In a split decision, the Sixth Circuit Court of Appeals in its opinion in Sunshine Heifers, LLC v. Citizens First Bank (In Re: Lee H. Purdy), 763 F.3d 513 (6th Cir. 2014) held a long term lease of livestock extending beyond the economic life of the individual leased livestock can still be a true lease and not a disguised security interest.
Recreational marijuana is legal in two states—Washington and Colorado—and medical marijuana is legal in another twenty-one states. Colorado alone has over 500 marijuana dispensaries and that number is on the rise. However, as the marijuana industry continues to grow, federal law still prohibits the use of marijuana. So what happens when a marijuana business becomes insolvent? Does it have the right to avail itself of the protections of the Bankruptcy Code?
On August 26, 2014, the Ninth Circuit Court of Appeals held that Wells Fargo (the “Bank”) did not violate the automatic stay by placing a temporary administrative hold on a chapter 7 debtor’s bank accounts. See In re Mwangi, 2014 WL 4194057 (9th Cir. 2014). Holland & Hart represented the Bank in this significant victory.
In its opinion in Clark v. Rameker, 573 U.S. ____ (2014), the United States Supreme Court ruled that inherited IRA accounts are not exempt under 11 U.S.C. § 522(b)(3)(C), and are subject to payment of creditor claims in a chapter 7 case.
A nightmare scenario for a lender: you lend $1.2 million to a debtor to purchase equipment; you take a first priority security interest in the equipment; one day another company calls to tell you it purchased the equipment at a bankruptcy auction you never knew about, for 10-20% of what you’re owed; you try to overturn the sale, but cannot, because the sale is consummated and your appeal is now “statutorily moot.” Could this happen? It happened in a recent Oregon case.
The Bankruptcy Code impairs lenders’ rights in various ways. Accordingly, lenders have long attempted to devise methods of preventing borrowers from filing for bankruptcy protection. Such attempts generally have not been successful -- courts hold that as a general matter, a borrower’s pre bankruptcy waiver of the right to file bankruptcy is against public policy and is void. See, e.g., Klingman v. Levinson,831 F.2d 1292, 1296 n.3 (7th Cir.
In addition to their full-time jobs, many individuals have their own “side businesses” which generate some income but not enough to enable them to give up their “day job.” Many of these side businesses require assets in order for the individual to deliver the goods or services to his customers. When that individual has to file for bankruptcy, may he or she claim a “tools of the trade” exemption in the assets used in the side business? The Tenth Circuit Bankruptcy Appellate Panel in held a debtor may assert such an exemption in appropriate circumstances, in its decision in&
The United States Court of Appeals for the Tenth Circuit recently ruled that a chapter 7 trustee may not avoid a post-petition transfer under either § 549 or § 362, where recovery of the transfer would not benefit the estate, even though the elements for avoidance under those sections are established by the evidence.
The definition of a family famer under § 101(18)(A) of the Bankruptcy Code is convoluted at best: a family farmer is a farmer whose aggregate noncontingent, liquidated debts arising out of his farming operation make up not less than 50% of his debts; however, the farmer’s debt “for” his principal residence is excluded in making this calculation unless the debt also “arises out of” his farming operation, in which event it is included in making the calculation. In its opinion in First National Bank of Durango v.
A central purpose of bankruptcy is to grant debtors a fresh start – in bankruptcy terms, a “discharge” of existing debts. But not all debts are dischargeable. Bankruptcy Code § 523(a)(2)(A), for example, prevents the discharge of debts resulting from “false pretenses, a false representation, or actual fraud . . . .” What if a principal incurs a large debt based not on his own fraud, but on the fraud of his agent? Is that debt dischargeable? That was the question addressed recently by the Ninth Circuit Bankruptcy Appellate Panel inIn re Huh, BAP No.