Ran into a friend of mine at a party over the weekend who does appearances at chapter 7 341’s. He said he’s appearing on bunches of cases for lawyers none of us have ever heard of, i.e., “newbys.” He said every day he gets a few clients that think their unsecured seconds are going to be stripped in the chapter 7. Peter Lively and Jim King I know are trying to find a case that they can try to strip the second, arguing that Dewsnup doesn’t apply to completely unsecured liens. I believe a case in Florida recently went that direction. But it hasn’t happened yet here.
Does a Chapter 13 Debtor have the Absolute Right to Separately Classify “Codebtor Consumer Claims”? We don’t know says the 9th Circuit BAP
Meyer v. Renteria (In re Renteria), — B.R. — (9th Cir. BAP May, 2012)
Issue: May a chapter 13 plan, that pays a “codebtor consumer debt” in full and other unsecured creditors 9%, be confirmed without considering whether the discrimination is reasonable?
Holding: Yes, but only on these facts where the trustee conceded that the plan was filed in good faith.
Judge Richard Lee, Eastern District of California
Opinion by Markell, concurring opinions by Pappas and Dunn
The “majority” opinion said that it appears that there is an absolute right to separately classify “codebtor consumer claims” and pay that claim in full and other unsecured creditors a nominal amount. The majority did not reach the ultimate issue because the trustee conceded that the plan was filed in good faith. One concurring opinion said categorically there is no absolute right; the other said categorically there is an absolute right.
Bankruptcy Filings in Central District in May Increase Slightly over April
| Central District of California | ||||||||
| 2008 | 2009 | 2010 | % | 2011 | 2012 | |||
| Jan | 3,694 | 6,004 | 9,013 | 50% | 10,868 | 21% | 8,835 | -19% |
| Feb | 3,787 | 6,971 | 9,659 | 39% | 10,631 | 10% | 9,307 | -12% |
| March | 4,381 | 8,529 | 12,840 | 51% | 13,543 | 5% | 10,108 | -25% |
| April | 5,023 | 8,512 | 12,114 | 42% | 12,087 | 0% | 9,034 | -25% |
| May | 5,177 | 8,967 | 11,906 | 33% | 11,669 | -2% | 9,620 | -18% |
| June | 5,351 | 9,595 | 12,190 | 27% | 11,718 | -4% | ||
| July | 5,983 | 9,894 | 12,737 | 29% | 10,418 | -18% | ||
| Aug | 6,195 | 9,748 | 12,720 | 30% | 11,496 | -10% | ||
| Sept | 6,290 | 9,214 | 12,412 | 35% | 10,006 | -19% | ||
| Oct | 6,364 | 10,322 | 11,753 | 14% | 9,887 | -16% | ||
| Nov | 6,029 | 9,462 | 10,900 | 15% | 9,099 | -17% | ||
| Dec | 6,615 | 9,864 | 10,925 | 11% | 9,089 | -17% | ||
| 64,889 | 107,082 | 139,169 | 30% | 130,511 | -6% | |||
| % of total | 0.059 | 0.075 | 0.089 | 0.095 | ||||
Bankruptcy Filings Hold Steady in May, 2012
| 2007 | 2008 | 2009 | 2010 | % | 2011 | % | 2012 | ||
| Jan | 55,200 | 70,300 | 89,000 | 102,600 | 15% | 102,200 | 0% | 87,900 | -14% |
| Feb | 58,800 | 79,500 | 102,000 | 117,800 | 15% | 109,600 | -7% | 104,400 | -5% |
| March | 73,100 | 90,400 | 131,000 | 159,200 | 22% | 146,400 | -8% | 122,100 | -17% |
| April | 67,800 | 93,200 | 128,700 | 146,200 | 14% | 129,800 | -11% | 108,900 | -16% |
| May | 69,900 | 89,700 | 120,400 | 133,500 | 11% | 122,800 | -8% | 109,300 | -11% |
| June | 67,300 | 89,900 | 124,800 | 133,850 | 7% | 120,700 | -10% | ||
| July | 69,100 | 96,400 | 130,500 | 134,600 | 3% | 110,200 | -18% | ||
| Aug | 77,100 | 94,300 | 120,000 | 135,600 | 13% | 120,900 | -11% | ||
| Sept | 67,500 | 96,200 | 125,500 | 134,000 | 7% | 110,400 | -18% | ||
| Oct | 81,200 | 108,900 | 130,200 | 129,700 | 0% | 111,500 | -14% | ||
| Nov | 74,200 | 91,400 | 115,500 | 118,100 | 2% | 98,500 | -17% | ||
| Dec | 65,900 | 95,900 | 117,000 | 114,700 | -2% | 96,500 | -16% | ||
| 827,100 | 1,096,100 | 1,434,600 | 1,559,850 | 9% | 1,379,500 | -12% |
Prof. Katie Porter to Speak at cdcbaa Program June 23, 2012
Next cdcbaa MCLE Program is sure to be a hit:
*Bankruptcy Mythbusters* *June 23, 2012*
*Southwestern Law School – 3050 Wilshire Boulevard – Westmoreland Building – 3rd Floor*
Panelist: Katherine Porter, A UC Irvine Law Professor.
General Meeting: 10:30am, CLE 11:00am-1:00pm
Many of you may know Prof. Porter as a UC Irvine Law Professor who was recently named by Attorney General Kamala Harris to serve as monitor of the mortgage settlement between California and five of the nation’s largest banks. She is a nationally recognized expert in commercial and consumer law, has written several research articles taking aim at the banks and loan servicers for their [okay I’ll say it] FRAUD. She is well versed in the mortgage crisis from a consumer perspective. Prof. Katie Porter CV
On October 15, 2011 Prof. Porter presented her Bankruptcy Mythbusters program at the National Conference of Bankruptcy Judges and received great reviews by some of our own judges and was mentioned in this blog article: National Conference of Bankruptcy Judges–10/15/2011 Mythbusters, by Stephen Sather. This article is only a glimpse of what’s to come at our event. This should be very enlightening.
She has a book, Broke: How Debt Bankrupts the Middle Class by Stanford Press, 2012. Those of us that read and/or write blogs know her contributions to Credit Slips blog as a co-founder and contributor.
By clicking on any of the links provided herein you will find plenty of information regarding her contributions to consumers, her country and our practice. We are certainly privileged to have her as our guest for our next MCLE event.
See you all there!
— Christine A. Wilton, Esq. Law Office of Christine A. Wilton
GMAC Mortgage Sale Pleadings
You can access the sale pleadings here. The motion is 330 pages and will tell you more than you ever wanted to know about this business and includes the actual Asset Purchase Agreements. The hearing on the proposed sale is June 18, 2012. If you would like to bid on the assets, you have until September 14 to do so. The proposed breakup fee to the “stalking horse” Nationstar is $72 million.
Attorneys Fees Gone Amuck
What can I say? Ted Olsen, partner at Gibson, Dunn & Crutcher, known for his part in the Bush v. Gore fiasco in 2000, and for his part in the Perry – same sex marriage case in California – and Prop 8 – is billing $1,800 per hour for his part in a chapter 11 case. As Jacqueline Palank writes in the WSJ Bankruptcy Blog:
Bankruptcy attorneys, as we’ve noted, also belong to the exclusive but growing $1,000-or-more club, although their presence is somewhat more controversial given the distressed companies they’re representing. Bankruptcy tends to be where we encounter top-dollar fees—like Theodore Olson’s stunning $1,800 hourly rate in the LightSquared Chapter 11 case—because they’re subject to a federal judge’s approval and therefore are easily visible in publicly filed court papers.
According to the same article, there are now some 700 or so partners who bill $1,000 per hour or more in bankruptcy cases.
Bye-Bye Blackberry?!? What is a bankruptcy professional to do?
iPhone or Android Time?
Research in Motion, maker of the blackberry is struggling and could be sold. Get the story here.
Aram Ordubegian @BK_law
Corporate Fraud is Discharged in Chapter 11
I found out the hard way that corporate fraud is discharged in chapter 11 (provided of course that a plan is confirmed that is not a liquidating plan). I say the hard way because I advised Judge Wayne Johnson recently that I was going to file a non-dischargeability complaint in the corporate chapter 11 and he said something like, “you can’t do that,” and I responded something like, “Oh yes I can.” He then read me sections 523 and 1141 and I backed off and promised to review the code before filing anything. The issue came up last week when someone posted the same question on a listserve and Prof. Mark Scarberry from Pepperdine responded explaining the reasoning behind the rule.
Mark wrote:
Section 523(a) applies, by its terms, only to debtors who are individuals (flesh-and-blood human beings). Section 523(a) refers to section 1141 and thus applies to chapter 11 discharges of individuals. Section 1141(d)(2) confirms that result by providing that the chapter 11 discharge does not discharge an individual debtor from debts that are excepted from the discharge by section 523.
Section 727 applies only in chapter 7 cases. See section 103(b). (Note that the exceptions from discharge in section 523(a) are irrelevant in a chapter 7 case where the debtor is not an individual, because section 727(a)(1) prevents any such non-individual debtor from receiving a chapter 7 discharge.)
Here is my best understanding of the policy behind the non-applicability of section 523(a) to non-individual chapter 11 cases.
M. Jonathan Hayes Books
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