In In re Kohls, 2007 LEXIS 76 (Bankr NDWVa 2007), the debtor filed this adversary proceeding against the Bank to cancel indebtedness and recover damages related to a $34,864 loan that the Bank made to the Debtor on the grounds that the loan was unconscionable at the time it was executed in violation of W. Va. Code § 46A-2-121.
Many bankruptcy practitioners are familiar with the general tenet that an obligation secured only by a mortgage on the Debtor’s principal residence is immune from modification or avoidance by the Debtor. Sections 1123(b)(5) and 1322(b)(2) of the Bankruptcy Code protect residential mortgages from being “stripped-down” to the value of the subject real estate or subjecting the terms of the underlying obligation to modification.
A recent judgment for partial dismissal by the United States District Court for the Middle District of Tennessee reinforces that a bank, when serving as a depository of fiduciary funds, may be shielded from liability for the fiduciary’s misconduct by the powerful protections of Tennessee’s Uniform Fiduciaries Act (the “UFA”).
The Third Circuit recently held that a bankruptcy court may confirm a Chapter 11 plan that includes a sale of assets in which secured creditors are not permitted to “credit bid” for the assets. In re Philadelphia Newspapers, LLC, 599 F.3d 298 (3d Cir. 2010). In that case, the debtors in possession, companies that own and operate the Philadelphia Inquirer and Philadelphia Daily News, moved the bankruptcy court to approve bid procedures for an auction of the debtors’ assets. Id. at 302.
Under BAPCPA, enacted in 2005, a Bankruptcy Court may not approve a Chapter 13 plan which does not provide for the payment of all unsecured claims in full if the plan does not devote all of the debtor’s projected disposable income over the life of the plan to repayment of the unsecured creditors.
The Bankruptcy Appellate Panel for the Sixth Circuit has issued an opinion protecting and preserving a bank’s security interest in funds in the debtor’s bank account notwithstanding the fact that the bank released those funds to the trustee. In re Cumberland Molded Products, LLC, No. 09-8049 (6th Cir. B.A.P. June 23, 2010).
A recent defeat by a student-loan creditor could turn out to be a victory for the industry overall.
On March 23, 2010, the United States Supreme Court decided an important case concerning a student-loan creditor’s motion to void a bankruptcy court’s judgment.1 The creditor brought this motion after initiating collection efforts and in response to the debtor’s request to cease and desist those efforts.
The District Court for the Northern District of Ohio recently clarified the applicable requirements for post-petition severance payments to a debtor’s former officers. In the case of In re: Forum Health, et al.1, the debtor sought authorization from the Court to make a severance payment in the amount of $18,126.00 to its former Chief Executive Officer. The Trustee objected, asserting that the debtor’s motion was not based on a program that was generally applicable to all full-time employees as required by 11 U.S.C. § 503(c)(2)(A).
Chapter 7 Trustees can and sometimes do successfully avoid creditor’s perfected liens. Typically, the avoidance opportunity arises because the lien was not perfected on a timely basis. The Bankruptcy Code provides that the avoided liens may be “preserved” for the benefit of the bankruptcy estate; this prevents a windfall to a junior lienor who would become the first lienholder courtesy of the Trustee’s success.
On July 26, 2010, the Indiana Court of Appeals, in the published decision of Green Tree Servicing, LLC., v. Brian D. Brough, No. 88A01-0911-CV-550, addressed the issue raised by Appellant Green Tree as to whether the trial court erred by vacating its prior Order directing the parties to arbitrate their dispute, which involved a prior bankruptcy filing and a claim under the Fair Credit Reporting Act.