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New Cases For the Week of October 1, 2001 -
October 5, 2001
Brought to you by BKINFORMATION.COM
- The Source for Business Bankruptcy Information on the Internet
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October 5, 2001
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Case
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Court
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Holding
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Cadle
Co. v. Schlichtmann
(DBN Subscription Required)
Reversing prior ruling |
1st Cir. |
Although
a security interest in the accounts receivable of a law
firm--including an account arising from a contingent fee
agreement-- survives the firm's dissolution and the bankruptcy
of one of its partners attaches to a post-bankruptcy payment
of the fee, the secured creditor's failure to make specific
demand for turnover of the fee prior to its disposition
defeats a conversion claim. |
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October 4, 2001
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Case
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Court
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Holding
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In
re Craig's Stores of Texas, Inc.
(DBN Subscription Required) |
5th Cir. |
Postconfirmation
bankruptcy jurisdiction is not as broad as the expansive
preconfirmation jurisdiction appurtenant to "related
to" matters.
"Once the bankruptcy court confirms a
plan of reorganization, the debtor may go about its business
without further supervision or approval. The firm also is
without the protection of the bankruptcy court. It may not
come running to the bankruptcy judge every time something
unpleasant happens."
After a debtor's reorganization plan has
been confirmed, the debtor's estate, and thus bankruptcy
jurisdiction, ceases to exist, other than for matters
pertaining to the implementation or execution of the plan.
The fact that the outcome of a
postconfirmation lawsuit involving postpetition facts may
impact a debtor's ability to fund its plan is insufficient to
confer jurisdiction, since the estate (which ceases to exist
at confirmation) will not be impacted. Thus, the
district court (sitting as an appellate court in bankruptcy)
did not err in sua sponte dismissing the appeal of a
bankruptcy court judgment. |
In
re Brightful
(DBN Subscription Required) |
3rd Cir. |
To
discharge a student loan under the "undue hardship"
provision of 11 USC 523(a)(8), a debtor must show: (1) that
the debtor cannot maintain, based on current income and
expenses, a minimal standard of living for herself and her
dependents if forced to repay the loans; (2) that additional
circumstances exist indicating that this state of affairs is
likely to persist for a significant portion of the repayment
period for student loans; and (3) that the debtor has made
good faith efforts to repay the loans.
The bankruptcy court clearly erred in
finding that the debtor had satisfied the second element of
the test. Although the court found that the debtor most
likely would never attain her college degree, lacked useful
vocational training, suffered glaring psychiatric problems,
was emotionally unstable, and that her pursuit of sexual
discrimination charges against her ex-employer (a law firm)
had both scarred her future prospects with that firm and
accounted for the sharp reduction in her income, the court did
not give appropriate weight to the fact that the debtor had
and did work as a legal secretary, albeit part-time. |
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October 3, 2001
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Case
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Court
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Holding
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Kennedy
v. Medicap Pharmacies
(DBN Subscription Required) |
6th Cir. |
The
bankruptcy court did not err in ruling that a debtor's
obligation under a covenant not to compete was not a
dischargeable obligation. Under applicable State law the
creditor did not have an alternative remedy of damages (which
would have rendered the obligation a dischargeable
"claim" under 11 USC 101(12)(B)) because an
essential element of the equitable entitlement to enforcement
of the covenant through injunction was proof of the inadequacy
of money damages. |
Williams
v. Marlar
(DBN Subscription Required) |
8th Cir. |
A
prepetition State court fraudulent transfer judgment is not
preclusive against a bankruptcy trustee (even where the
trustee is represented by the same attorney who represented
the plaintiff in the prepetition action) since the trustee is
entitled to rely on the standing of any and all unsecured
creditors for 544(b) purposes and only one of several
unsecured creditors was subject to the preclusive effect of
the judgment. |
In
re Moss
(DBN Subscription Required) |
8th Cir.
BAP |
There
is no requirement that a judgment issued in another State be
registered in order to constitute a valid unsecured claim in a
bankruptcy pending in a second State. The debtor's
argument to that effect was "ludicrous and frivolous." |
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October 2, 2001
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Case
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Court
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Holding
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In
re Zibman
(DBN Subscription Required) |
5th Cir. |
The
facts and the law applicable on the date that a petition for
bankruptcy is filed determine the exemptions available to a
debtor. Since the 6-month time limit is an integral
feature of Texas's statutory exemption for proceeds from the
sale of a homestead, the court erred in denying the trustee's
objection to prepetition homestead sale proceeds which were
not reinvested in a new homestead before the six month period
expired postpetition. |
In
re Richards and Conover Steel Co.
(DBN Subscription Required) |
8th Cir.
BAP |
The
concept of reasonably equivalent value is a means of
determining if the debtor received a fair exchange in the
marketplace for the goods transferred. But the requirement of
economic benefit to the debtor does not demand consideration
that replaces the transferred property with something else
tangible or leviable that can be said to satisfy the
creditor's claims. The bankruptcy court erred in finding that
a debtor corporation's prepetition payment of the legal fees
of an unofficial unsecured creditor's committee was a
constructive fraudulent transfer. The committee's counsel's
work assisted the debtor in maximizing assets, collection of
receivables, and reduction of debt, thereby constituting
reasonably equivalent value, regardless of who hired the firm
and who was ultimately responsible for paying its fees. |
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