The Barton doctrine (named after the U.S. Supreme Court case Barton v. Barbour, 104 US 126 (1881)), generally prohibits suits against receivers and bankruptcy trustees in forums other than the appointing courts, absent appointing court's permission. It applies to suits that involve actions done in the officers' official capacity and within their authority as officers of the court.
Some term loans allow borrowers to redeem debt. But to protect a lender’s expected yield, such loans often impose a “make-whole premium” on redemption. That is, they require compensation to the lender for the borrower’s premature termination of interest payments.
Overturning prior pro-debtor precedent, a federal appeals court recently emphasized that secured lenders are entitled to the benefit of their bargains with defaulting borrowers, by making it easier for lenders to collect default-rate interest from a Chapter 11 debtor under a plan of reorganization. Bankruptcy law has long allowed debtors to pay arrearages under a Chapter 11 plan and thereby reinstate the pre-default terms of their loans.
A Chapter 11 debtor “cannot nullify a preexisting obligation in a loan agreement to pay post-default interest solely by proposing a cure,” held a split panel of the U.S. Court of Appeals for the Ninth Circuit on Nov. 4, 2016. In re New Investments Inc., 2016 WL 6543520, *3 (9th Cir. Nov. 4, 2016) (2-1).
(Bankr. E.D. Ky. Nov. 28, 2016)
The bankruptcy court enters summary judgment in favor of the plaintiffs in this 11 U.S.C. § 523(a)(6) nondischargeability action. The plaintiffs had obtained a state court default judgment against the debtor for damages caused to them when the debtor drove to their home and shot one of the plaintiffs and injured the other plaintiff with flying debris. The court holds that collateral estoppel bars the debtor from relitigating the issue of whether the debtor caused a willful and malicious injury to the plaintiffs. Opinion below.
Judge: Wise
The In re Tempnology LLC bankruptcy case in New Hampshire has produced yet another important decision involving trademarks and Section 365(n) of the Bankruptcy Code. This time the decision is from the United States Bankruptcy Appellate Panel for the First Circuit (“BAP”). Although the BAP’s Section 365(n) discussion is interesting, even more significant is its holding on the impact of rejection of a trademark license.
On November 28, 2016, Judge Laurie Selber Silverstein of the Delaware Bankruptcy Court ruled on a motion for relief from the automatic stay (we she treated as a motion for relief from the discharge injunction) in the Altegrity bankruptcy, Case No. 15-10226. The “Opinion” is available here. The Opinion was issued following legal argument and, by agreement of the parties, based only upon undisputed facts. Opinion at *1.
In early November, the Ninth Circuit held in In re New Investments, Inc. that a debtor was required to “cure” defaults to an agreement using a post-default interest rate, overturning its prior, decades-old decision In re Entz-White Lumber & Supply, Inc., which had held that a debtor could cure agreements at pre-default interest rates.
Background
In the recent decision of Pacifica L51 LLC v. New Invs., Inc. (In re New Invs., Inc.), No. 13-36194, 2016 WL 6543520 (9th Cir. Nov. 4, 2016), the Ninth Circuit held that Section 1123(d) of the Bankruptcy Code legislatively overruled Great W. Bank & Tr. v. Entz-White Lumber & Supply, Inc. (In re Entz-White Lumber & Supply, Inc.), 850 F.2d 1338 (9th Cir.
Just about every year changes are made to the rules that govern how bankruptcy cases are managed — the Federal Rules of Bankruptcy Procedure. The revisions address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others.