The Ninth Circuit Court of Appeals recently rendered its decision in the Mwangi case, dealing whether a debtor can assert a claim against his bank for placing an administrative freeze on his bank account pending a determination of the debtor’s exemption claim as to the funds in the account.
If a creditor violates the automatic stay by seizing property of the estate and fails to cure that violation before the debtor files an action under sec. 362(k), may the debtor recover his attorney’s fees for prosecuting the stay violation under sec. 362(k)? The Ninth Circuit Court of Appeals recently ruled that, in these circumstances, attorney’s fees incurred in prosecuting a stay violation are recoverable by a debtor against the creditor committing the violation.
Citing Ninth Circuit precedent from cases under the Bankruptcy Act, the Ninth Circuit BAP reluctantly held that a pre-petition state court civil contempt proceeding is exempt from the automatic stay of sec. 362 of the Bankruptcy Code. The decision of the BAP is Yellow Express, LLC v. Mark Dingley (In re: Dingley), 514 B.R. 591 (9th Cir. BAP 2014).
Bankruptcy Judge Dennis Montali in San Francisco said last week that he will allow a direct appeal to the Ninth Circuit from one of his rulings in the bankruptcy of Howrey LLP, skipping an intermediate appeal to the U.S. District Court. The judge relied on Jewel v. Boxer — a California state law case which holds that profit earned on unfinished business after dissolution belongs to the “old” firm, not to a newly-formed firm that completed the work.
For years, it has been the rule in the Ninth Circuit that a chapter 11 plan cannot discharge or otherwise affect the obligation of a non-debtor owed to a third party. This view interprets section 524(e) of the Bankruptcy Code, which provides that “the discharge of a debt of the debtor does not affect the liability of any other third entity on, or the property of any other entity for such debt,” to specifically prohibit the permanent release, discharge, or injunction of non-debtors. See
On August 26, 2014, the Ninth Circuit Court of Appeals held that Wells Fargo (the “Bank”) did not violate the automatic stay by placing a temporary administrative hold on a chapter 7 debtor’s bank accounts. See In re Mwangi, 2014 WL 4194057 (9th Cir. 2014). Holland & Hart represented the Bank in this significant victory.
“If ye continue in the faith grounded and settled, and be not moved away from the hope of [EBIA v. Arkison]. . .”
– Colossians 1:23, King James version (as revised)
Originally appeared in the August 2014 issue of The Bankruptcy Strategist.
Summary
On June 9, 2014, in Executive Benefits Ins. Agency v. Arkison, the United States Supreme Court ruled that, pursuant to 28 U.S.C. § 157(c)(1), a bankruptcy court may make proposed findings of fact and conclusions of law in a Stern “core” proceeding subject to de novo review by an Article III court. To read the full decision, click here.
Facts
The United States Supreme Court, on June 9, 2014, unanimously held that certain “core” proceedings (e.g., fraudulent transfer suits ) could still be litigated in the bankruptcy court, but only if that court’s proposed fact findings and legal conclusions are subject to de novo review by the district court. Executive Benefits Ins. Agency v. Arkison (In re Bellingham Ins. Agency), 2014 WL 2560461 (U.S. Sup. Court, June 9, 2014).