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New Cases For the Week of December 8, 2003 -
December 12, 2003
Brought to you by BKINFORMATION.COM
- The Source for Business Bankruptcy Information on the Internet
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December
12, 2003
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Case
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Court
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Holding
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In
re Brick Hearth Pizza, Inc.
(DBN Subscription Required) |
Bankr.
Minn. |
Under
applicable State law, an
attorney does not have a
property interest in a
retainer merely by virtue of
the deposit of the retainer in
a trust account. The
Bankruptcy Court cannot invoke
$j 105 to create some sort of
“de facto priority claim”
in the nature of a first and
preemptive call on the
specific asset of a retainer
deposit.
To
the extent that an attorney
accrues any legal right
against a retainer deposit by
providing services, it is
properly considered as one of
common-law setoff, overlaid
with the limitations imposed
by ethical rules governing the
legal profession. A right of
setoff would accrue in value
as services were rendered.
However, there is no actual
transfer of property rights in
the subject funds until the
attorney exercises setoff by
drawing on the retainer, after
complying with the contractual
terms of retention and the
rules of professional conduct.
Before that there would be no
choate charge against the
funds in the favor of counsel,
the retainer remaining
property of the client until
actually applied by counsel.
Upon
the filing of a bankruptcy
petition, the balance of a
pre-petition retainer passes
into the estate, as property
subject to administration. As
such, it is subject to
turnover to the fiduciary in
charge of that administration,
and may be applied to other
expenses of maintaining the
estate.
When
a converted case is
administratively insolvent,
turnover of a prepetition
retainer to the Ch. 7 trustee
for distribution under Code
priorities is warranted. |
In
re Smith
(DBN Subscription Required) |
Bankr.
C.D. Ill. |
Under
section 545, a trustee can
avoid a statutory landlord's
lien secured by crops growing
on leased land. However,
the trustee's retention of the
land and harvesting of the
crops postpetition amounted to
assumption of the lease,
entitling the landlord to an
administrative claim for the
rent. |
Pincay
v. Andrews
(DBN Subscription Required) |
9th
Cir. |
It
is inexcusable neglect for a
lawyer to delegate the
calendaring of an appellate
deadline to a non-lawyer who
miscalendars the deadline. |
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December
11, 2003
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Case
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Court
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Holding
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In
re Adams
(DBN Subscription Required) |
6th
Cir. |
Only
an interest in a trust can be
the subject of an enforceable
transfer restriction within
the meaning of 11 U.S.C. §
541(c)(2). An ERISA-qualified
plan that is not a
"trust" is not
excluded from the estate under
section 541(c)(2) regardless
of the presence of an
anti-alienation clause. |
In
re Pena
(DBN Subscription Required) |
Bankr.
C.D. Ill. |
A
holdover tenancy is an
assumable lease under Section
365(a). |
In
re Podnar
(DBN Subscription Required) |
Bankr.
W.D. Mo. |
Appropriate
value for collateral being
redeemed in Chapter 7 cases is
liquidation value |
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December
10, 2003
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Case
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Court
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Holding
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In
re Metiom
(DBN Subscription Required) |
Bankr.
S.D. N.Y. |
Where
a claimholder is in
bankruptcy, a debtor's
assertion of a section 502(d)
claim objection does not
violate the automatic stay in
the claimholder's
bankruptcy. Section
502(d) is purely defensive,
and thus does not seek to
obtain property of the
claimholder's estate.
A claim objection based
upon 11 USC 502(d) is not
subject to dismissal after the
limitations period for the
underlying avoidance
action has run. Such a
result would elevate form over
substance. Instead, the
Court has discretion to order
the parties to comply with
adversary proceeding rules in
the contested matter.
A claim cannot be cleansed
of a section 502(d) defense
via its assignment to a new
entity (even if the assignment
was made as a sale free of
clear). |
In
re The Muralo Company
(DBN Subscription Required) |
Bankr.
N.J. |
Under
standards announced in SGL
Carbon, A small corporate
debtor faced with thousands of
sudden asbestos claims and
likely insolvency has not
filed its bankruptcy in bad
faith when its avowed intent
was to litigate in Bankruptcy
Court the issue of whether it
was liable for a predecessor's
asbestos-containing
products. Defense of the
claims consumed management's
time and attention and had a
destructive effect on the
debtor's everyday business
operations. For a year before
bankruptcy the debtor sought
alternatives. |
In
re Red Dot Scenic, Inc.
(DBN Subscription Required) |
2d
Cir. |
Where
debtor's sole shareholder paid
appellant for a personal debt
from debtor's corporate
checking account without
reimbursing debtor, and
exercised no control over the
funds once drawn from debtor's
account, appellant was the
initial transferee |
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December
9, 2003
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Case
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Court
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Holding
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In
re Crofford
(DBN Subscription Required) |
8th
Cir. BAP |
When
a court issues a sua sponte
order to show cause why
sanctions should not be
imposed under Rule 9011(b), no
other grounds for sanctions
are warranted unless
additional advance notice is
provided. Sanctions
under Rule 9011(b) are payable
to the Court. |
In
re Hayslett/Judy Oil, Inc.
(DBN Subscription Required) |
Bankr.
C.D. Ill. |
For
purposes of 11 USC 507(a), the
Illinois Motor Fuel Tax is an
excise tax, rather than a
trust fund tax. |
In
re Campbell-Erskine
Apothecary, Inc.
(DBN Subscription Required) |
Bankr.
W.D. Pa. |
Insuring
estate property against loss
or destruction is one of the
fundamental aspects of a DIP's
fiduciary duty. |
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December
8, 2003
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Case
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Court
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Holding
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In
re Drenttel
(DBN Subscription Required) |
Bankr.
Minn. |
Where
a homestead exemption statute
is silent as to
extra-territorial effect, it
has none. Although the
Bankruptcy Code requires a
debtor who has changed his
residence shortly before a
bankruptcy filing to use the
homestead exemptions of his
original State, such
exemptions may be limited to
real estate located within the
territorial jurisdiction of
that State thereby denying the
debtor a homestead exemption. |
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