In a recent decision, Heritage Home Group LLC, et al., Case No. 18-11736-KG, 2018 WL 4684802 (Bankr. D. Del. Sept. 27, 2018), Judge Kevin Gross, U.S. Bankruptcy Judge for the District of Delaware, held that a consultant tasked with liquidating the debtors’ assets under a store closing and asset disposition agreement (“Disposition Agreement”) is not a professional, and consequently, not required to be retained under Section 327(a) of the Bankruptcy Code.

In hindsight, it seems inevitable that constitutional and other jurisdictional problems would arise when Congress, in enacting the Bankruptcy Reform Act of 1978, created impressive new powers and responsibilities for the bankruptcy courts (along with a considerable degree of independence) but denied them the status of Article III courts under the Constitution (by denying its judges lifetime tenure, as Article III requires). And it didn’t take long for the problems to arise.

District Court Confirms Bankruptcy Court’s Constitutional Authority to Approve Millennium Plan Releases, Dismisses as Equitably Moot Opt-Out Lenders' Remaining Issues on Appeal

The Bottom Line

In the recent decision William R. Lee Irrevocable Trust v. Lee (In re Lee), the Seventh Circuit Court of Appeals affirmed a bankruptcy court’s decision (also affirmed by the district court) piercing a non-debtor’s corporate veil and allowing a creditor of the non-debtor to participate in the bankruptcy of the corporation’s individual shareholder.

The U.S. Court of Appeals for the Eleventh Circuit held that 12 U.S.C. § 1715z-20(j) did not alter or limit the lender’s right to foreclose under the terms of the valid reverse mortgage contract where the non-borrower spouse was still living in the home.

Accordingly, the Eleventh Circuit affirmed the trial court’s dismissal of the plaintiff’s petition for injunctive relief to prevent the foreclosure sale.

When a bankruptcy petition is filed, an automatic stay comes into effect staying proceedings against the debtor or the debtor’s property. 11 U.S.C. § 362(a). The stay centralizes litigation regarding the debtor and its property in the debtor’s bankruptcy case. When contract entered into pre-bankruptcy contains an arbitration clause, a bankruptcy court will consider if the stay should be enforced or if the parties can resolve the matter in arbitration. In In re Argon Credit, LLC, No. 16-39654 (Bankr. N.D. Ill. Sept.

The consummation of a plan of reorganization typically involves a series of complex actions by the debtor and its stakeholders (for example, existing debt and equity are extinguished and new debt and equity issued in their place). If an appeal of a confirmation order is taken, and the appeal reaches the appellate court following consummation of the plan, it raises the difficult question of whether it is possible to grant effective relief to the appellant at that stage. As a constitutional matter, courts — including appellate courts — cannot hear matters that have become moot.

Are a licensee’s rights to use a trademark safe if the licensor files for bankruptcy and rejects the trademark license? This is a question the U.S. Supreme Court may resolve later this year.

The U.S. Court of Appeals for the Eleventh Circuit recently rejected an attempt by homeowners to collaterally attack a state court mortgage foreclosure judgment, affirming the trial court’s dismissal of an amended complaint with prejudice for failure to state a claim, but on alternative grounds.