BankruptcyProf Blog

Review of My Supreme Court Book on Bankruptcy Litigation Blog

Boy, to be included in the same anything with Ken Klee is probably the highlight of my career.  Steve Jakubowski of the Coleman Law Firm in Chicago has written a review of my book, Bankruptcy Jurisprudence from the Supreme Court.  You can access the review here.  The review is posted today on his exceptional blog - Bankruptcy Litigation Blog.  Steve reviews Ken Klee's new book on the Supreme Court as well as mine and opines that they would be good reading for Sonia Sotomayor.

My book is available on Amazon.  Let me know what you think.  JH   

Circuit Court of Appeals Cases from Last Week

6th Circuit Court of Appeals, July 06, 2009
QSI Holdings, Inc. v. Alford, --- F.3d ---, 2009 WL ---------------- (6th Cir 2009)(section 546(e) defense to fraudulent conveyance extends to the leveraged buyout at issue, involving privately held securities)

8th Circuit Court of Appeals, July 08, 2009
Educational Credit Mgmt. Corp. v. Jesperson, --- F.3d ---, 2009 WL ---------------- (8th Cir 2009)(debtor not entitled to an undue hardship student loan discharge as debtor is a recent law school graduate who is reasonably likely to be able to make significant debt repayments in the foreseeable future and qualified for the Department of Education's twenty-five year Income Contingent Repayment Plan)

9th Circuit Court of Appeals, July 10, 2009
Biltmore Assocs., LLC v. Twin City Fire Ins. Co., --- F.3d ---, 2009 WL ---------------- (9th Cir 2009)(In an action by former officers of the Debtor for indemnification in an underlying action for breach of fiduciary duty, the "insured versus insured" exclusion in the relevant policies barred coverage, because a post-bankruptcy debtor in possession acts in the same capacity as the pre-bankruptcy debtor for the purpose of directors and officers liability insurance)

11th Circuit Court of Appeals, July 10, 2009
Lawrence v. Goldberg, --- F.3d ---, 2009 WL ---------------- (6th Cir 2009)(where Plaintiff sued his creditors claiming they conspired to wrongfully enforce a turn over order issued by a Bankruptcy Court, complaint is dismissed where Plaintiff failed to obtain leave of the Bankruptcy Court before filing his complaint)

Thanks to Findlaw.com. 

Central District Filings up 7% in June

In June, 2009, the Central District saw 9,578 total filings compared to 8,965 in May, 8,398 in April, 8,518 in March, 6,967 in February and 5,999 in January.  That is 48.550 for the first six months compared 33,396 for the same six months last year or a 45% increase.   

Chapter 13s were 2,287 compared to 1,988 in May - 22% of total filings - same percentage as the last three months.  That is 457 new petitions per trustee for the month.     

There were 110 new chapter 11 petitions compared to 66 in May.  Individuals filed 42 of the chapter 11 petitions in June.    

This info can be found at the Bankruptcy Data Project.   

Witness List for Sotomayor Confirmation Hearings Starting Monday

 You can access the list with biographies here.  An exhaustive study of her rulings by the Brennan Center can be accessed here.  The study concludes she is a "mainstream judge."   

GM Sale Approved

You can access Judge Gerber's Opinion here. 

cdcbaa Ethics Program - July 18, 2009

CENTRAL DISTRICT CONSUMER BANKRUPTCY ATTORNEYS ASSOCIATION

 GENERAL MEMBERSHIP ASSSEMBLY

July 18, 2009 at 10:30 a.m.

 Location:

Southwestern Law School
3050 Wilshire Blvd., Room W329
3rd Floor in the Westmoreland Building
Los Angeles, CA 90010  

MCLE Program, Co-Sponsored by Southwestern Law School,
11:00 a.m. – 1:00 p.m.
Total Hours: 2 hours

“Ethics: Attorneys Beware!: The Unauthorized Practice of Bankruptcy Law”

 Moderator:

Jennifer L. Braun, Esq.
Assistant to the United States Trustee

 Speakers:

The Honorable Judge Maureen A. Tighe
United States Bankruptcy Judge – San Fernando Valley Division

 Holly J. Fujie, Esq.
President, State Bar of California

 Jerry C. Baik, Esq.
Supervising Assistant City Attorney,
City of Los Angeles Criminal-Identity Theft and Fraud Unit

Circuit Court of Appeals Cases from Last Week

5th Circuit Court of Appeals, June 30, 2009
Tate v. Bolen, --- F.3d ---, 2009 WL -------------- (5th Cir. 2009)(Debtors allowed to deduct a transportation ownership deduction under the plain language of section 707(b), even though they had no loan or lease payment on their vehicle)

8th Circuit BAP Rules that Credit Union Violated the Automatic Stay in Collecting Auto Loan

In re Krivohlavek, --- B.R. ---, 2009 WL ----------- (8th Cir. BAP, May 2009)

Issue:   Does a credit union violate the automatic stay when it removes funds from the debtor’s savings account for payment of an auto loan where the debtor has announced she intends to return the vehicle but has not?           

Holding:      Yes. 

The chapter 7 debtor filed her statement of intention with her schedules indicating that she intended to return a vehicle which had been financed by her credit union.  The payments on the loan were paid by an automatic deduction from her paycheck which funds were placed into her credit union savings account and then, from there, apparently immediately, transferred out by the credit union in payment of the loan.  The payroll deduction was a little more than the loan payment as some of the deduction was for a “Christmas account.”  The debtor informed the credit union shortly after she filed that she was going to return the vehicle and that she wanted the automatic payments stopped.  The credit union told her “that it did not have the ability to stop the automatic payment of her loan and that the only way to do so was for the Debtor to obtain a form from her employer, sign it, and then submit it to the Credit Union.”  The debtor eventually filled out and submitted the right form but by then $1,300 had been taken from her savings account and applied to the loan. 

The debtor filed a motion for turnover and for sanctions which the bankruptcy court denied.  The credit union argued that it did not “violate the automatic stay because it did not take any affirmative act to collect a debt from the Debtor; it merely received what it believed were voluntary payments on a loan.”  The court accepted the credit union’s position that only the debtor could stop the paycheck deductions, it was essentially a one-step process, that is the transfer by the employer to the credit union resulted in the payment, and that since she had not returned the vehicle, she apparently intended to keep it and therefore the credit union could keep the payments.

The 8th Circuit BAP reversed.  It disagreed with the factual finding that the credit union was not able to stop the withdrawal from the savings account.  “[H]ere the Credit Union took an affirmative step beyond the mere receipt of an automatic payment – it applied a portion of the funds automatically deposited into the Debtor’s account toward payment of a debt.  And that affirmative step constitutes an act to collect a debt prohibited by § 362(a)(6).”

Bankruptcy Filings Rise Slightly in June

Total bankruptcy filings for June, 2009 increased 3.6% to 124,800 from 120,400 in May which was down from 128,720 petitions filed in April.  That's 374,000 for the second quarter up 16% from 322,000 for the first quarter.  The June rate equates to 1,497,600 for the year compared to 1,597,000 in 2004, 1,660,000 in 2003 and 1,578,000 in 2002. 

California State Budget Balancer

Thanks to UCLA Prof. Steve Bainbridge for locating this.  Its a "Sim City" sort of program where you can figure out, using real numbers, how to balance the California State Budget.  The program is here. 

Aram Ordubegian Moves to Arent Fox

I have moved my practice to Arent Fox LLP.  My new contact information is below, please update your records.  Thank you.

Aram is a good friend and a great bankruptcy lawyer.

Aram Ordubegian  |  Partner, Bankruptcy & Financial Restructuring
Arent Fox LLP | 555 West Fifth Street, 48th Floor | Los Angeles, CA 90013
Tel: 213.629.7400 | Fax: 213.629.7401
ordubegian.aram@arentfox.com | www.arentfox.com

Circuit Court of Appeals Cases from Last Week

9th Circuit Court of Appeals, June 25, 2009
Batlan v. Bledsoe, --- F.3d ---, 2009 WL --------------- (9th Cir. 2009)(trustee must allege and prove "extrinsic fraud" to establish fraudulent conveyance included in dissolution judgment) 

9th Circuit Court of Appeals, June 26, 2009
Cunning v. Rucker, --- F.3d ---, 2009 WL --------------- (9th Cir. 2009)(no exemption for Debtor's assets in pension and 401(k) plans, where the retirement plans were not designed and used primarily for retirement purposes)

Thanks to Findlaw.com. 

Secured Debt When Converting from 13 to 7

From the Bankruptcy Roundtable List Serve:

We have a scenario where our clients filed a chapter 13 bankruptcy back in 2007. Since the filing, the debtors have separated, making them now eligible for conversion (given the separate living expenses).

1)         The home and the two vehicles were in arrears at the time of the chapter 13 filing and the arrearage was included in the chapter 13 plan as unsecured debt.  If we convert, what impact does the conversion have on those assets (do they have to surrender, given the arrearage?).

2)         If one of the debtors accumulated more debt post filing (and we know that they were not supposed to without the trustee’s permission – hence the separation)… can the debt accumulated post filing the chapter 13 but prior to conversion be discharged in the chapter 7?

I’d appreciate any/all input here.

Thanks!
Laurie Turley-Michel
Calhoun, Kademenos, & Childress, Co. L.P.A.
502 West Washington Street
Sandusky, OH 44870
419-625-7770 (Phone)
419-525-9476 (Fax)
lauriet@ckhlaw.com
 
One of the very unfortunate amendments perpetrated by the 2005 act is a change in section 348, effect of conversion, when a 13 is converted to a 7.  New section 348(f)(1)(C) means that when the debtor converts, he or she loses the benefit of the treatment of the secured claim under the plan, and the crediting of the payments pursuant to the plan.  

You can try redeeming the vehicles for current replacement value (no longer wholesale value), but even that could be a problem.  See  section 506(a)(2)

David S. Yen
Legal Assistance Foundation of Chicago
reply to: dyen@lafchicago.org
312-347-8372

Two Los Angeles Times Articles Today on the Supreme Court

Harmonious Week for the Roberts Court here and Supreme Court Looks Over 9th Circuit's Shoulder Here. 

Supreme Court Voting for this Term

The last two cases decided this term were both 5-4 and in both, Kennedy sided with Roberts, Scalia, Thomas and Alito.