A class of consumers suing the bankrupt Kangadis Food Inc. over its allegedly misleading olive oil purity claims is now suing the owners of the company in a separate class action aimed at holding them accountable.
On August 20th, the U.S. Court of Appeals for the Tenth Circuit reversed a trial court's ruling finding that judgments against Ponzi scheme "net gainers" were non-dischargeable in bankruptcy. The debtors were early investors in what turned out to be a Ponzi scheme and received more money than they invested. When the Ponzi scheme was uncovered, the state State of Oklahoma sued the debtors for unjust enrichment but not for any securities violations. After the State obtained a judgment on the unjust enrichment claim, the debtors declared bankruptcy.
On September 19th, the Ninth Circuit considered whether the exception to Chapter 7 bankruptcy discharge for debts resulting from a violation of state or federal securities laws applies when the debtor himself is not culpable for the securities violation that caused the debt. The case involved an attorney who was required by court order to return the unearned retainer paid by a company that engaged in securities fraud. The attorney filed a petition for Chapter 7 bankruptcy before he was technically required to return the money.
On April 7th, a federal bankruptcy court sanctioned Lender Processing Services, Inc., a home foreclosure service provider against whom the Federal Reserve Board and OCC have initiated enforcement action. The opinion explains LPS's business model and that model's failings, and cites case law documenting LPS's historic shortcomings. It reminds litigants that proving a default is the lender's, not counsel's, responsibility. In re Ron Wilson, Sr.
On July 16th, the OCC announced that it has approved the use of a shelf charter for the acquisition of a failed bank, allowing NAFH National Bank, Miami, Florida, to acquire two banks in Florida and one in South Carolina. This is the second instance in which a shelf charter was approved for use in such an acquisition. OCC Press Release.
On March 1st, the Seventh Circuit held that negative equity is included in a creditor's purchase money security interest and is not subject to a bankruptcy court's cramdown authority under Chapter 13 of the Bankruptcy Code. In re Aubrey Howard.
For months, landlords and tenants impacted by the COVID-19 pandemic have wondered whether force majeure clauses in leases would excuse a tenant's non-payment of rent. On June 3, 2020, a Bankruptcy Court for the Northern District of Illinois offered us an early look into how courts might interpret such clauses in the midst of the current crisis. In In re Hitz Restaurant Group, No. 20-B05012, 2020 WL 2924523 (Bankr. N.D. Ill. June 3, 2020), the Bankruptcy Court ruled that Executive Order 2020-7, the Stay-at-Home Order (the "Order") enacted by Illinois Governor, J.B.
Gupta’s $13.9 Million SEC Insider Trading Penalty Affirmed
On July 16th, the National Futures Association ("NFA") announced it has requested that the Special Committee for the Protection of Customer Funds, consisting of the public representatives on NFA's Board of Directors, retain the services of a national law firm to conduct a careful internal review of NFA's audit practices and procedures, and the execution of those procedures in the specific instance of Peregrine Financial Group, to assure that the right procedures are in place and that they are being properly followed.
Sending the Debtors back to the drawing board after almost three years in bankruptcy, in a 139 page opinion, the Bankruptcy Court has for the second time denied confirmation of the Plan of Reorganization for Washington Mutual, Inc. (“WaMu”), which was the owner of the largest savings bank ever to be seized by the FDIC.