New Cases - Week of August 17, 2009

New Cases For the Week of August 17, 2009 - August 21, 2009

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August 19, 2009
Case	Court	Holding

In re Congoleum Corp.
(DBN)

D. N.J.

Insurers are parties in interest with standing to object to a plan where funds to pay plan distributions will come from insurance benefits.

"Facilitation fees" paid by a debtor prepetition to asbestos plaintiffs' counsel in connection with a prepack asbestos plan are subject to review by the Bankruptcy Court under 11 USC 1129(a)(4), and a plan which thwarts such review cannot be confirmed.

August 19, 2009
Case	Court	Holding

Stanley v. Trinchard (DBN)	5th Cir.	The subject of bankruptcy falls within the express constitutional powers of Congress, and bankruptcy law therefore takes precedence over state laws. Section 108(a) is written broadly to extend any period within which the debtor may commence an action. Congress drew no distinction among the state law vehicles that govern time limits for filing suit, whether statutes of limitations or prescription, repose or peremption.
St. Paul Fire & Marine Ins. Co. v. Labuzan (DBN)	5th Cir.	An order precluding certain creditors from asserting a claim for violation of the automatic stay is reversed where creditors had standing to claim damages based on violations of the bankruptcy automatic-stay provision, 11 U.S.C. section 362(k).

August 17, 2009
Case	Court	Holding

In re Sharp (DBN)	4th Cir.	Although the "justifiable reliance" standard in 11 USC 523(a)(2)(A) normally does not require a creditor to investigate a debtor's representations, such a duty may arise when red flags indicate a need for further investigation. In a nondischargeability action, the bankruptcy court did not err in finding that a creditor bank did not justifiably rely or reasonably rely on a debtor;s representations.
In re Seaquest Diving LP (DBN)	5th Cir.	The fact that a dispute regarding an equity interest has been settled via a judgment does not preclude mandatory subordination under 11 USC 510(b). For the purposes of section 510(b), the nature of the obligation is not transformed when a settlement is reached via a judgment. A court can "look behind the judgment" to determine if section 510(b) applies.