All posts in Chapter 11

When Appealing, First Seek a Stay (In re Mortgages)

By | November 19, 2014 | Appeals, Chapter 11, Chapter 13, Chapter 7 | No comments

When appealing an order, remember to put on your checklist to first seek a stay of the challenged order.  If not, the appellate court will regrettably inform you “there is nothing we can do for you now”.   That is what happened in In re Mortgages Ltd., — F.3d — (9th Cir. 2014).

In a recently published Ninth Circuit Opinion, the Court held that an appeal by a group of creditors was equitably moot because they never sought a stay of the order that they were appealing from.  The debtor had already acted, and other third parties would be unfairly harmed if the panel were to side with the creditor-appellants.  The Court said, “clawing back money from those investors who already paid their full allocation would be either impossible or inequitable.”

As such, the panel dismissed the appeal citing In re Thorpe, which held that appeals can be dismissed based on mootness when a “comprehensive change of circumstances” has occurred that makes it inequitable for a court to consider the appeal’s merits.  In re Thorpe Insulation Co., 677 F.3d 869 (9th Cir. 2012).

Full Opinion Here: http://cdn.ca9.uscourts.gov/datastore/opinions/2014/11/12/12-15234.pdf

Supreme Court To Revisit In Re Dewsnup To Decide On “Strip Off’s” (Bank of America v. Caulkett and Bank of America v. Toledo-Cardona)

By | November 18, 2014 | Cases, Chapter 11, Chapter 13, Chapter 7 | No comments

The Supreme Court will hear two consolidated cases to determine whether a Chapter 7 debtor may “strip off” an underwater mortgage.

From SCOTUSblog:

The Supreme Court, taking on a bankruptcy issue that grew out of the collapse of the U.S. housing market, agreed on Monday to sort out when a mortgage debt on a home that has lost its value can be completely wiped out.  At issue in a pair of cases is the so-called “strip off” in bankruptcy of a mortgage that is ranked lower than another loan when the mortgaged property is worth so little that it could not cover either debt.

The Court, in the consolidated cases of Bank of America v. Caulkett and Bank of America v. Toledo-Cardona, will be deciding whether a “strip off” of a mortgage is to be barred in the same way that a “strip down” already is, under a 1992 Supreme Court ruling (Dewsnup v. Timm).

Read more…

Lawyer Hit With Sanctions For Filing Frivolous Motion To Compel (In re Medina, Bankr. E.D. Cal.)

By | November 14, 2014 | Chapter 11, Chapter 13, Chapter 7 | No comments
A California bankruptcy judge has imposed a $500 sanction on an attorney for filing a frivolous  motion to compel his clients’ Chapter 13 trustee to close their case.  The motion included inaccurate facts, no supporting legal authority, and forced the trustee to waste time by filing an opposition. The judge determined that a $500 sanction was a “reasonable deterrent to encourage Gillis to investigate the facts of his cases, and to familiarize himself with applicable law, before he files any future motions” in Chapter 13 cases.

U.S. Trustee Proposes Rulemaking on Ch. 11 MOR’s, Deadline for Public Comments Jan. 9, 2015

By | November 11, 2014 | Chapter 11, Legislation, U.S. Trustee | No comments

U.S. Trustee Program is authorized under §602 of the BAPCPA to issue rules that require DIP’s in non-small business cases under chapter 11 to file uniform period reports.  Now, the USTP is seeking public comment on the proposed rule that was published in the Federal Register (see link below). The proposed rule only applies to non-small businesses.  As you might know, small business debtors are currently required to use Form 25C for their MOR’s. Deadline for public comments Jan. 9th 2015

Link to PDF of Proposed Rule: www.justice.gov/ust/eo/rules_regulations/docs/MOR_NPRM.PDF

Link to USTP’s site at www.justice.gov/ust/eo/rules_regulations/index.htm#proposed.

Debtors + Class Action: Stir Carefully

By | October 19, 2014 | Cases, Chapter 11, Chapter 13, Chapter 7, Courts | No comments

You remember the class action quartet, right? Numerosity, Commonality, Typicality,  and Adequacy of Representation.

The Supreme Court in Wal-Mart Stores, Inc. v. Dukes (2011) took issue with plaintiff’s lack of commonality with other members’ claims.

But much recently, the Hon. James Otero of our local U.S. District Court of the Central District, took issue with the last requirement – adequacy of representation. In Alakozai v. Chase Investment Services Corp. (Oct. 2014), the court denied certification of the class on the following grounds: (a) plaintiffs’ claims were not “typical” of other members, and (b) the plaintiffs could not “adequately represent” the class.

Sitting at the edge of your seat, you ask — why!? Simple, the plaintiffs failed to disclose their personal bankruptcy filings, and failed to mention their class action claim in their bankruptcy schedules. Tsk-Tsk-Tsk.

To summarize, the court found that plaintiffs who had a personal bankruptcy pending would have other priorities that would obscure their full attention to the class action case, and that the plaintiff’s right to sue in the class action belonged to the trustee not the debtor (since the Ninth Circuit has said in Cloud v. Northrop Grumman,  all causes of action that accrued before the filing were property of the estate).  As such, argued the U.S. District Court, it was not the plaintiff’s claim to begin with – rather the Trustee’s. So you can’t “adequately represent” the class, if you are not the representative at all.

The case stands for the proposition that a District Court, at least in Judge Otero’s courtroom, will deny certification if the named plaintiff(s) do not disclose their bankruptcy filings or fail to list the class action in their schedules.

Rule of thumb: fully vet your plaintiff’s in the class action, and disclose if plaintiff’s have filed bankruptcy. Failure of which is, in legal parlance, a “big no-no”.

 

Full opinion at http://www.employmentclassactionreport.com/wp-content/uploads/sites/232/2014/10/Alakozai.pdf

Getting Paid: SCOTUS To The Rescue

By | October 16, 2014 | Chapter 11, Chapter 13, Chapter 7 | No comments

Should you be paid for your services? ‘Absolutely!‘, you yell at the first person in front of you.

Should you get a bonus for the hard work you did on behalf of debtor’s estate, which allowed the estate to recoup a lot of assets? “Well of course…” you murmur under your breathe — “In Re Smith (2002) says so!”

Not so fast. The Supreme Court will answer the latter question by the end of the term. Submit those fee-apps quickly…just in case.

The Court will be tackling the issue of whether fees that resemble a form of bonus to the fee applicant, and costs incurred in defending that fee application should be compensable?

Ironically, on the fifth Tuesday in September – yes, fifth – the Court granted certiorari to the Fifth Circuit’s Baker Botts LLP v. Asarco LLC (“Asarco”), to answer this question.

The story unfolds like this — the law firm of Baker Botts represented Asarco during the company’s $1.7 billion bankruptcy settlement in 2009, which at the time was the largest environmental bankruptcy in U.S. history.

During the complicated case, Baker Botts did an exceptional job in recouping assets valued at nearly $7 billion via a successful fraudulent transfer litigation. Baker Botts submitted a $120 million fee application — plus a $4 million bonus to themselves for their hard work in recouping such assets for the estate.

I assume Baker Botts argued “‘but-for’ our hard work, the debtor’s estate would not have realized $7 billion of recouped assets”. While applauding the firm’s hard work, the bankruptcy judge agreed. The Debtor was livid at such a fee application, and vehemently objected. In defending its fee application, Baker Botts incurred an additional $5 million. Now, should Baker Botts be able to recoup this $5 million additional fee?  We will find out.

While the bankruptcy and district court approved the fees under §330 — the Fifth Circuit said not so fast.  The Fifth Circuit said those fees do not benefit the debtor’s estate nor are they necessary for the administration of the case — and as such, sorry Baker Botts, but you do not get those fees.

Baker Botts immediately filed a petition to the high court arguing that the Fifth Circuit’s decision conflicts with the Ninth Circuit’s (which allows the bankruptcy court discretion to award such fees under 330(a)).

Our Ninth Circuit, in In re Smith (2002), has said that fees stemming from those types of services that Baker Botts performed are “actual and necessary services”, and thus compensable. Phew.

Come June 2015, the circuit split shall be resolved, and we should finally find out how discretionary §330 can be.

 

 

For further information, please see the source: ABI World, In Asarco Case, by Valeria Morrison and John Farnum.

Link http://www.abiworld.org/e-news/AsarcoAnalysisArticle.pdf

 

11/4/2014 – Settlement Agreements: What You Need to Know for State and Bankruptcy Courts

By | October 8, 2014 | Bankruptcy Data, Chapter 11, Chapter 13, Chapter 7, Community, Courts, Programs, Specialist Information | No comments

Settlement Agreements: What You Need to Know for State and Bankruptcy Courts

Panel:
Hon. Julia W. Brand, U.S. Bankruptcy Court
Stella Havkin, Esq., Havkin & Shrago
Raymond H. Aver, Esq., Law Offices of Raymond H. Aver APC

Moderator:
Christian Cooper, Esq., Public Counsel

Date: Tuesday, November 4, 2014
Time: 9am to 12 pm
Location: Roybal Federal Building
255 E. Temple Street, Assembly Room 1268
Los Angeles, CA 90012

YOU MUST COMPLETE A TWO-HOUR PRO BONO COMMITMENT BEFORE ATTENDING THE PROGRAM

Read more…

Dean Chemerinsky Speaking on the Future of Bankruptcy Courts

By | September 11, 2014 | Bankruptcy Data, Chapter 11, Chapter 13, Chapter 7, Community, Courts, Current Events, Judges Corner | No comments

ORANGE COUNTY BAR ASSOCIATION
COMMERCIAL LAW & BANKRUPTCY SECTION

September Meeting
WEDNESDAY, September 24, 2014
11:45 a.m. to 1:30 p.m.
ONE TIME CHANGE IN DATE, TIME & LOCATION

Speaker:
Erwin Chemerinsky
Founding Dean, Distinguished Professor of Law
University of California Irvine, School of Law

Commentary and Questions:
Hon. Theodor C. Albert
U.S. Bankruptcy Court, Central District of California

Hon. Mark S. Wallace
U.S. Bankruptcy Court, Central District of California

Program Managers:
Richard Marshack, Esq.
Kelly Zinser, Esq.

Read more…

July 19, 2014 – CDCBAA – In re Bellingham

By | June 24, 2014 | Appeals, Bankruptcy Data, Case Briefs, Cases, Chapter 11, Community, Courts, Current Events, Programs, Specialist Information, Supreme Court | No comments

On July 19 the Central District Consumer Bankruptcy Attys (cdcbaa) will hold our First Annual James T. King Bankruptcy Symposium. The topic is In re Bellingham, the new Supreme Court case dealing with core/non-core distinctions and the power of Congress to give power to non-Article III Judges (as you all know).

The panel will be Judge Richard Paez who wrote the opinion for the 9th Circuit Court of Appeals that was appealed to the Supreme Court; Prof. John Pottow from the University of Michigan School of Law who argued the case successfully for the appellees at the Supreme Court. He is really a fun guy to listen to. And Judge Meredith Jury who sits on the BAP and follows these issues carefully. I will be the moderator and try to stay out of their way.

Besides Bellingham, there will be some discussion generally about appeals process. This is really an exceptional panel!

The program will be at Southwestern Law School on July 19 from 11am to 1pm and will be free to members of cdcbaa as always. We will permit non-members to attend for $95. We will invite the local judges as well.

ONE PROBLEM. The room holds only 130 persons and the law school is adamant that we not permit more than that many to attend.

So we are going to require RSVPs. There is a button on the cdcbaa website for the program to RSVP – www.bklawyers.org. We will cut it off when it gets to 130 persons. So please go to the website and RSVP if you want to attend. You can pay the $95 fee on that website as well. We will allow persons who have not been members of the cdcbaa for the past 3 years to join for the rest of the year 2014 now at the reduced price of $175.00 which includes the Ashland Dinner, this program and the two remaining programs for the year.

Our administrator is Linda Righi at cdcbaa@aol.com.

June 25, 2014 – Bankruptcy Program; San Fernando Valley Bar Association; the Metrocraft Program

By | June 23, 2014 | Bankruptcy Data, Chapter 11, Community, Programs, U.S. Trustee | No comments

One of the crucial points in a successful chapter 11 case, whether the debtor is a large business or a homeowner in chapter 11, is getting the court to approve the disclosure statement. The Central District has a form disclosure statement for practitioners to use so the process would seem to be simple. However, when one peruses the bankruptcy court tentative rulings, the judges constantly point out multiple deficiencies in the disclosure statements they are considering. The result? Attorneys have to incur the expense of re-doing deficient disclosure statements, losing time and having an unhappy client.

When judges review disclosure statements, they usually work from a list of factors culled together by a Georgia bankruptcy court some 30 years ago, In re Metrocraft. These factors help our judges determine if your client’s disclosure statement contains adequate information. The Bankruptcy Section has brought together Ron Bender, one of Southern California’s top attorneys in chapter 11 practice and Russell Clementson, one of the U.S. Trustee’s most experienced chapter 11 attorneys to talk about the Metrocraft factors, how the judges locally apply them and how the U.S. Trustee applies them. Any presentation including Ron Bender and Russell Clementson will have a lot of useful tips and guidance.

You should attend this program. The tips and guidance you will receive will improve your work product and will make your clients happier. The price is inexpensive, lunch is included and parking is free. No other bar association gives you so much for such little cost.

By the way, if you do not practice in chapter 11, perhaps you practice in chapter 7 or 13, the program is important for you. Learn what individual debtors in oversized chapter 11 cases (cases to big for chapter 13) go through so that you can better advise them.

If you are a creditor’s attorney, learn what the other side has to do and what you can do to protect your client’s rights.

Here are the particulars:
Date: Wednesday, June 25, 2014
Time: 12 noon to 1:15 p.m
Where: 5567 Reseda Boulevard, Suite 200, Tarzana, CA 91356

Cost:
Member $30.00
Non-Members $40.00
Member at Door $40.00
Non-Member at Door $50.00

Reservations: Contact Linda Temkin at the San Fernando Valley Bar Association
events@sfvba.org; Tel: 818-227-0490; Fax: 818-227-0499

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