(6th Cir. Oct. 12, 2016)

The Sixth Circuit affirms the bankruptcy court’s order denying the creditor’s motion to reopen the case. The debtor’s ex-spouse filed the motion four years after the debtor received his discharge. The ex-spouse argued that an obligation arising out of their divorce proceedings should be declared non-dischargeable. The court holds the bankruptcy court did not abuse its discretion in denying the motion. Opinion below.

Per Curiam

Attorney for creditor: Aaron J. Scheinfield

A recent, and highly publicized, decision from the case formerly known as Sports Authority, In re TSA WD Holdings, Inc. et al., Case No. 16-10527 (MFW), Bankr. D. Del. (Docket #2863, Aug.

Lots of people and companies buy old debt—for example, hedge funds, private equity firms, and even some commercial bank affiliates. Typically, this is debt that the original creditor has charged off and sold for a fraction of the legal balance. In some cases, the debt has grown so old that a statute of limitations makes it technically unenforceable. But that doesn’t always stop the debt buyer from attempting collection.

On October 11, 2016, the United States Supreme Court granted certiorari in the matter of Johnson v. Midland Funding LLC, on appeal from the Eleventh Circuit Court of Appeals, in order to resolve whether a conflict exists between the Fair Debt Collection Practices Act (“FDCPA”) and the Bankruptcy Code. In Midland Funding, the appellate court found a debt collector to have violated the FDCPA by filing a proof of claim on time-barred debt in a Chapter 13 bankruptcy.

“Equitable mootness” prevented the U.S. Court of Appeals for the Sixth Circuit from “unravel[ing] the entire Plan, … forc[ing] the City [Detroit] back into emergency oversight, and requir[ing] a wholesale recreation of the vast and complex web of negotiated settlements and agreements.” In re City of Detroit, 2016 U.S. App. LEXIS 17774, *14, *17 (6th Cir. Oct. 3, 2016) (2-1).

CR&B Alert

Commercial Restructuring & Bankruptcy News

OCTOBER 2016, ISSUE 3

In This Issue:

Delaware and New York at Odds over Reclamation Claims--2

Second Circuit Sets Out Standard for Determining Scope of Free and Clear Provision in Sale Order Under Section 363(F)--2

Good Faith Filing Requirement Alive and Well in Involuntary Bankruptcy Cases--4

Unpaid Compensation Payable Exclusively in Stock Constitutes Equity, Not an Unsecured Claim--5

(Bankr. W.D. Ky. Oct. 3, 2016)

Companies that sell goods or extend credit to customers expect to be paid. When customers become insolvent, or file for Chapter 11 protection, those expectations are no longer realistic. Yet, there are a number of "creditor remedies" that can be utilized to maximize recovery from the insolvent customer. This article addresses one such "remedy": a carve-out from the pre-petition secured lender.

Summary

The U.S. Court of Appeals for the Fifth Circuit recently held that a Creditor Exclusion provision in D&O insurance coverage may result in significant limitations on the coverage provided to the D&Os, when the underlying dispute is with a creditor in its capacity as such.