The United States Second Circuit has issued its ruling in the Momentive Performance Materials casesresolving three separate appeals by different groups of creditors of Judge Bricetti’s judgment in the United States District Court of the Southern District of New York, which affirmed

(6th Cir. Oct. 6, 2017)

The Sixth Circuit affirms the bankruptcy court’s dismissal of the 11 U.S.C. § 727 complaint. The plaintiff is the debtor’s ex-husband. The court holds that the plaintiff does not have standing to bring the complaint. The only debt owed to him was already nondischargeable under 11 U.S.C. § 523(a)(15) because it was incurred in connection with a divorce decree. Opinion below.

Judge: Bush

Attorney for Appellant: Kenneth R. Beams

Appellee: Pro Se

The Sixth Circuit affirms the bankruptcy court’s interpretation of the creditor’s settlement agreement with the debtor. The agreement provided that the creditor released his claims against the city and the individual officers. The plan only provided for a small percentage to be paid on the claim, but stated claims against individual officers were not discharged by the plan. The creditor argued the settlement agreement should not be held to have released claims against the individual officers, but the court finds the plain language of the agreement makes clear such claims were released.

On August 10, 2017, the U.S. Supreme Court rescinded the grant of certiorari in PEM Entities LLC v. Levin on the grounds that review had been “improvidently granted.” The case seemingly provided a perfect vehicle to resolve the circuit split on whether federal or state law governs debt recharacterization in bankruptcy, and less than two months after the Court first agreed to hear the case, its dismissal came as a surprise.

(6th Cir. Aug. 31, 2017)

The U.S. Court of Appeals for the Sixth Circuit recently affirmed a bankruptcy court’s order granting the debtors’ motion to compel the trustee to abandon their home as property of the estate because it had little equity and thus little value for unsecured creditors.

A copy of the opinion is available at: Link to Opinion.

(6th Cir. July 18, 2017)

The Sixth Circuit affirms the bankruptcy court’s order modifying its prior sale order under Rule 60(b). The court’s original order approved a sale of estate assets but the sale agreement and the order failed to include certain contracts to be assumed and assigned to the buyer. The court finds that modification of the order was appropriate because the motion to modify the order was filed within one year of entry of the sale order and the bankruptcy court properly exercised its discretion after weighing the relevant factors. Opinion below.

(6th Cir. July 14, 2017)

The Sixth Circuit affirms the bankruptcy court’s order granting the debtors’ motion to compel the Chapter 7 trustee to abandon their residential real property. The trustee sought to evict the debtors in order to sell the property and pay creditors. The trustee argued that because he tendered the homestead exemption payment to the debtors, eviction should be permitted. The debtors argued and presented evidence to establish that there was no equity for the estate considering the condition of the property. Opinion below.

Judge: Gilman

The Bankruptcy Appellate Panel of the U.S. Court of Appeals for the Sixth Circuit recently held that a mortgage foreclosure deficiency judgment lien may be avoided under 11 U.S.C. § 522(f)(2), reversing the bankruptcy court’s ruling to the contrary.

A copy of the opinion is available at: Link to Opinion. 

When a defaulted borrower files a bankruptcy petition, two important events occur: (1) a bankruptcy “estate” comprised of certain assets of the debtor is created; and (2) all collection efforts (and pending litigation) against the debtor or its assets are automatically stayed. Accordingly, the court’s determination of whether items are or are not property of the debtor and of the bankruptcy estate is of critical importance to the creditor’s ability to collect on its debt.