BankruptcyProf Blog

Cal Bar Insolvency Law Committee Writing Competition 2009 Winner Announced

Ali Matin, from my alma mater, Loyola Law School, is the winner of the 2009 Writing Competition hosted by the Business Law Section of the California Bar Assn.  The article entitled "Phantom Home Mortgage Deductions on Chapter 7 Means Tests: Why Bankruptcy Courts’ Treatment of Secured Debt Payments is Contrary to Legislative Intent and Against Public Policy" can be accessed here.  The argument is that persons who are not paying their mortgages should not be entitled to deduct the payments on the means test.  I smell a big firm creditor lawyer in the making.  My view is that Congress makes the law and 707(b)(2) says a debtor may deduct "The debtor's average monthly payments on account of secured debts shall be calculated as the sum of - (I) the total of all amounts scheduled as contractually due to secured creditors in each month of the 60 months following the date of the petition."  If Congress didn't mean that, they should correct it and the 100 other mistakes they made.  Since almost everyone passes the means test anyway, all the logic in the world about the equities and fairness are beside the point. 

Anyway, 707(b)(3) says that if a debtor passes the means test, the court still can dismiss the case based on the totality of the circumstances.  Several judges have ruled that secured payments you are not going to make is a factor in determining if the filing was an abuse and I have been told that the US Trustee will file motions to dismiss in these cases.  

But huzzah to Mr. Matin for a good article and a nice explanation of the means test.         

Chrysler Chapter 11 in New York

U.S. Bankruptcy Court  Southern District of New York (Manhattan)
Bankruptcy Petition #: 09-50002-ajg

Assigned to: Judge Arthur J. Gonzalez
Chapter 11

Date filed:   04/30/2009 
 
Debtor
Chrysler LLC
1000 Chrysler Drive
Auburn Hills, MI 48326
Tax ID / EIN: 38-267362

represented by  Corinne Ball
Jones Day
222 East 41st Street
New York, NY 10017
(212)326-3939
Fax : (212)755-7306
Email: cball@jonesday.com

 
U.S. Trustee
United States Trustee
33 Whitehall Street
21st Floor
New York, NY 10004
(212) 510-0500       

Meet Corinne Ball, Chrysler's Bankruptcy Attorney

The ABA Article can be accessed here. 

Chrysler to File Bankruptcy Today - Washington Post Article (and all over the Radio all morning)

Its 9:00 a.m. Los Angeles time and this is old news already.  The Washington Post article is here.  The problem with informal workouts is that one creditor hold out will prevent the deal from getting done.  I assume the hedge funds who are objecting believe they will get a better deal in bankruptcy.  Chrysler (and its mother - the U.S.) believes that the bankruptcy court will approve the agreement over the hedge fund's objection because its better for the creditors than a liquidation.  That is always the test and it comes down to property values and trials in bankruptcy over confirmation of plans are often gigantic valuation battles.  I just wish the news pundits would stop saying that "the public may stop buying Chryslers because of the bankruptcy."  The more the public hears that, the more nervous it will get - not because of the bankruptcy but because the news has scared them off.  Just my 10 cents worth.     

The Reuters article is here.  Thanks to my son Desmond.    

4th Circuit Rules that Auto Lender has Purchase Money Security Interest Even in Negative Equity Portion of Loan

Brief by Roksana Moradi, third year student at University of West Los Angeles School of Law.

Wells Fargo Fin. Acceptance v. Price, --- F.3d ---, 2009 WL 975796 (4th Cir. 2009)

ISSUE: Does a creditor have a “purchase money security interest” for the portion of its claim relating to negative equity?

HOLDING: Yes.

Circuit Judge Wilkinson,
Debtors Telephius and Shawana Price bought a 2001 Lincoln from Capital Mazda in North Carolina.  Debtors purchased the Lincoln on secured credit financed by Capital Mazda who subsequently assigned the contract to Wells Fargo.  They put down $1,400 and traded in their 1997 Nissan Maxima.  Debtors had purchased the Nissan on credit, and still owed $5,500.00 to their previous lender.  The contract for the Lincoln therefore included financing for "negative equity.”

Almost one year later the Prices filed a Chapter 13.  Their Chapter 13 plan proposed to bifurcate Wells Fargo’s claim under Section 506(a): a secured claim for the present value of the Lincoln and an unsecured claim for the remainder.  Wells Fargo objected arguing that the "hanging paragraph" protected its claim from bifurcation because that claim was secured by a "purchase money security interest."

The bankruptcy court ruled that the meaning of "purchase money security interest" in the hanging paragraph depended on state law and therefore, under North Carolina law, the negative equity and gap insurance components of the contract did not give rise to a purchase money security interest.

On appeal, the district court agreed but applied the "dual status rule" and held that Wells Fargo did have a purchase money security interest for the part of its claim that did not relate to negative equity and gap insurance.  

The Fourth Circuit reversed both the bankruptcy court and the district court.  In Chapter 13, the debtor has the option of retaining his property over the objection of a secured creditor.  In return, the secured creditor retains its lien on the collateral, and the debtor must pay the present value of the creditor’s "allowed secured claim" over time.  Section 506(a)(1) provides that the value of the allowed secured claim is equal to the value of the collateral.  Thus, if the secured creditor’s claim is for more than the collateral’s value, Section 506(a)(1) requires the bifurcation of the claim into two components: a secured claim for the value of the collateral, and an unsecured claim for the balance.  Bifurcation of the secured creditor’s claim is sometimes characterized as "stripping down" the secured claim to the collateral’s value.

In 2005, Congress amended Chapter 13 by adding the "hanging paragraph" (so called because the paragraph is unnumbered) to Section 1325(a).  The effect of the hanging paragraph is to prevent the bifurcation of certain secured claims when confirming a debtor’s plan under Section 1325(a)(5).  The text of the hanging paragraph provides: For purposes of paragraph (5), section 506 shall not apply to a claim described in that paragraph if the creditor has a purchase money security interest securing the debt that is the subject of the claim, the debt was incurred within the 910-day [period] preceding the date of the filing of the petition, and the collateral for that debt consists of a motor vehicle acquired for the personal use of the debtor, or if collateral for that debt consists of any other thing of value, if the debt was incurred during the 1-year period preceding that filing.

The hanging paragraph does not define the term "purchase money security interest."  The Court of Appeals looked to state law to define those terms.  In North Carolina, a "purchase-money security interest" in goods is defined as a security interest in goods that are "purchase-money collateral," which is in turn defined as goods that secure a "purchase-money obligation."  So the important question for the court’s purposes was the definition of a "purchase-money obligation."  To constitute a purchase-money obligation, the debt must be "incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used."

Wells Fargo claimed that the Prices incurred the portion of the debt relating to negative equity "for value given to enable the [Prices] to acquire rights in or the use of the [new car]," and that the value was "in fact so used."  The Court of Appeals agreed in that the value from Capital Mazda used to pay off the Prices’ negative equity "enabled" the Prices to acquire the new vehicle and held that the entire debt was secured by a purchase money security interest that Wells Fargo’s claim was therefore protected from bifurcation by the hanging paragraph.  The negative equity financing was integral to the whole transaction in which the new vehicle was purchased.  All of the Prices’ debt to Wells Fargo was incurred at the same time, in the same contract, and for the same purpose: acquiring the new car.  Therefore, Wells Fargo’s claim was entirely a “purchase money obligation.” 

Supreme Court Grants Cert on Exemptions Case, Schwab v. Reilly

Today, per ScotusBlog.com, the Supreme Court granted cert in Schwab v. Reilly, Docket: 08-538, to be argued next term. 

Issue (grant limited to questions one and two):

1. When a debtor claims an exemption using a specific dollar amount that is equal to the value placed on the asset by the debtor, is the exemption limited to the specific amount claimed, or do the numbers being equal operate to “fully exempt” the asset, regardless of its true value?

2. When a debtor claims an exemption using a specific dollar amount that is equal to the value placed on the asset by the debtor, must a trustee who wishes to sell the asset object to the exemptions within the thirty day period of Rule 4003, even though the amount claimed as exempt and the type of property are within the exemption statute?

The Third Circuit Court of Appeals ruled for the debtor saying:

We decide whether a Chapter 7 trustee who does not lodge a timely objection to a debtor’s exemption of personal property may nevertheless move to sell the property if he later learns that the property value exceeds the amount of the claimed exemption. Where, as here, the debtor indicates the intent to exempt her entire interest in a given property by claiming an exemption of its full value and the trustee does not object in a timely manner, we hold that the debtor is entitled to the property in its entirety.

Given the Supremes propensity for reversing circuits, this might not be good.  You can access the 3rd Circuits opinion here. 

Chapter 13 Audited Annual Report for FY 2008

You can access the report here, more statistics than the feeble mind like mine can comprehend - by district and even by trustee!.  The report is dated April 24, 2009.   

188 trustees across the country collected $5.2 billion.  Distributions were (very roughly) $2.7 billion to secured creditors; $260 million to priorty creditors; $1.2 billion to unsecureds; and $472 million to debtor's counsel.  The trustees' actual expenses of operations were $253 million plus $32 million compensation for the trustees.  There were 756,874 cases open at the end of the fical year.   

Circuit Court of Appeals Cases from Last Week

6th Circuit Court of Appeals, April 20, 2009
U.S. Bank, N.A. v. EPA, --- F.3d ---, 2009 WL -------- (6th Cir 2009)(EPA's claim against the Debtor for groundwater cleanup compensation under CERCLA is affirmed, where Debtor assumed its predecessor's liabilities)

7th Circuit Court of Appeals, April 23, 2009
Int'l Painters and Allied Trades Indus. Pension Fund v. Radcliffe, --- F.3d ---, 2009 WL -------- (7th Cir 2009)(1. setoff of defendant's pension benefits upon bankruptcy violated the automatic stay, and 2. the court properly refused to lift the automatic stay, as the exemptions to the anti-alienation provisions of ERISA did not apply to plaintiff's actions)

Thanks to Findlaw.com

Great Program Wednesday, April 29 by San Fernando Valley Bar Assn

Dear Jon:

On April 29, 2009, at the Woodland Hills bankruptcy court, the San Fernando Valley Bar Association’s Business, Real Property and Bankruptcy section and the cdcbaa will sponsor the three sitting judges who will be presenting short topics of interest to them.  Judge Thompson will be speaking on bankruptcy law in Roman times.  Judge Tighe will be speaking on the interplay between bankruptcy law and criminal law.  Judge Mund will offer some insights into the 1978 Bankruptcy Act.  The program is a wonderful opportunity, in an informal setting, for attorneys to get insight into the three Woodland Hills judges and to mingle with them before and after the program.  Also, there will be a raffle for fine bottles of wine.  To win, you have to have stored in your head a good amount of trivia about bankruptcy.  You can get the flyer here.

The May program is addressing MERS and will argue that any motion for relief from stay brought by MERS should be denied.

Thank you, for your help.

Sincerely,
Steven R. Fox

NY Times Article on the Ins and Outs of MERS

April 24, 2009
Tracking Loans Through a Firm That Holds Millions
By MIKE McINTIRE

Judge Walt Logan had seen enough. As a county judge in Florida, he had 28 cases pending in which an entity called MERS wanted to foreclose on homeowners even though it had never lent them any money.

MERS, a tiny data-management company, claimed the right to foreclose, but would not explain how it came to possess the mortgage notes originally issued by banks. Judge Logan summoned a MERS lawyer to the Pinellas County courthouse and insisted that that fundamental question be answered before he permitted the drastic step of seizing someone's home.

"You don't think that's reasonable?" the judge asked.

"I don't," the lawyer replied. "And in fact, not only do I think it's not reasonable, often that's going to be impossible."

Judge Logan had entered the murky realm of MERS. Although the average person has never heard of it, MERS - short for Mortgage Electronic Registration Systems - holds 60 million mortgages on American homes, through a legal maneuver that has saved banks more than $1 billion over the last decade but made life maddeningly difficult for some troubled homeowners.

Created by lenders seeking to save millions of dollars on paperwork and public recording fees every time a loan changes hands, MERS is a confidential computer registry for trading mortgage loans. From an office in the Washington suburbs, it played an integral, if unsung, role in the proliferation of mortgage-backed securities that fueled the housing boom. But with the collapse of the housing market, the name of MERS has been popping up on foreclosure notices and on court dockets across the country, raising many questions about the way this controversial but legal process obscures the tortuous paths of mortgage ownership.

If MERS began as a convenience, it has, in effect, become a corporate cloak: no matter how many times a mortgage is bundled, sliced up or resold, the public record often begins and ends with MERS. In the last few years, banks have initiated tens of thousands of foreclosures in the name of MERS - about 13,000 in the New York region alone since 2005 - confounding homeowners seeking relief directly from lenders and judges trying to help borrowers untangle loan ownership. What is more, the way MERS obscures loan ownership makes it difficult for communities to identify predatory lenders whose practices led to the high foreclosure rates that have blighted some neighborhoods.

In Brooklyn, an elderly homeowner pursuing fraud claims had to go to court to learn the identity of the bank holding his mortgage note, which was concealed in the MERS system. In distressed neighborhoods of Atlanta, where MERS appeared as the most frequent filer of foreclosures, advocates wanting to engage lenders "face a challenge even finding someone with whom to begin the conversation," according to a reportby NeighborWorks America, a community development group.

To a number of critics, MERS has served to cushion banks from the fallout of their reckless lending practices.

"I'm convinced that part of the scheme here is to exhaust the resources of consumers and their advocates," said Marie McDonnell, a mortgage analyst in Orleans, Mass., who is a consultant for lawyers suing lenders. "This system removes transparency over what's happening to these mortgage obligations and sows confusion, which can only benefit the banks."

A recent visitor to the MERS offices in Reston, Va., found the receptionist answering a telephone call from a befuddled borrower: "I'm sorry, ma'am, we can't help you with your loan." MERS officials say they frequently get such calls, and they offer a phone line and Web page where homeowners can look up the actual servicer of their mortgage.

In an interview, the president of MERS, R. K. Arnold, said that his company had benefited not only banks, but also millions of borrowers who could not have obtained loans without the money-saving efficiencies it brought to the mortgage trade. He said that far from posing a hurdle for homeowners, MERS had helped reduce mortgage fraud and imposed order on a sprawling industry where, in the past, lenders might have gone out of business and left no contact information for borrowers seeking assistance.

"We're not this big bad animal," Mr. Arnold said. "This crisis that we've had in the mortgage business would have been a lot worse without MERS."

About 3,000 financial services firms pay annual fees for access to MERS, which has 44 employees and is owned by two dozen of the nation's largest lenders, including Citigroup, JPMorgan Chase and Wells Fargo. It was the brainchild of the Mortgage Bankers Association, along with Fannie Mae, Freddie Mac and Ginnie Mae, the mortgage finance giants, who produced a white paper in 1993 on the need to modernize the trading of mortgages.

At the time, the secondary market was gaining momentum, and Wall Street banks and institutional investors were making millions of dollars from the creative bundling and reselling of loans. But unlike common stocks, whose ownership has traditionally been hidden, mortgage-backed securities are based on loans whose details were long available in public land records kept by county clerks, who collect fees for each filing. The "tyranny of these forms," the white paper said, was costing the industry $164 million a year.

"Before MERS," said John A. Courson, president of the Mortgage Bankers Association, "the problem was that every time those documents or a file changed hands, you had to file a paper assignment, and that becomes terribly debilitating."

Although several courts have raised questions over the years about the secrecy afforded mortgage owners by MERS, the legality has ultimately been upheld. The issue has surfaced again because so many homeowners facing foreclosure are dealing with MERS.

Advocates for borrowers complain that the system's secrecy makes it impossible to seek help from the unidentified investors who own their loans. Avi Shenkar, whose company, the GMA Modification Corporation in North Miami Beach, Fla., helps homeowners renegotiate mortgages, said loan servicers frequently argued that "investor guidelines" prevented them from modifying loan terms.

"But when you ask what those guidelines are, or who the investor is so you can talk to them directly, you can't find out," he said.

MERS has considered making information about secondary ownership of mortgages available to borrowers, Mr. Arnold said, but he expressed doubts that it would be useful. Banks appoint a servicer to manage individual mortgages so "investors are not in the business of dealing with borrowers," he said. "It seems like anything that bypasses the servicer is counterproductive," he added.

When foreclosures do occur, MERS becomes responsible for initiating them as the mortgage holder of record. But because MERS occupies that role in name only, the bank actually servicing the loan deputizes its employees to act for MERS and has its lawyers file foreclosures in the name of MERS.

The potential for confusion is multiplied when the high-tech MERS system collides with the paper-driven foreclosure process. Banks using MERS to consummate mortgage trades with "electronic handshakes" must later prove their legal standing to foreclose. But without the chain of title that MERS removed from the public record, banks sometimes recreate paper assignments long after the fact or try to replace mortgage notes lost in the securitization process.

This maneuvering has been attacked by judges, who say it reflects a cavalier attitude toward legal safeguards for property owners, and exploited by borrowers hoping to delay foreclosure. Judge Logan in Florida, among the first to raise questions about the role of MERS, stopped accepting MERS foreclosures in 2005 after his colloquy with the company lawyer. MERS appealed and won two years later, although it has asked banks not to foreclose in its name in Florida because of lingering concerns.

Last February, a State Supreme Court justice in Brooklyn, Arthur M. Schack, rejected a foreclosure based on a document in which a Bank of New York executive identified herself as a vice president of MERS.  Calling her "a milliner's delight by virtue of the number of hats she wears," Judge Schack wondered if the banker was "engaged in a subterfuge."

In Seattle, Ms. McDonnell has raised similar questions about bankers with dual identities and sloppily prepared documents, helping to delay foreclosure on the home of Darlene and Robert Blendheim, whose subprime lender went out of business and left a confusing paper trail.

"I had never heard of MERS until this happened," Mrs. Blendheim said.  "It became an issue with us, because the bank didn't have the paperwork to prove they owned the mortgage and basically recreated what they needed."

The avalanche of foreclosures - three million last year, up 81 percent from 2007 - has also caused unforeseen problems for the people who run MERS, who take obvious pride in their unheralded role as a fulcrum of the American mortgage industry.

In Delaware, MERS is facing a class-action lawsuit by homeowners who contend it should be held accountable for fraudulent fees charged by banks that foreclose in MERS's name.

Sometimes, banks have held title to foreclosed homes in the name of MERS, rather than their own. When local officials call and complain about vacant properties falling into disrepair, MERS tries to track down the lender for them, and has also created a registry to locate property managers responsible for foreclosed homes.

"But at the end of the day," said Mr. Arnold, president of MERS, "if that lawn is not getting mowed and we cannot find the party who's responsible for that, I have to get out there and mow that lawn."
 
Thanks to Erik Clark

Cramming Down a Wholly Unsecured Lien in Chapter 7?

Question:  You cannot strip away a wholly unsecured lien in chapter 7 - right? 

Answer from Dan Press:

That was conventional wisdom before 1998, when I won Yi v. Citibank, 219 BR 394 (ED Va. 1998) (wholly unsecured lien strippable in a 7).  It then became a hot issue until 2001, when after saying in a 2001 unpublished case that wholly unsecured liens were strippable in a 7, in Warren v. Smith 1 Fed Apx. 178 (4th Cir. 2001), the 4th Cir decided later that same year, in Ryan v. Homecomings, 253 F.3d 778 (4th Cir 2001), that they were not.  The 6th Cir. has agreed with Ryan, in Talbert v. City Mortgage, 344 F.3d 355 (6th Cir. 2003).  As such, this issue is foreclosed only in the 4th and 6th Circuits.  No other circuit has ruled on the issue.  The 9th Cir. BAP has said no. In re Laskin, 222 B.R. 872 (9th Cir. BAP 1998).

Since Talbert in 2003, probably because of the economy, there were few if any appellate decisions on lien stripping at all, until recently, and it appears that no one has picked up the ball in other circuits. It appears that Howard v. Nat. West, 184 BR 644 (Bk. EDNY 1995) (lien strip-offs OK in C7) has not been overruled or rejected in that court, for example.  The Third Circuit seems to have expressly left the issue open in McDonald v. Master Fin., 205 F.3d 605 (3rd Cir. 2000).  So it seems to me that this ought to be considered still a live issue everywhere but the 4th and 6th circuits.

Dan Press
Chung & Press, P.C.
6718 Whittier Ave. #200
McLean, VA 22101
703-734-3800
703-734-0590 fax
dpress@chung-press.com

NACBA Convention Sold Out

 

The National Association of Consumer Bankruptcy Attorneys annual program held this year in Chicago is officially sold out.  You can sign up for the waiting list here.   

Eligibility for Chapter 13

A chapter 13 debtor cannot have more than $336,000 of unsecured debts when he files chapter 13, Section 109(e).  Whether he does or does not exceed this limit is determined by the schedules he files as long as the schedules are filed "in good faith."  (Gawd I hate that word!)  But does the unsecured portion of secured debt go in the secured column or the unsecured column?  I don't think there is any doubt that "secured debt" as used in 109(e) is determined by state law.  But what about Section 506(a) which bifurcates secured claims into secured and unsecured?

In the San Fernando Valley at least, the judges have been telling us that you have to read 506(a) to determine what is secured and unsecured and therefore the undersecured portion of a secured debt is included entirely in the unsecured debt column throwing many debtors into chapter 11 cases which they cannot afford.  The judges believe they are bound by the 9th Circuit's ruling in In re Scovis,249 F.3d 975 (9th Cir. 2001) and In re Soderlund, 236 B.R. 271 (9th Cir. BAP 1999).  There are three other circuit cases which unfortunately made the same blanket announcement.  In In re Day, 747 F.2d 405 (7th Cir. 1984), the collateral was almost worthless accounts receivable; In re Miller, 907 F.2d 80 (8th Cir. 1990), the collateral was vacant land of a nominal value and in In re Balbous, 933 F.2d 246 (4th Cir. 1991) the issue was how to treat selling costs when determining value. 

I am looking forward to doing the appeal on this issue although I wish Congress would just clarify it (and the 100 other mistakes in the code).  Congress decides who qualifies for what.  They should tell us more clearly and save everyone a lot of trouble. 

Update on Cramdown Bill in the Senate

The Washington Post article today by Renae Merle can be accessed here.  Lenders are putting up a pretty good fight in the Senate.  Among the concessions demanded is a sunset provision in 2014 when the legislation will end, and a requirement that the debtor accept a loan modification without cramdown if offered.  What's most interesting is who is not negotiating.  "[T]he Mortgage Bankers Association and American Bankers Association, major industry groups, are not part of the current negotiations, and congressional Republicans continue to resist the provision."  "The Independent Community Bankers of America had been observing the negotiations, but walked away last week, said Camden Fine, president of the group. 'Basically we were told by the senators that are involved that we either had to agree in principle to some sort of cramdown provision or we couldn't stay in the room,' Fine said. 'And we could not agree to that because we don't agree in principle.'"  
  

6th Circuit Rules that Transfer by "Convience Check" from One Credit Card to Another within Preference Period is an Avoidable Preference to Recipient

Brief by Roksana Moradi, third year student at University of West Los Angeles School of Law.

MBNA Am. Bank, N.A. v. Meoli, --- F.3d ---, 2009 WL 961209 (6th Cir. 2009)

Issue:  Are “convenience checks” written by a debtor on a credit card account and sent to a different credit card as payment within the preference period, preferential transfers within the meaning of 11 U.S.C. §547(b)?

Holding:   Yes.

Debtor Sharrene Wells wrote two “convenience checks” from her Chase credit card account and sent the checks to MBNA during the 90-day period preceding her petition for bankruptcy protection.  Chase Bank had offered these checks and advertised that they could be used to “transfer balances, pay bills, make a purchase, [or] get extra cash.”  The chapter 7 trustee sued MBNA to avoid and recover, among other transfers, the amount of the two $5,000 convenience checks.  The trustee filed a motion for summary judgment arguing that these were preferential transfers within the provisions of § 547(b).  The bankruptcy court granted the trustee’s motion and entered a judgment against MBNA.  MBNA appealed to the Bankruptcy Appellate Panel which affirmed.  

The 6th Circuit affirmed also.  The issue was whether the two $5,000 convenience checks were transfers by the debtor of the debtor’s interest in property.  The Appellate Court relied on McLemore v. Third National Bank (In re Montgomery), 983 F.2d 1389 (6th Cir. 1993) in which the court explained that cash equivalents, like credits in a bank account, may constitute property of the debtor.  The court explained that the degree of control a debtor exercises over the property transferred is the principal determinant of whether the debtor has “‘an interest’” in the property such that its transfer may be avoided under § 547(b).

The court stated, “Wells was free to use the convenience checks for any reason she chose, including paying down her credit card balance with MBNA.”  Further, that “ in making her decision to do just that and then drawing the checks on her Chase Bank credit card account, Wells exercised complete control over the funds drawn, in which she had an ownership interest.”

More on Big Case Attorneys Fees

Weil Gotshal is chapter 11 counsel to General Growth, the big mall management company.  I guess there are attorneys at Weil not working on Lehman Bros.  You can access the 67 page application here. 

Circuit Court of Appeals Cases from Last Week

4th Circuit Court of Appeals, April 13, 2009
Wells Fargo Fin. Acceptance v. Price, --- F.3d ---, 2009 WL --------- (4th Cir. 2009)(creditor has a purchase money security interest for the portion of its claim related to negative equity)

7th Circuit Court of Appeals, April 15, 2009
In re Ingersoll, Inc., --- F.3d ---, 2009 WL --------- (7th Cir. 2009)(district court's order barring law firm's claim for additional fees under 11 U.S.C. sec. 105 affirmed)

7th Circuit Court of Appeals, April 16, 2009
Cardinal Stritch Univ., Inc. v. Kuehn, --- F.3d ---, 2009 WL --------- (7th Cir. 2009)(district court's judgment ordering plaintiff to provide a transcript and pay damages and attorneys' fees affirmed where defendant had a state-law right to receive a certified copy of her transcript, and plaintiff's refusal to honor that right until defendant paid her back tuition constituted an act to collect her unpaid pre-petition debt)

Supreme Court Statistics So Far This Term

I love these statistics from the Scotus.com website.  All kinds of tidbits.  Of the eight 9th Cir cases the Supremes have decided this term, seven have been reversals and one affirmed "in part."  The Supreme Court has reversed 82% of the cases they have ruled on this term.  48% of the opinions were unanimous - 20% were 5-4.  Of the non-unanimous opinions, Roberts and Stevens disagreed 82% of the time, Scalia and Stevens disagreed 86% of the time.  The justices most in agreement with each other?  Roberts and Scalia and Roberts and Alito disagreed only 14% of the time.  Ginsberg and Souter disagreed only 14% of the time.  Of the 36 majority opinions written this term, Kennedy has written two - that's six and a half months!      

Fees In Lehman Bros Near $100 million for First Five Months

From my friend and fellow bankruptcy lawyer, Steve Fox:

Dear Jon:

The WSJ bankruptcy blog has a reference to the fee/expense applications by the attorneys and other professionals in the Lehman Bros. case.  The focus is on the fees.  The expenses are pretty high, including one for over $1,000,000 by Debtor’s counsel.  I don’t know about you but I can’t imagine carrying that kind of expenses in house waiting for reimbursement.  Here is the link.  For the Milbank firm, take a look at this link.  Many of the associates’ billing rates are double my rates including a couple of associates recently admitted to practice.  Talk about feasting on a dead cow in the road.

Great Little Bio on Elizabeth Warren in Newsweek

You can access the article here.  According to Bob Lawless, Prof. Warren is now offically the coolest person he knows.  She will appear as tonight's guest on The Daily Show with Jon Stewart.