The issue of whether the Bankruptcy Code precludes claims under the FDCPA took another twist in an opinion issued by the Second Circuit last week. In a pro consumer opinion, the Second Circuit seemingly changed direction by reversing the Southern District of New York’s dismissal of FDCPA claims which arose in part as a result of violations of the discharge injunction. See Garfield v. Ocwen Loan Servicing, LLC, 2016 U.S. App. LEXIS 3 (2ND Cir. Jan. 4, 2016).
On December 14, 2015, the United States Court of Appeals for the Second Circuit held that claims arising from securities of a debtor’s affiliate must be subordinated to all claims or interests senior or equal to claims of the same type as the underlying securities in the bankruptcy proceeding.
“Claims arising from securities of a debtor’s affiliate should be subordinated” to all other “senior or equal” claims in the debtor’s bankruptcy case, held the U.S. Court of Appeals for the Second Circuit on Dec. 14, 2015. In re Lehman Brothers Inc., 2015 WL 8593604, at *3 (2d Cir. Dec. 14, 2015).
A recent Second Circuit Court of Appeals decision, Franklin v. McHugh, 2015 WL 6602023 (2d Cir. 2015), illustrates the dire consequences of failing to comply fully with all electronic filing requirements for a notice of appeal.
A hornbook principle of U.S. bankruptcy jurisprudence is that valid liens pass through bankruptcy unaffected. This long-standing principle, however, is at odds with section 1141(c) of the Bankruptcy Code, which provides that, under certain circumstances, "the property dealt with by [a chapter 11] plan is free and clear of all claims and interests of creditors," except as otherwise provided in the plan or the order confirming the plan.
“Render unto Caesar the things that are Caesar’s, and unto [CEC] the things that are [CEC’s] [?]” – Matthew 22:21 (as revised)
On August 4, 2015, the Second Circuit weighed in for the first time on the circumstances in which the confirmation of a Chapter 11 plan could strip a secured creditor of its lien. In City of Concord, N.H. v.
A Chapter 11 reorganization plan may extinguish a secured creditor’s lien if: (1) the plan “does not preserve the lien”; (2) the court confirms the plan; (3) the plan “dealt with” the lender’s collateral; and (4) the lender “participated in the bankruptcy” case, held the U.S. Court of Appeals for the Second Circuit on Aug. 4, 2015. In re Northern New England Tel. Operations, LLC, 2015 WL 4619576 (2d Cir. Aug. 4, 2015).
Key Takeaway: Second Circuit allows secured
creditors to opt out of chapter 11 and preserve their liens from discharge.
A bankruptcy court must dismiss a creditor’s involuntary bankruptcy petition when the debtor has raised a “legitimate basis” for disputing the petitioning creditor’s underlying claim, held the U.S. Court of Appeals for the Second Circuit on July 14, 2015. In re TPG Troy, LLC, 2015 WL 4220619, at *5 (2d Cir. July 14, 2015). The Second Circuit also affirmed the bankruptcy court’s award of $513,427 in attorney’s fees and costs to the vindicated debtor under Bankruptcy Code (“Code”) Section 303(i)(1). Id. at *6.