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New Cases For the Week of July 5 2004 -
July 9, 2004
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- The Source for Business Bankruptcy Information on the Internet
July 9, 2004 |
Case |
Court |
Holding |
In re Vaughan
(DBN Subscription Required) |
10th Cir. BAP |
A debtor may use section 522(f) to avoid a homestead lien which arose postpetition pursuant to a nondischargeability judgment. |
In re Simms Construction Services Co., Inc.
(DBN Subscription Required) |
6th Cir. BAP |
Because an attorney who received payment of legal fees during the preference period had a valid charging lien under State law, the bankruptcy court erred in entering a preference avoidance judgment against the attorney on account of the payment. |
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July 8, 2004 |
Case |
Court |
Holding |
In re Captain Blythers, Inc.
(DBN Subscription Required) |
9th Cir. BAP |
Whether an asset of the Ch. 11 estate revests in the Ch. 7 estate in a postconfirmation conversion depends upon the terms of the plan, in particular whether the asset was intended to be used to pay creditors. |
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July 7, 2004 |
Case |
Court |
Holding |
Houbigant, Inc. v. Federal Insurance Co.
(DBN Subscription Required) |
3rd Cir. |
An insurer in an insurance coverage dispute with a debtor was not bound by a bankruptcy court's prior "fair and reasonable" approval of a settlement between the debtor and an allegedly injured party.
Under New Jersey law, a court must clearly state its rationale for finding that a settlement agreement is fair and reasonable. In deciding whether a settlement is prudent and reasonable, a court must consider the risk to the settling parties. It is the extent of the defendants' exposure to liability and not mere allegations in the plaintiffs' complaint that govern the appraisal of reasonableness. The bankruptcy court merely voiced the words "fair" and "reasonable," but failed to state any specific basis for such a finding. The court only noted that it had considered the "statements of all parties and any objections thereto," as well as the "pleadings and proofs of claim." This is insufficient to support a finding of reasonableness under state law, nor does it afford a basis of review. The same would be true even assuming that the Insureds' motion in support of the settlement is incorporated by reference into the bankruptcy court's decision. The Insureds' motion, like the bankruptcy court's order, fails to address the merits of the tort claim; rather, it simply states that litigating the tort claims would be "complex and expensive."
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In re Captain Blythers, Inc.
(DBN Subscription Required) |
9th Cir. BAP |
Where State law required a corporation to have a CFO, a prepetition consultant who effectively functioned as the company's CFO was not disinterested (per 11 USC 101(14)(D)), and was thus disqualified from serving as an estate professional, regardless of the fact that the company's board had never acted to appoint the consultant as CFO. |
Fix v. Quantuum Industrial Partners
(DBN Subscription Required) |
7th Cir. |
A turnaround specialist who was fired by a debtor's board of directors after the debtor's assets were sold in a bankruptcy sale was entitled to a $5 million "change in control" payment from the parent on account of the bankruptcy sale. |
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July
5, 2004
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Case
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Court
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Holding
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Hunter v. Philpott
(DBN Subscription Required) |
8th Cir. |
The term "fiduciary" in § 523(a)(4) refers only to trustees of "express trusts." The term is used in a "strict and narrow sense," and therefore does not embrace trustees of constructive trusts imposed by law because of the trustee's malfeasance.
The simple determination than an individual is an ERISA fiduciary is enough to satisfy the requirements of § 523(a)(4). Instead, the court must look specifically at the property that is alleged to have been defalcated to determine whether the individual was legally obligated to hold that specific property for the benefit of the ERISA fund.
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In re Hutton Valley Farms
(DBN Subscription Required) |
Bankr. W.D. Mo. |
Rule 9011 sanctions imposed on attorney who filed Chapter 7 case for partnership with no assets.
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