The Bankruptcy Code prevents an individual debtor from discharging certain debts, including, upon request of the creditor, debts for “fraud or defalcation while acting in a fiduciary capacity.” 11 U.S.C. § 523(a)(4). The Seventh Circuit recently confirmed in Stoughton Lumber Co., Inc. v. Sveum, No.
The US Supreme Court has unanimously held that a debtor cannot void a wholly underwater second mortgage in Chapter 7 bankruptcy proceedings. The decision comes in the consolidated cases of Bank of America, N.A. v. Caulkett, No. 13-1421, and Bank of America, N.A. v. Toledo-Cardona, No. 14-163.
In re Ramz Real Estate Co., LLC, 510 B.R. 712 (Bankr. S.D.N.Y. 2013) –
An undersecured mortgagee objected to a debtor’s proposed plan of reorganization on several grounds, including that (1) the plan was not approved by a proper impaired class and (2) retention of equity by the debtor’s members violated the absolute priority rule.
Following up on our coverage in the recent U.S. Supreme Court ruling that a debtor in a Chapter 7 case cannot ‘strip off’ or void a wholly unsecured junior mortgage under section 506(d) of the Bankruptcy Code, I had the opportunity to discuss the ruling with Colin O’Keefe of LXBN TV.
The Issue and Background
On June 2, 2015, the United States’ Supreme Court issued the opinion in the case of Bank of America v. Caulket, where the Court ruled that a Debtor whose home is ‘underwater’ cannot “Strip off” or void a junior lien when filing for Chapter 7 Bankruptcy protection. The Court in a unanimous decision answered the question of whether 11 U.S.C. §506(d) allows Chapter 7 debtors to void certain liens on their home. The Court stated, in a an opinion written by Justice Thomas,
A little over a year ago, I authored an article addressing the question of whether the “Absolute Priority Rule” applied to Chapter 11 bankruptcy cases filed by an individual. That article, which focused on the decision of the Fourth Circuit Court of Appeals in In re Maharaj 681 F. 3d 558 (4th Cir. 2012), noted that the trend appeared to be towards the conclusion that the Absolute Priority Rule did apply in such cases—but that in Michigan, the issue had not yet been addressed by the Sixth Circuit Court of Appeals. That has now changed.
This is the second in a series of Alerts regarding the proposals made by the American Bankruptcy Institute’s Select Commission to Reform Chapter 11 Business Bankruptcies. It covers the Commission’s recommendations about the paying of “critical vendors” and other unsecured creditors at the very beginning of a bankruptcy case. The Commission’s recommendations are set forth below. For copies of this Alert, or the prior article about the Commission’s recommendations regarding secured lenders, please contact any BakerHostetler bankruptcy attorney.
When a consumer debtor files a bankruptcy petition, a notice is mailed out by the court to all of the debtor’s scheduled creditors. In most bankruptcy courts, the notice contains the debtor’s filing date, case number, and other pertinent information meant to aid a creditor in identifying the debtor. In addition, the notice typically contains several important dates and deadlines.
On May 4, 2015, the United States Supreme Court unanimously held in Bullard v. Blue Hills Bank, Case No. 14-115, that a bankruptcy court’s order denying confirmation of a debtor’s proposed plan is not a “final” order that can be immediately appealed. The Supreme Court’s decision implicates practical considerations within the bankruptcy process and the appropriate balance between the bargaining power of debtors and creditors
Case Summary