New Bankruptcy Cases - December 31, 2001

Arnold v. Garlock (DBN Subscription Required)	5th Cir.	When a creditor with a putative contribution claim against a debtor on account of asbestos liability attempted to remove and transfer to Delaware bankruptcy court numerous claims pending against it in State court (asserting "related to" jurisdiction via the contribution claim), the trial courts did not err in remanding such claims back to State court. For several reasons, the creditors contribution claim legally nonexistent or feigned, thereby eliminating the basis for bankruptcy jurisdiction. The automatic 10-day stay in Rule 62 applies only to orders related to the payment of money, and does not apply to a remand order.
In re Laclede Steel Co. (Adobe plug-in required to view)	8th Cir. BAP	There is no particular test which was required to be applied under 11 USC 547(c)(2)(B), but, rather, the courts should engage in a “peculiarly factual analysis,” the cornerstone of which is the consistency of the transaction in question as compared to other, prior transactions between the parties. When a debtor paid a debt 177 days after invoicing, the bankruptcy court did not err in finding that such payment was not in the ordinary course of business where the parties' prior dealings reflected payment aging no more than 70 days after invoicing. The fact that the debtor had a reason for the lateness of the payments does not render the payment ordinary between the parties. The fact that the debtor could not cover the check to the creditor is not a justification which brings the payment within the ordinary course of business exception. Rather, it is simply the reason the payment is a preference in the first place.
In re Martin (Adobe plug-in required to view)	8th Cir. BAP	The bankruptcy court did not err in refusing to review a three year old order under Rule 60(b)(6)
In re Kaelin (Adobe plug-in required to view)	8th Cir. BAP	The bankruptcy court did not err in denying a debtor's request to amend his exemption schedule to list a malpractice claim against his personal injury attorneys. The debtor's stated intention was to exempt and abandon the asset, for no articulable reason. Accordingly, the debtor's effort to amend his exemptions was in bad faith.

In re Foster (DBN Subscription Required)	10th Cir.	Property subject to a trust is not property of the bankruptcy estate. Under applicable State law, a party claiming a constructive trust must (1) show fraud or mistake in the debtor's acquisition of the property; and (2) be able to trace the wrongfully held property. The putative trust beneficiary can sometimes use the lowest intermediate balance test to trace commingled funds. However, in a bankruptcy proceeding, the bankruptcy court must weigh the claims of the remaining creditors before employing an equitable fiction such as the lowest intermediate balance rule. Where all creditors are similarly-situated fraud victims it may be inappropriate and inequitable to use the lowest intermediate balance test to elevate the claim of one fraud creditor over others.