Two recent cases serve as reminders the devil is truly in the details.
Anyone who obtains title insurance, whether as an owner or a lender, should be aware of a recent abrupt and significant change in title insurance practices across the country. Title companies have recently stated that they will no longer delete creditors’ rights exclusions from, or add affirmative creditors’ rights coverage as an endorsement to, any of their issued title policies.
Individual debtors with old tax debts relating to late-filed tax returns may be surprised to find that those tax debts may not be dischargeable under section 523(a) of the Bankruptcy Code due to the lateness of the tax filing. There is a current Circuit split regarding whether a late tax filing constitutes a “return” at all, which is critical to the dischargeability inquiry. The Ninth Circuit weighed in last week in In re Smith, 2016 WL 3749156 (9th Cir. July 13, 2016), further cementing the split.
Buyers of, and lenders upon, distressed California real property can sleep a little better following a recent U.S. Ninth Circuit Court of Appeals decision: In the Matter of Craig L. Tippett, 2008 U.S. App. LEXIS 18914 (September 4, 2008). In Tippett, the Court upheld the California bona fide purchaser statute against a federal preemption claim and declined to find a violation of the Bankruptcy Code’s automatic stay provision in order to affirm an unauthorized real property sale by the Chapter 7 debtor.
Directors and officers of Delaware corporations face no liability to corporate creditors from direct claims for breach of fiduciary duty, under the Delaware Supreme Court’s recent ruling in North American Catholic Educational Programming Foundation, Inc. v. Gheewalla, (May 18, 2007) (“North American Catholic”).
Estate professionals are under continued scrutiny. Unlike other professionals, getting paid is not simply a matter of sending a bill. The bankruptcy court, appropriately so, closely oversees the amount and timing of payment of estate professional fees. And proper disclosure under the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) is critical for all estate professionals.
We’ve all seen it. The business opportunity looks enticing but is laced with risk about a potential bankruptcy filing down the road. As bankruptcy lawyers we are often asked how deals can be structured to prevent a potential bankruptcy filing.
Editor’s Note: On June 16, 2016, The Bankruptcy Cave gave you our summary of the controversial Sabine decision. At that time, post-hearing motions were pending.
A recent decision out of a New Jersey Bankruptcy Court highlights a loophole in the Bankruptcy Code which may allow Chapter 7 debtors to keep significant assets out of the hands of trustees and creditors.