An individual Chapter 11 debtor’s “estate was diminishing” with no “reasonable likelihood of rehabilitation,” held the U.S. Court of Appeals for the First Circuit on July 5, 2016. In re Hoover, 2016 WL 3606918, *2 (1st Cir. July 5, 2016), affirming the bankruptcy court’s conversion of the case to a Chapter 7 liquidation. In a rare appellate decision on the conversion issue, the First Circuit affirmed the finding that the debtor had sold “inventory without replacing it with new inventory or retaining cash sufficient to offset the diminution.” Id. at *3.

While the majority of the cases covered by the Weil Bankruptcy Blog address issues arising in corporate restructurings, cases concerning individual debtors often offer interesting insights into the history and meaning of various provisions of the Bankruptcy Code.

Last week, the Second Circuit Court of Appeals reversed a bankruptcy court order barring tort claims for product defects against the purchaser of General Motors’ (“Old GM”) assets.  The purchaser (“New GM”) had purchased Old GM’s assets “free and clear” in Old GM’s 2009 bankruptcy case under section 363 of the Bankruptcy Code.  The Second Circuit’s ruling is certainly a victory for the plaintiffs who are seeking damages for personal injuries arising o

Until the recent U. S. Supreme Court’s decision in Husky International Electronics, Inc. v. Ritz, __ U.S. __, 136 S.Ct. 1581, 194 L.Ed.2d 655, 84 U.S. L.W. 4270 (2016), there was disagreement in the circuit courts regarding whether a debtor in bankruptcy could be denied a discharge under 11 U.S.C. § 523(a)(2)(A) where the evidence of wrongdoing proved the debtor committed actual fraud, but there was no evidence that the debtor made a misrepresentation to the creditor seeking to bar the discharge.

A decision from the United States Supreme Court penned by Justice Sonia Sotomayor adopted a broad reading of “actual fraud” in section 523(a)(2)(A) of the Bankruptcy Code, which excepts from discharge debts “obtained by . . .

Recently, a bankruptcy court in the First Circuit, confronted with whether the debtors’ chapter 12 case could be converted to a chapter 11 case – an issue over which there is split in the case law – determined that the Debtors’ chapter 12 case could not be converted to a chapter 11 case.

Relevant Statutes and Statutory Provisions:

The Supreme Court of Ohio recently held that, when debt on promissory note secured by mortgage has been discharged in bankruptcy, the holder of the note may not pursue collection against the maker of note, but the mortgagee has standing to foreclose on the collateral property, and can use the amounts due on the note as evidence to establish that it may collect from the forced sale of the property.

On June 22, 2016, the Bankruptcy Court for the District of Delaware allowed a putative creditor class to file a class proof of claim in the In re Pacific Sunwear of California, Inc., et al., bankruptcy proceedings.[1]  In granting

On June 28, 2016, the U.S. Supreme Court agreed to hear a challenge to a Third Circuit-affirmed settlement and dismissal of the chapter 11 cases of Jevic Transportation, Inc. (“Jevic”) and certain of its affiliates. SeeOfficial Comm. of Unsecured Creditors v. CIT Grp./Bus. Credit Inc. (In re Jevic Holding Corp.), 787 F.3d 173 (3d Cir. 2015), cert. grantedCzyzewski v. Jevic Holding Corp., No. 15-649, 2016 WL 3496769 (U.S. 2016).

(E.D. Ky. July 8, 2016)

The district court affirms the bankruptcy court’s decision finding the debt dischargeable. The debtor sold a television to the plaintiffs, claiming it was a “high definition” television.The plaintiffs disputed that characterization and obtained a judgment in state court for the purchase price plus punitive damages. However, the court finds that the plaintiffs failed to meet their burden of proof in showing the requisite elements of § 523(a)(2)(A). Opinion below.

Judge: Schaaf