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August 28, 2008

A Little Short on Judges in Riverside

PUBLIC NOTICE
RE: RIVERSIDE DIVISION CASES ASSIGNMENTS TO LOS ANGELES DIVISION JUDGES RIVERSIDE DIVISION COURTROOM CHANGES

Effective September 1, 2008, a portion of newly filed Riverside Division bankruptcy cases will be assigned to Judges Bluebond, Donovan and Neiter of the Los Angeles Division.

Most hearings on Riverside Division cases assigned to the Los Angeles judges will be held by video conference. Parties appearing before Judge Bluebond and Judge Donovan are to appear at Riverside Division Courtroom 303, and parties for hearings before Judge Neiter are to appear at Riverside Division Courtroom 301.

Papers filed on Riverside Division cases assigned to the Los Angeles Division judges shall be filed either electronically or, for non-registered ECF users, at the Intake area of the Riverside Division. Chambers and courtesy copies of papers filed for these cases shall be delivered to the Intake area of the Riverside Division.

Note:  Riverside has had four judges for a long time but two basically retired at the same time and no one has volunteered to move to Riverside. 

August 28, 2008 in Judicial Announcements | Permalink | Comments (0) | TrackBack

Mrs. Fields' Meeting of Creditors September 3, 2008

DATETIMECASE NUMBERCASE NAMELOCATION
September 3, 2008 1:30 p.m. 08-11953 (PJW) Mrs. Field's Original Cookies, Inc. J. Caleb Boggs Federal Building
844 North King Street, Room 5209
Wilmington, DE 19801

10 days after the case was filed and 12 days before objections are due to the Plan of Reoragnization already filed.  That is what I call moving it along. 

August 28, 2008 in Current Affairs | Permalink | Comments (0) | TrackBack

August 27, 2008

9th Circuit BAP Rules on "Dual Status" of Purchase Money Loans to Purchase Autos When Previous Auto is "Underwater"

Americredit Financial Services, Inc. v. Penrod (In re Penrod),  ---- B.R. ---, 2008 WL 3854465  (9th Cir. BAP July, 2008)

Issue:   When an auto lender rolls old debt into the purchase of a new auto, is the debt “purchase money,” all or in part?             

Holding:   In part.  The BAP adopts the “Dual Status Rule.”      

Judge Thomas Carlson, San Francisco
Markell, Klein, Jury
Opinion by Markell

This chapter 13 debtor borrowed $31,600 from Americredit to buy a “910 auto,” a Taurus, which she purchased for $25,600.  The difference was the negative equity she owed on the car she traded in for the Taurus.  When she filed chapter 13 she owed about $25,000.  The plan valued the Taurus at $15,000 making the remaining balance unsecured.  The plan “reduced” the interest rate on the secured debt to 9%.  Americredit did not object to the interest rate but objected to the treatment saying the entire amount owed was protected by the hanging paragraph.  The Bankruptcy Court found that the negative equity was not protected by the hanging paragraph but the balance, “some $18,540,” was secured.   The court then confirmed the plan on that basis. 

The BAP affirmed.  Markell starts his very lengthy opinion (48 pages) with the sarcastic comment, “The ‘hanging paragraph’ is found somewhere around § 1325(a).”  He says, “Much ink has been spilled over the proper characterization and treatment of negative equity in secured claims subject to the hanging paragraph.”  “A leading car lender, General Motors Acceptance Corporation, has stated in defending a similar claim that between 26% and 38% of all its new car financing involves ‘negative equity.’”  “[G]iving negative equity PMSI status effectively enriches car lenders at the expense of the debtor’s unsecured creditors.”  “[T]he financed negative equity is nothing more than a refinancing of the preexisting debt owed on the trade-in.”  He says that some courts use the “Transformation Rule” where the purchase money debt becomes non-purchase money when it includes a refi of other debt.  He discusses the “Dual Status Rule” where the loan is part purchase money and part not.  The BAP adopts the Dual Status Rule which Markell says recognizes “the substance of the transaction.” 

August 27, 2008 in 9th Circuit Briefs | Permalink | Comments (1) | TrackBack

August 26, 2008

Mrs. Fields' Files Chapter 11

This is a "pre-packaged case."  Mrs. Fields' sent out a Disclosure Statement and Plan a while ago which they then filed the same day as the Bankruptcy Petition.  The last day to file an objection to the Plan is September 15, 2008. 

U.S. Bankruptcy Court
District of Delaware (Delaware)
Bankruptcy Petition #: 08-11953-PJW


Assigned to:
Peter J. Walsh
Chapter 11
  Date Filed: 08/24/2008

Debtor
Mrs. Fields' Original Cookies, Inc.
2855 East Cottonwood Parkway
Suite 400
Salt Lake City, UT 84121
Tax id: 87-0552899
represented by David R. Hurst
Montgomery McCracken Walker & Rhoads LLP
1105 N. Market Street
15th Flooor
Wilmington, DE 19801
302-504-7828
Fax : 302-504-7820
Email: dhurst@mmwr.com
U.S. Trustee
United States Trustee
844 King Street, Room 2207
Lockbox #35
Wilmington, DE 19899-0035
302-573-6491
   

August 26, 2008 in Current Affairs | Permalink | Comments (0) | TrackBack

11th Circuit Court of Appeals Rules on Whether Property Acquired Post-Chapter 13 is Property of the Estate

In re Waldron,  --- F.3d ---, 2008 WL 2953571 (11th Cir,  August, 2008)

Issue:   Is an asset acquired after a chapter 13 plan is confirmed but before the plan is completed “property of the estate,” and can the bankruptcy court order the debtor to amend his schedules and disclose the asset?                   

Holding:    Yes.   

This chapter 13 debtor was involved in an auto accident after his plan was confirmed but before it was completed.  He received $25,000 which he claimed exempt and the bankruptcy court agreed.  He then pursued an “under-insured” claim under Georgia law.  He moved the bankruptcy court for an order that any proceeds are not property of the estate.  He argued that when the plan was confirmed, the property revested in him under 1327(b).  The court denied the request saying the definition of property of the estate under 1306(a) controls and ordered the debtor to amend his schedules.  The district court affirmed. 

The 11th Circuit also affirmed.  “Section 1306(a) does not mention the confirmation of the debtor's plan as an event relevant to what assets are property of the estate.”  1306(a) states that property acquired after the commencement of the case which would have been an asset under 541(a) is property of the estate.  “If Congress had intended for confirmation to so dramatically affect the expansive definition of property of the estate found in [section] 1306, it knew how to draft such a provision.”  As to the court ordered the amendment, the 11th Circuit said the order was appropriate under FRBP 1009 and “[t]he disclosure of postconfirmation assets gives the trustee and creditors a meaningful right to request, under section 1329, a modification of the debtor's plan to pay his creditors.”  The debtor said he would have to amend every time he bought groceries if that is the rule.  “We do not hold that a debtor has a free-standing duty to disclose the acquisition of any property interest after the confirmation of his plan under Chapter 13.  Neither the Bankruptcy Code nor the Bankruptcy Rules mention such a duty.”  “But the bankruptcy court has the discretion, under Rule 1009, to require a debtor to amend his schedule of assets to disclose a new property interest acquired after the confirmation of the debtor's plan.”

Note:  In the Central District of California, the pre-printed plan form states that the property does not revest when the plan is confirmed. 

August 26, 2008 in Other Circuit Briefs | Permalink | Comments (0) | TrackBack

August 25, 2008

9th Circuit Court of Appeals Annoyed That It Was Not Advised of Settlement

Lowrey v. Channel Communications, Inc. (In re Cellular 101, Inc) ---- F. 3d ----, 2008 WL ------------- (9th Cir. August 2008)

Issue:   Must a party inform the court of appeals of a settlement which might make the appeal moot [and might not]?

Holding:   Yes, otherwise the right to argue the terms of the settlement later are waived.
appeal from the BAP

Judge Clifton
This chapter 11 debtor sued Channel Communications and AT&T prepetition claiming that those companies interfered with the debtor’s right to buy Channel if it were to be sold.  After the debtor filed chapter 11, Channel and AT&T filed a chapter 11 plan which permitted the sale of Channel to AT&T to go forward resulting in a payment to the debtor of some $2 million.  Channel and AT&T then requested $400,000 in attorneys fees for their substantial contribution to the reorganization.  The debtor objected but the court allowed about half of the request.  The debtor appealed.  The debtor, Channel and AT&T then settled everything but the debtor determined to go forward with the appeal and no one informed the court of appeals of the settlement.  The court of appeals affirmed the ruling and Channel then sought payment of the allowed fees.  The debtor then objected saying that the settlement included the fees which therefore had already been paid.  The bankruptcy court granted the request for payment saying that either the release did not apply to the payment or the appeal was moot and the debtor should have so informed the court of appeals.  The debtor appealed that order.  The BAP affirmed saying that the debtor should have advised the court of appeals and therefore waived the argument. 

The 9th Circuit affirmed.  “The Supreme Court has held that all counsel have a duty ‘to bring to the federal tribunal’s attention, without delay, facts that may raise a question of mootness.’”  “Regardless of [the debtor’s]  motives, we cannot permit the court to be subject to such manipulation.  We conclude that by failing to raise the release issue in the prior appeal, [the debtor] waived its right to assert the defense in subsequent proceedings.  Settlement and release is an affirmative defense and is generally waived if not asserted in the answer to a complaint.”  “[The debtor] argued that ‘even if it had raised the release issue during the prior appeal, we would have been required to remand the matter for factual findings, implying that its failure to inform the court of the settlement agreement was harmless and should be without consequence.”  “[R]egardless of the likelihood that remand for factfinding might have been necessary, the decision whether and when to remand the matter was one for the court to make, not [the debtor].  [The debtor] usurped the decision as to how the case should be organized when it proceeded with the arguments it had already presented on appeal and elected not to advise the court of an event which it believed disposed of the claim.  The bankruptcy court was correct in its assessment that, having taken its shot, [the debtor] does not get another opportunity to reach into its quiver for another arrow.”  The court commented that a complete settlement would divest the court of appeals of jurisdiction.  The debtor argued that Channel was asserting [while the matter was pending at the court of appeals] that the claim for fees was not released in the settlement anyway.  The court of appeals could not therefore resolve that issue because it was not before it.   

August 25, 2008 in 9th Circuit Briefs | Permalink | Comments (0) | TrackBack

71 Public Companies Have Filed Chapter 11 so Far This Year

Year
No. of filings
Assets (billions)
2003
172
$98.3
2004
92
$47.7
2005
86
$133.8
2006
66
$22.3
2007
78
$70.5
2008*
71
$75.8
* -- Year to date; Sources: BankruptcyData.com, New Generation Research

August 25, 2008 in Bankruptcy Statistics | Permalink | Comments (0) | TrackBack

August 24, 2008

Circuit Court of Appeals Cases for Last Week

5th Circuit Court of Appeals, August 18, 2008
In the Matter of N A Flash Found. Inc., --- F.3d ---, 2008 WL -------(5th Cir. 2008)(there is no preference where creditor was a beneficiary of a construction trust fund of which debtor was trustee, and would be entitled to full recovery of the funds transferred, even in a Chapter 7 proceeding)

7th Circuit Court of Appeals, August 19, 2008
In re Holland, --- F.3d ---, 2008 WL -------(7th Cir. 2008)(district court order on appeal from bankruptcy court is not final and appeal is dismissed where district court ruled that Florida law applied and remanded to bankruptcy court, without deciding whether Florida law granted an exemption)

8th Circuit Court of Appeals, August 22, 2008
Henning v. Mainstreet Bank, --- F.3d ---, 2008 WL -------(8th Cir. 2008)(bank not required to release lien on debtor's home per terms of the contract)

9th Circuit Court of Appeals, August 21, 2008
In re Cellular 101, Inc., --- F.3d ---, 2008 WL -------(9th Cir. 2008)(A party's failure to timely inform the court of appeals of a settlement that it believes disposes of a pending appeal precludes the party from asserting the affirmative defense of settlement and release in a later proceeding)

9th Circuit Court of Appeals, August 22, 2008
In the Matter of Ferrell, --- F.3d ---, 2008 WL -------(9th Cir. 2008)(Statutory damages are not available for violations of provisions of the Truth in Lending Act (TILA))

Thanks again to Findlaw.com.

August 24, 2008 in Other Circuit Briefs | Permalink | Comments (0) | TrackBack