowingly and voluntarily consent to such adjudication. Such consent does not have to be express. Here, the creditor filed a non-dischargeability complaint that included a count requesting a declaratory judgment that a trust was the alter-ego of the debtor. The bankruptcy court entered judgment against the debtor on that count (as well as the non-dischargeability counts). The debtor’s answer conceded that the action was a core proceeding and requested judgment in his favor on all counts. The Supreme Court remands to the Seventh Circuit to decide whether the debtor gave the requisite knowing and voluntary consent to entry of the final judgment by the bankruptcy court. Opinion below.
2015-05-26 – wellness international network v sharif
Author: Matt Lindblom
(U.S. Sup. Ct. May 4, 2015)
The Supreme Court holds that an order denying confirmation of a Chapter 13 plan is not a final order that the debtor can immediately appeal. The debtor submitted a Chapter 13 plan that split the mortgage holder’s claim into a secured claim and an unsecured claim. The debtor proposed to pay only a small portion of the unsecured claim and to pay the secured claim in full but long after the plan period. The bankruptcy court declined confirmation, and the debtor appealed to the BAP for the First Circuit. The BAP first ruled that it was not a final order but then nevertheless reviewed the interlocutory appeal under 28 U.S.C. § 158(a)(1). The BAP affirmed. The debtor then sought review in the Court of Appeals, which recognized there was a split among the circuits on the issue of whether an order denying confirmation was a final appealable order. It ultimately sided with the majority. The court dismissed for lack of jurisdiction because it was not a final order from the bankruptcy court and the BAP had not certified the appeal. The debtor then appealed to the Supreme Court. The Court holds that an order denying confirmation is not a final order subject to appeal, as there is no conclusion to a “proceeding” at that point. The debtor can submit a revised plan and the status quo remains the same in the interim. On the other hand a dismissal following denial of confirmation or confirmation itself does alter the status quo and thus concludes the “proceeding.” Opinion below.
2015-05-04 – bullard v blue hills bank
Author: Matt Lindblom
(6th Cir. B.A.P. Jan. 21, 2015)
The Sixth Circuit B.A.P. denies the appellee’s motion to dismiss the appeal. The bankruptcy court entered an order sanctioning the debtor’s attorney but reserving the issue of the amount of the monetary sanctions. The attorney filed a notice of appeal of this first order. The bankruptcy court then entered two orders setting the sanction amount. The attorney then filed a corrected notice of appeal to include these two orders outside the normal 14-day appeal notice period. The appellee argued that the first notice was deficient because the first order was not final and appealable and the second notice was filed too long after the second set of orders. The court holds that the first order was not final, but the corrected notice of appeal was sufficient and timely. The second set of orders did not satisfy Rule 58 (incorporated by Bankruptcy Rule 7058) in that they were not set out in a “separate document,” and thus the attorney had an additional 150 days in which to file a notice of appeal of those orders. Opinion below.
2015-01-21 – church joint venture v montedonico
Author: Matt Lindblom
(7th Cir. Jan. 9, 2015)
The Seventh Circuit reverses the bankruptcy court’s decision declining to award fees to the attorney for the unsecured creditors committee. The bankruptcy court dismissed the chapter 11 prior to reorganization. The attorney then sought an order from the bankruptcy court holding the debtor liable for the attorney fees. The bankruptcy court declined to enter the order, reasoning that it could no longer grant the relief because the case had been dismissed and there were no assets in the bankruptcy estate. The Seventh Circuit holds that the bankruptcy court does have jurisdiction to resolve this issue and that it should have entered the order holding the debtor liable for the fees. The attorney could then enforce the order through other legal proceedings. Opinion below.
2015-01-09 – in re sweports
(Bankr. W.D. Ky. Dec. 17, 2014)
The bankruptcy court dismisses the lien avoidance action for lack of jurisdiction. The defendant obtained an order abandoning the trustee’s interest in and granting stay relief with respect to the debtors’ manufactured home on which the defendant claimed a lien. The debtors then filed the adversary proceeding, seeking to avoid the lien for failure to properly perfect the lien, and filed a motion to reconsider the court’s order granting stay relief. The court granted the motion to reconsider, leaving the stay in place pending further orders of the court. The defendant moved to dismiss the adversary proceeding, arguing the debtors did not have standing to pursue the avoidance action. The court granted the motion, but did so on the basis that it had ordered the trustee’s interest in the property abandoned. Thus, because the property was abandoned and no longer property of the estate, the court had no jurisdiction over it. Opinion below.
2014-12-17 – robinson v manufactured housing contract
(6th Cir. Dec. 10, 2014)
The Sixth Circuit dismisses the appeal from the Bankruptcy Appellate Panel (“BAP”) for lack of subject matter jurisdiction. The bankruptcy court ruled in the nondischargeability adversary proceeding that the creditor’s claims were dischargeable, and the creditor appealed to the BAP. The BAP reversed, holding that the bankruptcy court incorrectly applied 11 U.S.C. § 523, and remanded for further proceedings on damages. The debtor then appealed to the Sixth Circuit. The court recognizes that it only has jurisdiction to consider final orders from the BAP. The BAP’s order was not final, as it remanded to the bankruptcy court to consider further evidence. Opinion below.
2014-12-10 – kraus anderson v bradley
(6th Cir. B.A.P. Dec. 10, 2014)
The Sixth Circuit B.A.P. affirms the bankruptcy court’s denial of the motion to enforce an order approving compromise of claims in this Chapter 7 bankruptcy. The movants were the debtor’s principal and the new entity that held property owned by the debtor entity prepetition. Before the bankruptcy, the respondents had instituted successor liability and fraudulent transfer claims against the movants in state court. During the bankruptcy, the trustee settled the estate’s claims against the movants, which settlement was approved by the bankruptcy court. After the bankruptcy was concluded, the respondents reactivated the state court litigation. The movants then filed their motion with the bankruptcy court, seeking to enjoin the prosecution of the state court litigation based on res judicata. The Sixth Circuit B.A.P. holds that the bankruptcy court appropriately denied the motion for lack of subject matter jurisdiction. The state court litigation was not directed at the debtor or the debtor’s estate and would have no impact on the estate. While the trustee could have brought the claims while the bankruptcy was pending, after it was closed, the respondents could proceed with the claims. 11 U.S.C. § 105(a) and the Anti-Injunction Act also did not permit the bankruptcy to grant the requested relief. Opinion below.
2014-12-10 – in re ec morris corp
(Sixth Circuit Nov. 26, 2014)
The Sixth Circuit affirms the bankruptcy court’s disallowance of the creditor’s claim. The creditor filed a proof of claim in response to the individual chapter 11 debtor’s adversary proceeding against him. The proof of claim asserted a claim against the estate based on the debtor’s alleged violation of Florida securities laws. The creditor argued on appeal that the bankruptcy court did not have the authority to rule on his claim because it was a non-core issue. The Sixth Circuit disagrees, holding that the bankruptcy court’s ruling in the adversary proceeding was essentially a ruling on the allowance or disallowance of a claim against the estate, which is a core issue as set forth in 28 U.S.C. § 157(b)(2). Thus, the bankruptcy court properly ruled on the claim in the adversary proceeding. The Sixth Circuit also agreed with the bankruptcy court’s finding that the debtor had not violated Florida securities laws. Opinion below.
2014-11-26 – in re bavelis
(Bankr. E.D. Ky. Oct. 21, 2014)
The Sixth Circuit had determined that the bankruptcy court lacked jurisdiction over the adversary complaint. That determination was the result of an appeal of one of two judgments entered in the adversary proceeding. The bankruptcy court, in what appears to be a case of first impression, concludes that the judgment that was not appealed should stand because there was an arguable basis for jurisdiction at the time it was entered as to some of the counts. The court sets aside its judgment as to the counts for which it did not have an arguable basis for jurisdiction. The lengthy opinion (48 pages) is below.
2014-10-21 – in re alma energy llc