Seeking to recharacterize a debt claim as an equity contribution to the debtor through the equitable powers of the bankruptcy court (something we’ve written about quite a bit in our blog) is one way to reduce creditor claims against the bankruptcy estate, but only in certain circuits.
The U.S. Court of Appeals for the Fourth Circuit recently reversed the dismissal of a Chapter 13 bankruptcy debtor’s complaint filed in federal district court alleging that defendants foreclosed on and sold the debtor’s home in violation of the automatic stay, holding that the federal district court had subject matter jurisdiction and the complaint adequately stated a plausible claim for relief under 11 U.S.C. § 362(k).
Although almost all of an individual debtor’s assets become property of the estate upon a bankruptcy filing, certain exceptions exist to the rule at both the federal and state level. In some jurisdictions, funds held for a debtor in retirement plans are exempt assets. An open question, however, is whether payments distributed from such plans prior to the petition date are also exempt assets. The United States Court of Appeals for the Tenth Circuit recently held in
Last month, the Supreme Court announced its decision in Baker Botts LLP v. Asarco LLC. As most readers will be aware, that case involved a dispute over whether debtor’s retained counsel could be compensated for the fees and expenses incurred in the defense of its bankruptcy fee application.
“Many debtors…fail to complete a Chapter 13 [bankruptcy] plan successfully,” noted Justice Ruth Bader Ginsburg in a recent Supreme Court decision, Harris v. Viegelahn, 135 S.Ct. 1829 (2015). It is for this reason that the Bankruptcy Code provides the nonwaiveable right of a debtor to convert a voluntary Chapter 13 case to a Chapter 7 case at any time. 11 U.S.C. § 1307(a). However, this conversion is not without its challenges. One such challenge is determining how postpetition wages that were collected during the Chapter 13 plan should be distributed after the conversion.
In a post-housing crisis economy, many homeowners, facing a plummet in home values, found themselves trapped in homes that are worth less than the amount they owe bank. Those homeowners have sought refuge in Chapter 7 bankruptcy proceedings, attempting to strip down the first mortgage and leaving many junior lienholders holding nothing but the bag—until now. In a big win for lenders, the U.S.
The Bankruptcy Code allows bankruptcy trustees, debtors in possession, and official committees to hire attorneys, accountants, and other professionals to assist them in carrying out their statutory duties, with their fees to be paid by the bankruptcy estate. However, to get paid, these professionals must obtain approval from the bankruptcy court. But what happens when someone objects to their fees? Can the professionals recover the fees they incur in defending their fee applications? The Supreme Court says no.
Will Congress Finally Act?
This is the fourth in a series of Alerts regarding the proposals made by the American Bankruptcy Institute Commission to Reform Chapter 11 Business Bankruptcies. We discuss here the Commission’s efforts to require that debtor’s management act in a more transparent fashion. For copies of this or any prior articles about the Commission, please contact any BakerHostetler bankruptcy attorney.
This is the fourth in a series of Alerts regarding the proposals made by the American Bankruptcy Institute Commission to Reform Chapter 11 Business Bankruptcies. We discuss here the Commission’s efforts to require that debtor’s management act in a more transparent fashion. For copies of this or any prior articles about the Commission, please contact any BakerHostetler bankruptcy attorney.