BankruptcyProf Blog

Nice Listing of Programs for the Next Few Years

Here is a listing of the currently scheduled ABI, NACTT (Nat Assn of Chapter 13 Trustees), NACBA, NABT (Nat Assn of Bankruptcy Trustees), NCBJ (Nat Conf of Bankruptcy Judges), Norton Institutes and a few other organizations through 2013. 

NACBA Brief on Supreme Court Exemption Case

The National Assn of Consumer Bankruptcy Attorneys has filed a very nice amicus brief in the Schwab v. Reilly case pending before the Supreme Court. You can acccess it here. 

Supreme Court Sets Oral Argument on Remaining Two Bankruptcy Cases this Term

Tuesday, Dec. 1, 2009:

Milavetz Gallop v. U.S, This is the case that deals with the Debt Relief Agency rules.  Are attorneys debt relief agencies? And do the new code sections infringe on the right to free speech?  

U.S. Student Aid Funds v. Espinosa.  This is the case that will resolve whether or not the chapter 13 plan can discharge a student loan without an adversary proceeding.  Kozinski wrote that service of the plan was adequate notice to the student loan lender and the lender therefore had a duty to object and was bound by the order confirming the plan when they did not object. 

Its nice that the cases are set for the same day.  Reminder, the Supremes have also accepted Schwab v. Reilly dealing with how to claim an exemption.  That case is set for oral argument on November 3. 

Thanks to Scotus.com.   

Annual Meeting of the National Conference of Bankruptcy Judges October 18 - 21

You can access the brochure here.   Justice John Paul Stevens will be one of the speakers.   

Thank You for Two Years

Today marks the second anniversary of this blog.  I'm pretty proud of the blog and really appreciate the views and comments I receive from colleagues. I've tried to maintain the mandate from Prof. Paul Caron: 

What Law Professor Blogs Are
The permanent resources & links and daily news & information are designed to collect in one place materials helpful to law professors in their scholarship and teaching:

So the blog has received 77,000 hits in two years; 21,000 the first year (2,600 total the first five months).  Thanks for reading.  Let me know what you think.   

Judge Keith Lundin New Book on Chapter 13 Due out Shortly

I plugged Judge Keith Lundin's Chapter 13 book in the introduction to my book, A Summary of Bankruptcy Law.  A fellow consumer bankruptcy attorney asked me how to get the book so I went to the source myself.  I'm happy to help Judge Lundin get the word out.  His treatise has a staggering amount of information on chapter 13 and cites to every case ever I think.  Here is the email I sent to Judge Lundin and his response.

Judge Lundin,
   I plugged your chapter 13 book in my book, A Summary of
Bankruptcy Law.  How do people go about buying the book?  I attached the
pdf of my book.  The plug is in the introduction.  I have met you a few
times at the Norton Institutes in Las Vegas, an exceptionally enjoyable
experience.
Jon Hayes

“The Rutter Group book on Bankruptcy by Judges Alan Ahart and Leslie Tchaikovsky, and retired Judge Kathleen March is a great reference and resource. It is also geared to the world of California bankruptcy. In the chapter 13 arena, Judge Keith Lundin‟s book, Chapter 13, 3rd.Ed, is a must for your bookshelf. And by the way, if you ever get a chance to listen to Judge Lundin, don’t miss the opportunity. He is an engaging and funny populist who has sat on the bankruptcy court in Nashville, Tennessee for many years. Every bankruptcy attorney in the Ninth Circuit should have a copy of Judge Randall Newsome‟s Research Notebook – print it out and keep it by your desk. You can get it online by doing a google search.”

Judge Lundin's response:

Jon --  thanks so much for the nice plug and for asking.  The place to go
for now is <bankruptcypress.com>.  In the next month or so the 4th Edition
will be uploaded to <ch13online.com> and on-line subscriptions with lots of
other stuff will be available there.  Hope to see you at a seminar soon.
take care.  kml

State Median Family Income Revisions Due Next Week

From Dennis McGoldrick:
 
The updated Census Bureau State Median Family Income figures are scheduled to be posted to the U.S. Trustee Program website the week of September 28, 2009. The DOJ will apply the new figures to petitions filed on or after October 12, 2009. 
 
http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm

dennis

Ten Companies Veering Towards Bankruptcy

Pretty interesting article on Yahoo predicting that Hertz, Goodyear, CBS, Macys, Sprint are all traveling down that chapter 11 highway.  "Its not the end of the world, but you can see it from here."  Some unknown athlete.  The article is here.

Solicitor General Amicus Brief in Exemption Case - Schwab v. Reilly

The Solicitor General supports the trustee. Its brief can be accessed here. 

Calvin Ashland Awards Dinner - November 4, 2009

THE CENTRAL DISTRICT CONSUMER BANKRUPTCY ATTORNEYS ASSOCIATION

2009 CALVIN ASHLAND AWARDS DINNER

PLEASE JOIN US FOR A NIGHT OF CELEBRATION TO POSTHUMOUSLY HONOR

Earle Hagen

THIS YEAR'S CALVIN ASHLAND ATTORNEY OF THE YEAR

(Presented by cdcbaa President James T. King)

November 4, 2009

Marriott Hotel Grand Ballroom
333 South Figueroa Street
Los Angeles, CA 90071

Special presentation by Southern California Bankruptcy Inn of Court

Reception and no-host bar at 6:00 p.m. followed by dinner, Bankruptcy Inn of Court skit, and awards presentation at 7:00 p.m.

$95 CDCBAA Member/guests who RSVP & pay before 10/15/09; $115 Non-member/guests and Member/guests who RSVP & pay after 10/15/09; $75.00 Government Employees

Please RSVP by October 28, 2009
For seating availability, please email PeterMLively@aol.com or call (310) 899-0630

9th Circuit Rules that Section 506(b) Preempts State Law on Attorneys Fees

Countrywide Home Loans v. Hoopai (In re Hoopai), ---- F. 3d ----, 2009 WL ------------- (9th Cir. Sept. 2009)

Issue:   Is an oversecured creditor’s right to fees under Section 506(b) limited by state law?  Does an oversecured creditor have the right to fees under 506(b) incurred after a chapter 13 plan is confirmed? 

Holding:   No on either.  506(b) pre-empts state law but the right under 506(b) ends on confirmation.  

Appeal from the BAP

Judge Richard Paez
Prior to filing her chapter 13, the debtor sold her home for $300,000 but did not complete the sale.  Also prior to the filing, Countrywide conducted a foreclosure action selling the same home to a third party for $159,000.  “However, Countrywide did not record the affidavit of sale as required by Hawaii Revised Statutes section 667-5 to conclude the sale.”  The debtor filed chapter 13 three days after the foreclosure but before the affidavit of sale was recorded.  The debtor moved to complete her sale, and Countrywide moved for relief.  The bankruptcy court denied the MFR, granted the debtor’s motion and confirmed the plan.  Both sides appealed and the district court affirmed both decisions.  The debtor’s sale was ultimately completed but Countrywide wanted $85,000 in attorneys fees as an oversecured creditor under 506(b).  The debtor filed a declaratory relief action re the fees and requested fees herself under Hawaiian law as the prevailing party.  The bankruptcy judge ruled that Countrywide was the prevailing party and that the requested fees were reasonable. 

The BAP reversed saying that Countrywide was not the prevailing party and remanded to reconsider the rulings on that basis.  Countrywide appealed saying that even if it was not the prevailing party as required to get fees under Hawaiian law, it was entitled to the fees under 506(b) since 506(b) preempts state law. 

The Court of Appeals reversed both and remanded.  It said that both the court and the BAP incorrectly assumed that there was no right to fees unless Hawaiian law permitted the fees.  “[O]ur case law has firmly established that § 506(b) entitles oversecured creditors to enforce contractual attorneys’ fees provisions and preempts state law on attorneys’ fees.”  “Countrywide’s entitlement to attorneys’ fees under § 506(b) is not limited by state law.”

 

The Court of Appeals then looked at the “temporal scope” of the fees.  The issue was whether Countrywide has a right to fees for its efforts after confirmation of the plan.  Countrywide argued that it had the right to fees at least until the plan’s “effective date,” that is, when the sale was completed a year later.  The 9th Circuit ruled that the right to fees under 506(b) ends when the plan is confirmed “because a confirmed plan establishes the scope of all claims against the debtor.”  “[A] contrary result would be inconsistent with the purpose of section 506(b), which allows oversecured creditors to include post-petition interest and certain fees as part of the secured claim they will receive upon confirmation of the plan.”  Also, “because § 1325(a) provides secured creditors with a different right to interest from the ‘effective date of the plan’ through payment, §506(b) would seem to conflict with § 1325(a) if both were to apply during the same time period.”  It ruled that here the confirmation date and the effective date were the same (as would be the case almost always it comments).  Therefore, to receive post-confirmation fees, Countrywide must proceed under state law.  The Court of Appeals ruled that the debtor was the prevailing party and that Countrywide therefore did not have the right to post-confirmation fees.  Because the debtor was the prevailing party, she may have the right to her fees and remanded the whole thing back to the bankruptcy court.   

Circuit Court of Appeals Cases from Last Week

2nd Circuit Court of Appeals, September 18, 2009
In re Ames Dept. Stores, Inc., --- F.3d ---, 2009 WL ----------- (2nd Cir. 2009)(Bankruptcy Code order disallowing request for payment of administrative expenses until debtor's predecessor in interest returned a preferential transfer is vacated where section 502(d) does not bar allowance of administrative expenses within the scope of section 503(b))

7th Circuit Court of Appeals, September 17, 2009
US v. Arthur, --- F.3d ---, 2009 WL ----------- (7th Cir. 2009)(bankruptcy fraud and related crimes affirmed where: 1) wife's conviction is supported by sufficient evidence; 2) defendant's constitutional claims that the marital agreements were fraudulent was well-founded; 3) defendant lacks standing to raise a Sixth Amendment ineffective assistance of counsel claim on behalf of his wife; and 4) district court did not err in using defendant's prior state court judgment to increase his base offense level)

7th Circuit Court of Appeals, September 17, 2009
Hoosier Energy Rural Elec. Coop., Inc. v. John Hancock Life Ins. Co., --- F.3d ---, 2009 WL ----------- (7th Cir. 2009)(In a dispute involving a leveraged lease of a power station, district court's grant of temporary injunction is affirmed since co-op's claim was sufficient for the limited purpose of the temporary injunction)

8th Circuit Court of Appeals, September 16, 2009
Knudsen v. IRS, --- F.3d ---, 2009 WL ----------- (8th Cir. 2009)(ch 12 reorganization plan affirmed where: 1) a Chapter 12 debtor may treat postpetition income taxes imposed on the debtor's income earned during the pendency of the case as administrative expenses; 2) debtors' sale of their slaughter hogs in 2004 constituted the sale of a "farm asset used in the debtor's farming operation" under section 1222(a)(2)(A); and 3) the "marginal method" was the correct method to determine the allocation of taxes between priority and non-priority claims under section 1222(a)(2)(A))

Thanks to Findlaw.com

Review of My Book

Book Review by Christine Wilton: 

I have been reading everything bankruptcy related lately.  A few weeks ago, M. Jonathan Hayes sent us an email on our listserv for the Central District Consumber Bankrutpcy Attorneys Association, CDCBAA for short, that he had just published a new book entitled, A Summary of Bankruptcy Law.  I am one of those folks who likes summaries or digest versions of anything that cuts to the point and gives me just the meat, hold the potatoes and vegetables.

The section on chapter 7 bankruptcies takes up a major portion of the summary material.  I would have liked more information regarding chapter 13 processes, but it is a summary, so I let that go.  The material is concise and to the point.  It's an easy read and looks similar to a top tier law student's outline of a subject.  Not that I was a top tier law student, but I've obtained outlines from a few.  Overall, the book holds up to its title as a summary and I would add, a thorough summary at that.

Like kicking the tires on a car you're thinking about buying, I took the book's website citations and case citations for a spin.  The book provides valuable tools, advice on practice materials and case citations that I am still looking up.  I reccommend this book to the new practioner and law student.  Since the book was written by a California attorney,  it is well suited for the California practitioner and more specifically, those of us practicing in the Central District.  I even printed a copy of Judge Randall Newsome's Research Notebook and if I ever get a chance to meet the man, I promise to buy him a beer Jonathan.  Thank you for your good work.

The book can be purchased at Amazon.com. 

Doddling with August Filing Statistics

Filings in August, 2009;

Entire state of Texas, ch 7 was 2,355 or 46% of total filings, ch 13 was 2,666 or 52%.

Entire state of New York, ch 7 was 3,672 or 80% of total filings, ch 13 was 797 or 17%.

Central District of CA, ch 7 was 7,464 or 77% of total filings, ch 13 was 2,180 or 22%.

Entire state of CA, ch 7 was 14,108 or 77% of total, ch 13 was 4,145 or 22%.

Entire state of Michigan, ch 7 was 4,589 or 85% of total, ch 13 was 792 or 15%. 

Entire state of Hawaii, ch 7 was 209 or 84% of total, ch 13 was 46 or 15%.

The Central District of California had more total filings in August than the entire states of New York and Texas combined.  

12 districts out of 95 total had more chapter 13s than chapter 7; 3 districts in Alabama, 2 in Georgia, 2 in Texas, 1 each in Mississippi, Louisiana, North Carolina, Tennessee and Puerto Rico. 

Thanks to Bankruptcy Data Project.

Circuit Court of Appeals Cases from Last Week (a good day for Ford)

5th Circuit Court of Appeals, September 09, 2009
Ford Motor Credit Co. v. Dale, --- F.3d ---, 2009 WL ----------- (5th Cir. 2009)(Ford has purchase-money security interest in those portions of a claim attributable to the payoff of negative equity in a trade-in vehicle, gap insurance, and an extended warranty)

8th Circuit Court of Appeals, September 08, 2009
Ford Motor Credit Co. v. Mierkowski, --- F.3d ---, 2009 WL ----------- (8th Cir. 2009)(2-1 ruling that under Missouri law, the amount financed to pay off the negative equity in the trade-in is part of the price of the new car, thus it is a purchase-money obligation)

8th Circuit Court of Appeals, September 09, 2009
In re Callicott, --- F.3d ---, 2009 WL ----------- (8th Cir. 2009)(creditor has a purchase-money security interest in its entire claim, including the negative equity financing resulting from debtor's trade-in vehicle - this was the same panel as the Mierkowski case above)

Thanks to Findlaw.com. 

C.J. John Roberts to Speak at Univeristy of Michigan Law Today

Chief Justice Roberts will be speaking at the Michigan Law School today and attending the Michigan/Notre Dame football game tomorrow.  You can read the invitation letter and the story of the invite here.  I was surprised to see that Roberts has a "Chief of Staff," Jeffrey Minear, who "help[s] the Chief Justice administer the Court and the judiciary, as well as serving as the Chief Justice’s liaison to other government agencies.”

Central District Filings in August 2009

In August, 2009, the Central District saw 9,740 filings compared to 9,886 filings in July, 9,578 in June, 8,965 in May, 8,398 in April, 8,518 in March, 6,967 in February and 5,999 in January.  That is 58,436 for the first seven months compared 33,396 for the same seven months last year or a 75% increase.

August filings broken down by chapter:

CACB

7464; ch 7

96 ; ch 11

2180; ch 13

9740; total

Chapter 13s were 2,053 in July, 2,291 in June, 1,988 in May - 21% of total filings - roughly the same percentage as the last four months.  That is 411 new petitions per trustee for the month.     

There were 71 chapter 11 petitions in July, 110 in June and 66 in May. 

Filings so far in 2009:

CACB

52406 ch 7

761  ch 11

15018 ch 13

68191  total

 

Same numbers Jan through Aug, 2008;

CACB

29413; ch 7

547; ch 11

9629; ch 13

39591 total

This info can be found at the Bankruptcy Data Project.   

Outliers, The Story of Success

This is one of the best books I have ever read.  I don't read books on how to be successful (wear a suit, look the other guy in the eye etc) but my wife told me about the book a few times and the first chapter starts with a discussion about hockey so I gave it a try.  I was hooked within a few pages. An outlier is a person with a reasonable amount of intelligence, who makes tons and tons of effort to get to someplace, and is in the right place at the right time - the stars align for him or her.  Malcolm Gladwell proves this beautifully.  I expect unfortunately that people are going to be described now as outliers until the word loses its significance.  The young USC quarterback, Matt Barkley, was called an outlier in a recent article and Prof. Steve Bainbridge calls himself an outlier on his blog.  An outlier is not just some super smart person or great athlete; he is, as we all are, a product of a lots of things that result in what we call success.  To be sure, he is a person who makes a monster effort at what he is doing, but lots of people make monster efforts and don't reach the pinnacle of success - that's what the book is about - why do some get there and some don't?  Let me know what you think.      

FIU Law Review Invite

Dear Mr. Hayes,
    My name is Joseph Van de Bogart, and I am the Executive Symposium Editor for the Florida International University Law Review. I am currently in the process of preparing our Fall/Winter 2009 book on emerging issues in bankruptcy law.  Considering your organization and the extensive expertise and experience of your members, on behalf of our law review, we would like to inquire as to whether you know of any interested authors.
    The members of the FIU Law Review Editorial Board decided to pursue this topic area because of the ever-increasing importance of bankruptcy proceedings in the global economy and in consideration of the current financial crises.  I am honored to be putting together the Fall 2009 book and to have the opportunity to work with tremendously talented individuals.
    We hope you will agree to send out this invite to your members.  While they would be  free to write on any topic of their choosing, example topics include how bankruptcy is changing due to the financial crisis, how bankruptcy law is applied in your jurisdiction, cross-border insolvency issues, or any other issue in bankruptcy law that you find of interest.    We look forward to hearing from you.  Please feel free to contact me via email at josephvandebogart@gmail.com or by phone at 954-258-9261.
    Sincerely,
    Joseph Van de Bogart
    FIU Law Review
    Executive Symposium Editor
    josephvandebogart@gmail.com

SEC Report on Madoff

The 477 page SEC report on why it failed to catch Madoff sooner can be accessed here.