New Bankruptcy Cases - April 16, 2001

In re Zinni (DBN Subscription Required)	6th Cir. BAP	Although the defendant in a nondischargeability proceeding did not comply with the "warning shot" provisions of Fed. R. Bankr. P. 9011, the court did not err in awarding $3,168 in sanctions against plaintiff's attorney and his counsel when the award was made pursuant to the Court's sua sponte initiative. Although the BAP was dubious that the nominal amount of the sanction threatened to drive the plaintiff and/or his attorney out of business, remand was necessary to address their contention that the amount of the sanction was excessive in light of their resources.
In re Krause	8th Cir. BAP	There are no equitable exceptions to the right of setoff except those found in 11 USC 553. The bankruptcy court erred in confirming a Chapter 12 plan which proposed to: (i) assign certain government payments (which were subject to setoff) to another government agency in partial satisfaction of a second mortgage and (ii) permit the debtors to retain a small portion of the payments for living expenses. Since setoff places the creditor in a position of control that is more effective than that achieved by assignment, the plan failed to properly recognize the creditor's setoff rights.

In re Peterson (DBN Subscription Required)	10th Cir.	"Related to" jurisdiction under 28 USC 1334(b) should be measured by a "strict test," looking to the proceeding's practical effect on implementation of the confirmed reorganization plan, rather than to its conceivable effect on the bankruptcy estate.