The government's response to the recent Insolvency and Corporate Governance Consultation has increased the emphasis on flexibility and the restructure and rescue of businesses. However, along with the recent October Budget, there are proposed reforms which are set to increase the focus and accountability for directors of companies.
Preliminary Moratorium
One of the key new proposals to be introduced with the aim of rescuing companies is a "Preliminary Moratorium".
(Bankr. W.D. Ky. Oct. 16, 2017)
The bankruptcy court overrules the Chapter 7 trustee’s objection to the debtor’s claimed exemption. The debtor moved to reopen her case, add a personal injury cause of action to her schedules, and claim an exemption in a portion of the recovery on the cause of action. The court holds that Law v. Siegel is applicable, and thus the court does not have authority to deny the exemption even if bad faith exists. Opinion below.
Judge: Lloyd
Attorney for Debtor: Darren K. Mexic
Trustee: Jerry Burns
(Bankr. S.D. Ind. Aug. 21, 2017)
(Bankr. S.D. Ind. June 26, 2017)
The bankruptcy court dismisses without prejudice the debtor’s complaint against a foreclosing creditor because the court concludes it lacks subject matter jurisdiction. The debtor filed the complaint alleging numerous causes of action, including violations of the automatic stay. However, the alleged acts occurred at a time when the subject property was no longer property of the estate. Opinion below.
Judge: Carr
Attorneys for Debtor: Sabin, Shea & Des Jardines LLC, J. Andrew Sabin
(Bankr. E.D. Ky. Apr. 13, 2017)
(6th Cir. Feb. 23, 2017)
The Sixth Circuit affirms the bankruptcy court’s decision to confirm the debtor’s Chapter 13 plan, which included payment of overdue property taxes under Tennessee law with an interest rate of 12%. The state argued that the interest rate should be 18% due to the additional 6% interest permitted under the applicable state statute for a default penalty. The court holds that the 12% provided in the “nonbankruptcy law” is applicable, while the 6% penalty is not applicable. Opinion below.
Judge: Stranch
(6th Cir. B.A.P. Jan. 4, 2017)
The Sixth Circuit B.A.P. affirms the bankruptcy court’s decision and order denying the trustee’s request for turnover of funds paid to the debtor’s criminal defense attorney. The debtor’s mother had made the transfer from a bank account held jointly with the debtor. The trustee failed to meet the burden of proving by a preponderance of the evidence that the attorney fee was property of the estate, and thus turnover was inappropriate. Because the debtor had no claim to the fee, the trustee had no claim for turnover. Opinion below.
(Bankr. E.D. Ky. Nov. 11, 2016)
The bankruptcy court grants summary judgment in favor of the trustee in this declaratory judgment action, in which the plaintiff sought a judgment that certain health insurance proceeds were not property of the estate. The plaintiff argued that the debtor had assigned the proceeds to it prior to the bankruptcy, but the court holds that the evidence presented did not establish such assignment. The debtor’s spouse had signed the document for him, but the debtor’s spouse did not have the requisite agency authority to do so. Opinion below.
(N.D. Ind. Sept. 14, 2016)
(E.D. Ky. Bankr. June 24, 2016)
In this Chapter 13, the bankruptcy court rules on the objection to confirmation and finds that the creditor’s expert’s valuation of the debtor’s mobile home was more reliable than the valuations provided by the debtor’s experts. The creditor’s expert testimony was not hearsay, as it was reasonable for the expert to rely on information about the particular mobile home model provided by the manufacturer. The debtor’s experts failed to obtain knowledge of the particular model before determining their values. Opinion below.
Judge: Schaaf