The U.S. Court of Appeals for the Ninth Circuit has held that a nondischargeable debt for malicious and willful injury must include proof of tortious conduct. An intentional breach of contract does not suffice.
The United States Bankruptcy Court for the District of Delaware has ruled that a creditor cannot effect a “triangular” setoff of the amounts owed between it and three affiliated debtors, despite pre-petition contracts that expressly contemplated multiparty setoff. In re SemCrude, L.P., Case No. 08-11525 (BLS), 2009 WL 68873 (Bankr. D. Del. Jan. 9, 2009). The Court relied principally on the plain language of section 553(a) of the United States Bankruptcy Code, which limits setoff to mutual obligations between a debtor and a single nondebtor.
Financial advisors, investment bankers, lawyers and other professionals in reorganization cases should pay close attention to a decision of the U.S. Court of Appeals for the Second Circuit handed down on Jan. 6, 2009. In re Smart World Technologies, LLC, ___ F.3d ___ (2d Cir. 1/6/2009).
When a creditor seeks equitable relief in a bankruptcy court, must the court always follow common law principles of equity? Not according to several courts, including the Second Circuit. Concluding that the granting of equitable remedies may circumvent the Bankruptcy Code's equitable distribution system, courts have limited the application of equitable remedies in the bankruptcy context.
A federal bankruptcy imposed sanctions against two mortgage companies and their attorneys for making misrepresentations as to which party was the true holder of the mortgage and note. Decisions such as the one in In re Nosek resonate with particular significance as the mortgage crisis continues to have widespread ramifications.
The U.S. Court of Appeals for the Second Circuit has determined that a bankruptcy court may withdraw the derivative standing conferred on a statutory committee without that committee’s consent. Official Comm. of Equity Sec. Holders of Adelphia Communications Corp. v. Official Comm. of Unsecured Creditors of Adelphia Communications Corp. (In re Adelphia Communications Corp.), 544 F.3d 429 (2d Cir. 2008).
Introduction
In In re Entringer Bakeries, Inc.,1 the United States Court of Appeals for the Fifth Circuit affirmed the viability of the “earmarking doctrine” as a judicially-created defense to a preference action under section 547(b) of the Bankruptcy Code.
Introduction:
With the country officially in a recession and the lack of available refinancing options continuing, more and more businesses are faced with the realities of foreclosure. While foreclosure often allows a business to wipe the debt slate clean with respect to the foreclosed property, it can also create unintended tax consequences as well as tax planning opportunities.
Recourse v. Non-Recourse Debt