Response to Prof. Scarberry re Reaffirmations

By | June 20, 2012 | Reaffirmations | 6 Comments

Hi Jon,

I read Mark’s summary.  I think that although we reach opposite conclusions, we don’t disagree on the analysis of the issue.

However, there is a long line of cases which I cited in my article that support the position that provided the debtor states an intention to reaffirm, cooperates with creditor in executing reaffirmation K, and attends reaffirmation agreement  then ride-though exists if the judge denies the agreement.

11 U.S.C. §§362(h)(1)(a), 521(a)(2)(A), 521(a)(2)(B),521(a)(6)(B), 521(d).  In re Perez, 2010 Bankr. LEXIS 2229, at *29 (Bankr. D. N.M. July 12, 2010) (The court held that §521(a)(2)(B) does not require the debtor toconsummate an enforceable reaffirmation agreement,since whether the agreement is enforceable depends on factors outside the debtor’s power or control, but only to do all that is within the power and control of the debtor.). See also In re Moustafi, 371 B.R. 434, 438 (Bankr. D. Ariz. 2007); In re Husain, 364 B.R. 211, 219 (Bankr. E.D. Va. 2007); In re Barron, 441 B.R. 131, 137 (Bankr. D. Ariz. 2010); In re Chim, 381 B.R. 191, 198 (Bankr. D. Md. 2008). In re Hardiman, 398 B.R. 161, 187 (E.D. N.C.2008) (The court held that since the debtor had alreadycomplied with §§362 and 521, the remaining language stating, “[n]othing in this title shall prevent or limit the operation of an [an ipso facto clause]” does not apply.); In re Perez, 2010 Bankr. LEXIS 2229, at 40.  The same analysis should be applied when reading the language used later in §521(d).

As for language in 521(d), the Hardiman case sets forth that this provision only applies when the debtor fails to do something required after the passage of BAPCPA which basically requires the debtor to:

1) State an intention to reaffirm 2) Cooperate with creditor in executing and sending reaffirmation agreement back to creditor (This may be something debtors and debtor’s counsel may want to document in case creditor tries to claim debtor did not do this); and 3) Attend the reaffirmation hearings.

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Planned Electrical Power Outage – Friday, June 22, 2012, 7:00 p.m. to 9:00 p.m.

By | June 19, 2012 | Court Clerk Information, Current Events | No comments

ATTENTION ALL ECF USERS:

On Friday, June 22, 2012 GSA will be shutting off electrical power to the Roybal Building in Los Angeles. As a result, the following systems will be down beginning at 7:00 p.m. and will not be available until approximately 9:00 p.m.

CM/ECF Live System
CM/ECF Training (not available to complete homework assignment)
LOU
VCIS
LA Archive

We apologize for any inconvenience this may cause.

Best regards,

ECF Help Desk
(213) 894-2365

CM/ECF Tips to Avoid Filing Errors

By | June 19, 2012 | Court Clerk Information, Current Events | No comments

ATTENTION ALL CM/ECF USERS Re: CM/ECF Tips to Avoid Filing Errors

Entering the Jury Demand when Opening an Adversary Complaint:

When Opening and Adversary Proceeding, the monetary value in the Jury Demand field must be rounded up to the nearest thousand. For example, a Jury Demand for $25,000.00 should be entered as 25 only. It is essential that this information is entered correctly so it is accurately reported to the Statistical Division of the Administrative Office (AO).

Was your Client’s Chapter 7 Case Closed Without a Discharge?

Avoid this situation by filing the Financial Management Certification (Official Form 23) within the required time of 60 days from the first day set for the meeting of creditors or after the 341(a) meeting. This will prevent the case from being closed without a discharge, avoid having to file a motion to reopen the case and paying reopening fees.

Read more…

Judge Maureen Tighe Works Tirelessly Against BPPs

By | June 19, 2012 | Judges Corner | 1 Comment

Here is an article from The Third Branch News hosted by the Administrative Office of the Federal Court.  According to a study a few years ago, only 3% of those who file in pro per are actually doing it themselves.  That percentage may be a little higher now that there are self-help desks at most of the branches.

Reaffirmation Discussion: Can the auto lender pick up the vehicle after the Court refuses to approve the reaffirmation? Prof. Scarberry thinks so.

By | June 15, 2012 | Current Events, Reaffirmations | 3 Comments

From a discussion from another listserve: (Remember Prof. Scarberry is brilliant but creditor oriented).

 

Looking for some suggestions.  We’re finding that most car lenders won’t repo and will accept tender of payments if debtors comply with all requirements of 362(h) and 521(a)(2) but the reaff is denied based on undue hardship.  One lender – San Diego County Credit Union – simply refuses tender of payment after the reaff is denied, and then picks up the car after discharge.

For those of you at NACBA in San Antonio less than two months ago, Bankruptcy Judge Eileen Hollowell of Arizona spoke on reaffs and “ride through”.  Her Moustafi opinion essentially allows ride-through in the above circumstances, and her form Order was included in the NACBA materials.  In her form order, she specifically orders the creditor to continue accepting payments.

Here’s where I get lost.  Last year, there was a San Diego County Credit Union case that went up to the BAP.  Judge Hollowell was on that BAP panel which held that:

…a creditor does not violate the Bankruptcy Code by refusing to accept payments tendered by a debtor. Additionally, we did not find any other federal law that may apply.

If 521(d) (which makes ipso facto default clauses unenforceable) is inapplicable in a case because debtors have fully complied with 362(h) and 521(a)(2), isn’t acceptance of tender implicit – even mandatory – in the terms of an otherwise enforceable contract?

I now have a debtor with a denied reaff, sufficient funds in my trust account from every post-petition refusal of tender, and a guaranteed repo in a few days when the discharge issues.

Gary Holt
San Diego

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Does RadLAX Opinion Help re Absolute Priority Rule in Individual Cases?

By | June 14, 2012 | Absolute Priority Rule, Chapter 11, Supreme Court | 1 Comment

A friend commented that the last paragraph of Justice Scalia’s opnion in RadLAX gives us a clue to how the Supremes may rule in Friedman, if the absolute priority rule issue in that case gets to the Supreme Court.  He is certainly right (again).  The code says what it says.

“The Bankruptcy Code standardizes an expansive (and sometimes unruly) area of law, and it is our obligation to interpret the Code clearly and predictably using well established principles of statutory construction.  See United States v. Ron Pair Enterprises, Inc., 489 U. S. 235–241 (1989).  Under that approach, this is an easy case.”

The previous paragraph states:

“[N]othing in the generalized statutory purpose of protecting secured creditors can overcome the specific manner of that protection which the text of §1129(b)(2)(A) contains.  As for pre-Code practices, they can be relevant to the interpretation of an ambiguous text, but we find no textual ambiguity here.  And the pros and cons of credit-bidding are for the consideration of Congress, not the courts.”

Supreme Court Affirms Bank’s Right to Credit Bid in RadLAX Hotel

By | June 14, 2012 | Case Briefs, Chapter 11, Supreme Court | No comments

RadLAX Gateway Hotel, LLC v. Amalgamated Bank, — U.S. —, — S.Ct. — (May, 2012)

Issue:  Where a debtor proposes to sell property of the estate as part of a chapter 11 plan, must the secured creditors be entitled to credit bid?

Holding:  Yes.

Justice Antonin Scalia for 8-0 court, Kennedy did not take part

This chapter 11 debtor owned a hotel valued at roughly $50 million.  Amalgamated Bank was the first priority lienholder and was owed approximately $120 million.  The debtor submitted a chapter 11 which proposed to sell the hotel for $55 million, subject to overbids.  The sale was to be free and clear of liens.  The plan provided that the bank would not be permitted to “credit bid” at the sale.  The debtor filed a Motion to Approve Sale at the same time.  The bank objected to both on the basis that it had the right to credit bid pursuant to section 1129(b)(2)(A)(ii).  The debtor argued that if the bank had no right to credit bid, it was more likely that there would actually be bidders which was good for everyone.   The debtor argued that it was required by section 1129(b)(2)(A)(iii) only to give the bank the indubitable equivalent of its claim and since the bank was to receive all of the net proceeds of the sale, that was the indubitable equivalent of its secured claim.  The bankruptcy court denied the motion.  The Seventh Circuit Court of Appeals affirmed.

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Word Version of LBR Order Forms Revised

By | June 13, 2012 | Court Clerk Information | No comments

ATTENTION RE: Word Version of LBR Order Forms Revised

The Court has updated all of the Word versions of its LBR (Local Bankruptcy Rule) order forms so that the forms are compatible with LOU and streamline processing for the Court. The forms have been posted on the Court’s website. Please begin using these modified LBR order forms immediately when lodging an order through LOU.

These order forms include the Proofs of Service of Document and Notice of Entered Order that became effective June 1, 2012. No other text on these order forms has been changed, nor have the form revision dates. The Court is currently updating its other LBR forms to be more compatible with CM/ECF and to include the new Proof of Service of Document and Notice of Entered Order. A notice will be sent when this project has been completed.

Any questions may be directed to the ECF Help Desk at: ECF_support@cacb.uscourts.gov.

Best regards,

ECF Help Desk
(213) 894-2365

Federal Bar Association — ANNUAL SUPREME COURT REVIEW with Edwin Chemerinsky

By | June 13, 2012 | Current Events, Programs | 3 Comments

Federal Bar Association – Los Angeles Chapter
ANNUAL SUPREME COURT REVIEW
September 27, 2012
Time: 12:00 p.m. – 1:30 p.m.
Registration: 11:30 a.m.

Featuring UCI Law School Dean Erwin Chemerinsky.
Also Featuring Annual Judge Barry Russell Scholarship Awards.

Location: The Biltmore Hotel, 506 S. Grand Ave., Los Angeles, CA
Cost: $75 (FBA Members), $50 (government employees/Clerks/Students) $90 (non members)
Group Registration Fees: FBA member table of 9 $650; Nonmember table of 9 $775 Federal judiciary receive complimentary admission.

View flyer here.

Amrane Cohen Has a Position Open for Staff Attorney

By | June 12, 2012 | Chapter 13, Firm Announcements | 1 Comment

Dear Colleagues!

The Chapter 13 Standing Trustee for Santa Ana (& Riverside cases for Judge Houle), Amrane Cohen, has a position open for a new Staff Attorney. If you are interested or you know someone that may be interested, he has indicated that:

you can send applications or cover letter to his e-mail address with a resume and your salary requirements.  His email address is: amrane@ch13ac.com

KEITH HIGGINBOTHAM
2012 cdcbaa President

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