(6th Cir. B.A.P. Feb. 2, 2017)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s judgment in favor of the plaintiffs in the nondischargeability action. Collateral estoppel prevented the debtor from defending against the claim that the debt arose from fraud and a willful and malicious injury. A Tennessee state court had entered a default judgment against the debtor that included specific factual findings that established a claim for nondischargeability under 11 U.S.C. §§ 523(a)(2)(A), (a)(4), and (a)(6). Opinion below.

Judge: Opperman

(Sixth Circuit Apr. 7, 2016)

Ruling from the bench on April 4, Bankruptcy Judge Alan Koschik of the United States Bankruptcy Court for the Northern District of Ohio denied approval of a disclosure statement proposed by FirstEnergy Solutions Corp. because the plan it described was “patently unconfirmable.”[1]

It is a unique characteristic of debt restructuring under Chapter 11 of the Bankruptcy Code that a majority of a class of creditors can accept a modification of the terms of the debts owed to the class members, as provided in a plan of reorganization, and thereby bind non-accepting class members.[1] The ordinary route to confirming a Chapter 11 plan is to obtain its acceptance by a majority of every impaired class of creditors and equity hold

The Bottom Line

The Supreme Court has granted certiorari in Merit Management Group L.P. v. FTI Consulting Inc. to resolve a circuit split over the interpretation of Section 546(e) of the Bankruptcy Code, the “safe harbor” provision that shields specified types of payments “made by or to (or for the benefit of)” a financial institution from avoidance on fraudulent transfer grounds.

The Bottom Line:

In a case of first impression, the United States Court of Appeals for the Second Circuit recently held that antidiscrimination laws may be violated when a white employee is fired for having a black spouse. In Holcomb v. Iona College, 521 F.3d 130 (2d Cir. 2008), the Second Circuit vacated and remanded a federal district court’s grant of summary judgment in favor of Iona College (the “College”), finding that triable issues existed as to whether the College’s decision to terminate its employee, Craig Holcomb, was based at least in part upon a racially discriminatory motive.

In Giant Eagle, Inc. v. Phar-Mor, Inc.,1 the United States Court of Appeals for the Sixth Circuit held that a lessor-claimant whose lease was rejected pursuant to section 365(a) of Title 11 of the Bankruptcy Code was entitled to a claim for future-rent damages against the debtor, even though the lessor had entered into a nearly identical substitute lease. The Court concluded that efforts to mitigate damages by the lessor would not be considered in reducing the actual damage claim when those efforts failed to reduce the actual harm suffered by the lessor.

On January 27, 2020, FERC petitioned the United States Court of Appeals for the Sixth Circuit (“Sixth Circuit”) for rehearing en banc of that court’s decision finding bankruptcy court-FERC concurrent jurisdiction over certain power purchase agreements. Notwithstanding such concurrent jurisdiction, the Sixth Circuit’s decision finds that the bankruptcy court’s concurrent jurisdiction is paramount, and that therefore, FERC-jurisdictional power purchase agreements are susceptible to rejection in bankruptcy.