New Cases For the Week of November 3, 2003 - November 7, 2003

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November 6, 2003

Case

Court

Holding

McCarthy v. FDIC
(DBN Subscription Required)
9th Cir. Exhaustion requirement of Financial Institutions Reform, Recovery and Enforcement Act of 1989 applies to bank debtors as well as creditors, and to claims arising out of acts by receiver as well as by failed institution.

November 5, 2003

Case

Court

Holding

In re Allied Digital Technologies Corp.
(DBN Subscription Required)
Bankr. DE Although section 701 is not expressly included in section 546(a)(1)(B), Congress intended to grant an additional one year to an interim trustee because to read the statute otherwise leads to absurd or futile results inconsistent with the overall structure of the statutory scheme.
In re Chambers
(DBN Subscription Required)
7th Cir. A student's open account balance with a university is not a "educational loan" that is subject to an exception to discharge.

November 4, 2003

Case

Court

Holding

In re Mi-Lor Corp.
(DBN Subscription Required)
1st Cir. A close corporation owns claims against its officers or directors for self-dealing.  A creditors' trust established under a confirmed plan may pursue such claims on behalf of creditors, even if the corporation was not insolvent at the time of the alleged self-dealing. 

Where there is unanimous and fully informed shareholder approval in a close corporation, such approval suffices for enforceability of a release of the corporation's insiders by the corporation (subject to special rules for insolvency). If there is not full disclosure and unanimous approval, the question arises whether a showing of fairness alone would suffice to validate a release.

In re Travacom Communications, Inc.
(DBN Subscription Required)
Bankr. W.D. Pa. A State agency did not violate the automatic stay by proceeding with an administrative proceeding under the State's Prevailing Wage Act, even though the debtor had permanently ceased operation when the hearing commenced.

November 3, 2003

Case

Court

Holding

In re EXDS, Inc.
(DBN Subscription Required)
Bankr. DE A creditor cannot regain a right to jury trial in an avoidance action by withdrawing its proof of claim.
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