September 12, 2009
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.
September 11, 2009
C.J. John Roberts to Speak at Univeristy of Michigan Law TodayChief 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.”
September 10, 2009
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:
7464; ch 7
96 ; ch 11
2180; ch 13
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:
52406 ch 7
761 ch 11
15018 ch 13
Same numbers Jan through Aug, 2008;
29413; ch 7
547; ch 11
9629; ch 13
This info can be found at the Bankruptcy Data Project.
Outliers, The Story of SuccessThis 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.
September 9, 2009
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 email@example.com or by phone at 954-258-9261.
Joseph Van de Bogart
FIU Law Review
Executive Symposium Editor
SEC Report on MadoffThe 477 page SEC report on why it failed to catch Madoff sooner can be accessed here.
September 7, 2009
Prof. Chemerinsky to Present Annual Supreme Court Review
FEDERAL BAR ASSOCIATION
ANNUAL SUPREME COURT REVIEW
September 30, 2009
Time: 12:00 p.m. - 1:30 p.m.
Featuring UCI Law School Dean Erwin Chemerinsky.
Also Featuring Annual Judge Barry Russell Scholarship Awards.
Location: The Biltmore Hotel, 506 S. Grand Ave., Los Angeles, CA
Cost: $70 (FBA Members), $45 (government employees) $85 (non members)
Group Registration Fees: FBA member table of 9 $600; Nonmember table of 9 $700
Federal judiciary receive complimentary admission.
Filings Fall in August, 2009
Total bankruptcy filings for August, 2009 decreased 8% to 119,874 from 130,500 in July. Total filings were 124,800 in June, 120,400 in May, 128,700 in April, 131,000 in March, 102,000 in February and 89,000 in January.
September 6, 2009
Delaware Bankruptcy Judge Rules 2004 Exam Proper Even Though Four Adversary Actions are Pending
Brief by UWLA Law Student, Sara Hussain:
In re Washington Mutual, Inc., 408 B.R. 45 (Bkrtcy D. Delaware, June, 2009)
ISSUE: Does the existence of four pending adversary proceedings or other litigation between the parties require denial of a requested 2004 examination?
Judge Mary Walrath
The chapter 11 debtor filed a motion for a 2004 exam directing the examination of JPMorgan Chase Bank (“JPM”). “For the reasons set forth below, the Court will grant the Debtors' Motion.” Prior to the filing of a chapter 11 petition, Washington Mutual, Inc. (“WMI”) was a savings and loan holding company, which owned Washington Mutual Bank (“WMB”). “Deteriorating confidence in WMB fueled a bank run beginning September 15, with $16.7 billion in deposits withdrawn over a ten-day period.” On September 25, 2008, FDIC took over WMB. It was the largest bank failure in the nation's history. Immediately after its appointment as receiver, the FDIC sold substantially all the assets of WMB to JPM. On September 26, the Debtors filed chapter 11 petitions.
The Debtors filed proofs of claim with the FDIC in its capacity as receiver of WMB which the FDIC denied. On March 20, 2009, the Debtors filed suit in the United States District Court against the FDIC (the “DC Action”) with the following five counts: (1) seeking review of the FDIC's denial of the Debtors' proofs of claim; (2) wrongful dissipation of WMB's assets; (3) taking of the Debtors' property without just compensation; (4) conversion of the Debtors' property; and (5) seeking a declaration that the FDIC's disallowance of the Debtors' claims is void. JPM moved to intervene in the DC Action; the Debtors have opposed JPM's motion to intervene.
JPM filed an adversary proceeding against the Debtors seeking declaratory judgments regarding the ownership of various assets which JPM asserts it acquired in good faith and for value from the FDIC (the “JPM Adversary Action”). The Debtors then filed an adversary proceeding against JPM seeking turnover of approximately $4 billion in cash held in demand deposit accounts in the name of the Debtors at WMB at the time WMB was seized and sold to JPM. JPM filed a motion to dismiss the Turnover Action; the Debtors filed a motion for summary judgment.
A fourth action was filed, in state court in Texas by a group of insurance companies which held common stock of WMI against JPM (the “Texas Action”). On March 25, 2009, the FDIC and JPM removed the Texas Action to the United States District Court for the Southern District of Texas.
Rule 2004(a) of the Federal Rules of Bankruptcy Procedure states that “on motion of any party in interest, the court may order the examination of any entity.” The scope of a Rule 2004 examination is “unfettered and broad.” “The examination ... may relate only to the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor's estate. Additionally, in a case under chapter 11 ... the examination may also relate to the operation of any business and the desirability of its continuance, the source of any money or property acquired or to be acquired by the debtor for purposes of consummating a plan and the consideration given or offered therefor, and any other matter relevant to the case or to the formulation of a plan.”
“At issue in this case is the potential limitation on the use of the Rule 2004 examination device caused by the shadow of pending adversary proceedings or litigation in other forums. The ‘pending proceeding’ rule states ‘that once an adversary proceeding or contested matter has been commenced, discovery is made pursuant to Federal Rules of Bankruptcy Procedure 7026 et seq., rather than by a Rule 2004 examination.’” In addition, courts have also recognized that Rule 2004 examinations may be inappropriate “where the party requesting the Rule 2004 examination could benefit their pending litigation outside of the bankruptcy court against the proposed Rule 2004 examinee.”
In this case, JPM argues that the 2004 examination is improper because it seeks to elicit information directly related to issues and parties already named in the JPM Adversary Action as well as the DC Action. However, the Court held that nothing in the document production request seeks any information related to the Turnover Action. “The requested Rule 2004 examination does seek extensive discovery related to the Texas Action and because the Debtor is not a party to the Texas Action, the requested 2004 examination is proper, even though it seeks information related to the Texas Action.”
JPM then argues that the Debtors' requested 2004 examination seeks documents related to the JPM Adversary Action. The JPM Adversary Action primarily seeks a series of declaratory judgments that JPM owns a number of disputed assets it asserts that it purchased when it acquired the assets of WMB from the FDIC. The Debtors' Motion seeks production of documents and related depositions relating to potential business tort claims, potential fraudulent transfer claims, potential turnover claims against JPM, and potential preferential transfer claims against JPM.
“The Court concludes that the Debtors' Motion does not seek the discovery of evidence ‘related’ to the JPM Adversary Action. With respect to the potential business tort claims, the Debtors seek to investigate conduct which occurred before the OTS closed WMB. In contrast, the JPM Adversary Action seeks to have the Court determine the ownership of certain disputed assets from the sale of WMB's assets to JPM, which occurred after the OTS closed WMB. Accordingly, the Court finds that the Debtors' Motion does not seek to discover evidence related to the JPM Adversary Action.”
JPM also argues that the Debtors' requested 2004 examination seeks documents related to the DC Action. However, JPM is not a party to the DC Action. “The possibility that JPM may intervene in the DC Action is not a sufficient reason to deny the Debtors' Motion at this time. The “pending proceeding” rule is predicated on there actually being a pending action involving the two parties.”
“[T]here is no justification to prevent the Rule 2004 examination of JPM simply because the Debtors may obtain evidence which could be used in a pending proceeding in which JPM is not yet a party. One of the primary purposes of a Rule 2004 examination is as a pre-litigation device. Consequently, the Court should not permit a party to avoid examination by simply filing a motion to intervene in a pending proceeding against a third party. Since JPM is not a party to the DC Action, the concern that the Debtors are attempting to circumvent the Federal Rules of Civil Procedure is not present. The ‘relatedness’ of the DC Action to the Debtors' requested 2004 examination is not relevant.”
With respect to the DC Action, the “Debtors seek to discover evidence regarding JPM's alleged malfeasance prior to the seizure and sale of WMB. JPM argues that discovery of this evidence is related to the Debtors alleged causes of action against the FDIC for dissipation of WMB's assets and the taking of Debtors' property without just compensation. However, these causes of action are premised on the FDIC's failure to maximize the value of the receivership's assets in the sale of WMB to JPM. Specifically, the Debtors assert the FDIC would have received a higher value through the liquidation of WMB than the sale to JPM. The requested 2004 examination does not seek to discover evidence related to the hypothetical liquidation analysis implicated in the dissipation and takings causes of action asserted in the DC Action.”
Circuit Court of Appeals Cases from Last Week3rd Circuit Court of Appeals, September 01, 2009
In re Jersey Tractor Trailer Training, Inc., --- F.3d ---, 2009 WL ------- (3rd Cir. 2009)(creditor did not waive its security interest in debtor's accounts receivable. District court's holding that a competing creditor did not act in good faith, and therefore cannot be a holder in due course or a purchaser of instruments, is vacated and remanded)