The Weil Bankruptcy Blog frequently writes on issues revolving around equitable mootness (See Equitable Mootness on Life Support: The Third Circuit Further Pares Back the Abstention Doctrine in One2One Communications,
Smart Summary for Commercial Landlords
On May 16, 2016 the United States Supreme Court issued an opinion regarding the meaning of “actual fraud” under the Bankruptcy Code. Husky Int’l Electronics, Inc. v. Ritz represents a win for creditors by making it easier to show that a debtor committed fraud. A showing of a more general fraud, as opposed to a specific false representation by the debtor, will suffice to prevent certain debts from being discharged in bankruptcy.
Background
Early this week, a California Bankruptcy Court schooled counsel on abiding by local rules, avoiding gamesmanship, and maintaining a level of civility in litigation proceedings. These lessons arose in the context of an adversary proceeding in which counsel filed an emergency motion for a continuance of the deadline to respond to a complaint following retention of new counsel.
Lesson #1: Check for Typos
Yes, Gathering Agreements Can Be Rejected as Executory Contracts (At Least Under One Court’s Interpretation of Texas Law)
In its recently issued decision in Husky International Electronics, Inc. v. Ritz, a 7-1 majority of the Supreme Court has clarified that intentionally fraudulent transfers designed to hinder or defraud creditors can fall within the definition of “actual fraud” under Section 523(a)(2)(A) of the Bankruptcy Code and can sometimes result in corresponding liabilities being non-dischargeable in a personal bankruptcy proceeding.1
So you are chugging along with a foreclosure action (either on real and/or personal property) only to be stopped in your tracks by the borrower filing a voluntary Chapter 7 bankruptcy petition. The usual, immediate thought is – “better contact our bankruptcy counsel to obtain relief from the automatic stay.” Well, perhaps, or perhaps you might want to contact the Chapter 7 Trustee first (either directly or through your bankruptcy counsel). Why? Maybe the Chapter 7 Trustee would be interested in liquidating that collateral for you though the bankruptcy system.
(Bankr. W.D. Ky. May 17, 2016)
On May 16, 2016, the U.S. Supreme Court decided Husky International Electronics, Inc. v. Ritz, No. 15-145, holding that the "actual fraud" bar to discharge under section 523(a)(2)(A) of the Bankruptcy Code encompasses an individual debtor's knowing receipt of fraudulently transferred property.
Statutory Background
The Supreme Court’s Decision: