The circuit courts continue to wrestle over the duties imposed by the Bankruptcy Code’s automatic stay on creditors concerning turnover of a debtor’s impounded vehicle. Is a creditor required to automatically turn over the vehicle as soon as the bankruptcy petition is filed, or can it retain possession while awaiting an order of the bankruptcy court adjudicating turnover in an adversary proceeding?
“[A] secured creditor [has no] affirmative obligation under the automatic stay to return a debtor’s [repossessed] collateral to the bankruptcy estate immediately upon notice of the debtor’s bankruptcy,” held the U.S. Court of Appeals for the Third Circuit on Oct. 28, 2019. In re Denby-Peterson, 2019 WL 5538570, *1 (3d Cir. Oct. 28, 2019). Affirming the lower courts, the Third Circuit joined “the minority of our sister courts – the Tenth and D.C. Circuits” with its holding.
In Kinnick v. Med-1 Solutions, LLC, the District Court for the Southern District of Indiana found that sending a collection letter to a bankruptcy debtor provided that debtor with standing to file a claim based on the Fair Debt Collection Practices Act against the creditor outside of the bankruptcy case.
The U.S. Court of Appeals for the Fifth Circuit recently held that a bankruptcy court lacks the power to enforce discharge injunctions entered in other districts, and that the debtors’ particular private education loans were not excepted from discharge.
A copy of the opinion in Crocker v. Navient Solutions, LLC is available at: Link to Opinion.
On October 29, the U.S. Court of Appeals for the Eleventh Circuit vacated a district court decision denying class certification, concluding the court erred in its determination that each FDCPA and Florida Consumer Collection Practices Act (FCCPA) claim’s individualized inquiries predominated over issues common to the proposed class.
The Fifth Circuit’s recent decision in Crocker v. Navient Solutions is a stark reminder to for-profit student lenders and servicers that bankruptcy caselaw continues to evolve relating to discharge. In Crocker, the Fifth Circuit joined the trend of cases holding that private student loans are dischargeable in bankruptcy.
Our private credit clients are preparing for the next restructuring cycle and have called us about ultrafast bankruptcy cases. These chapter 11 cases have grabbed headlines because they lasted less than a day. Specifically, FullBeauty Brands and Sungard Availability Services emerged from bankruptcy in 24 hours and 19 hours, respectively. Is this a trend and which companies are best suited to zip through chapter 11?
A. Prepacks, Pre-Negotiated Cases, and Free-Falls
Commission for Lawyer Discipline v. Cantu Supreme Court of Texas, No. 18-0879 (October 25, 2019) Per Curiam (opinion available here)
In a non-precedential ruling, the Court of Appeals for the Third Circuit upheld a district court decision to grant summary judgment in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act.
Signing the Family Farmer Relief (FFR) Act of 2019 was like opening a pressure release valve. American farmers have suffered increasing financial stress this year from numerous sources, so a change in the law making Chapter 12 available to more farmers is likely to push the number of bankruptcy filings higher.
LEGAL CHANGES