A discharge of debt in bankruptcy “operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor. . . .” 11 U.S.C. § 524(a)(2). Certain debts, however, including debts “for violation of . . . any of the State securities laws,” are not subject to discharge. See 11 U.S.C. § 523(a)(19). A discharge injunction does not bar the collection of such debts.

The subject matter jurisdiction of bankruptcy courts causes confusion and can be hard to understand. In a recent decision, the United States Court of Appeals for the Eleventh Circuit clarified the meaning of the phrase “related to” in 28 U.S.C. §1334(b), the federal statute that governs the subject matter jurisdiction of bankruptcy courts.[1]

The Bottom Line

The Bottom Line

Addressing an issue of first impression in the Eleventh Circuit, the Court in Mantiply v. Horne (In re Horne), 876 F.3d 1076 (11th Cir. 2017), recently held that section 362(k)(1) of the Bankruptcy Code authorizes payment of attorneys’ fees and costs incurred by debtors in successfully pursuing an action for damages resulting from an automatic stay violation and in defending the damages award on appeal.

What Happened?

The Supreme Court has granted certiorari in Merit Management Group L.P. v. FTI Consulting Inc. to resolve a circuit split over the interpretation of Section 546(e) of the Bankruptcy Code, the “safe harbor” provision that shields specified types of payments “made by or to (or for the benefit of)” a financial institution from avoidance on fraudulent transfer grounds.

A recent case in the Southern District of New York, U.S. Bank, NA v. T.D. Bank, NA, applied the so-called Rule of Explicitness to the allocation of recoveries among creditors outside of a bankruptcy proceeding. In the bankruptcy context, this rule requires a clear and unambiguous intention to turn over post-petition interest to senior creditors at the expense of junior creditors. The court in this case found the requisite documentary clarity to pay post-petition interest ahead of the distribution of principal.

The Bottom Line: 

The Bottom Line:

In a case of first impression, the United States Court of Appeals for the Second Circuit recently held that antidiscrimination laws may be violated when a white employee is fired for having a black spouse. In Holcomb v. Iona College, 521 F.3d 130 (2d Cir. 2008), the Second Circuit vacated and remanded a federal district court’s grant of summary judgment in favor of Iona College (the “College”), finding that triable issues existed as to whether the College’s decision to terminate its employee, Craig Holcomb, was based at least in part upon a racially discriminatory motive.

March 9, 2012: Publication of Dynegy Examiner’s Report