New Cases For the Week of July 12, 2010 - July 16, 2010

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July 15, 2010

Case

Court

Holding

In re Cloverleaf Enterprises, Inc.
(DBN)
Bankr. MD

The Fifth Circuit's interpretation in Pro-Snax (i.e., whether an estate attorney seeking compensation must demonstrate a material identifiable benefit from the work performed) , was not supported by either the text of § 330 or sound policy. The proper test that should be applied is whether: "the services were "reasonably likely" to benefit the estate at the time the services were rendered."

In re Landamerica Financial Group, Inc.
(DBN)
Bankr. ED VA For the purpose of calculating the amount of a priority claim for severance under 11 USC 507(a)(4), it is improper for the debtor to prorate the severance pay over the entire period of a claimant's employment and allow only the amount that would be apportioned to the 180 days before the petition date to be given priority treatment.
     
July 15, 2010

Case

Court

Holding

In re Renegade Holdings, Inc.
(DBN)
Bankr. MD NC The post-confirmation discovery of an ongoing undercover criminal investigation against the debtor and its principal was adequate cause to alter or amend the confirmation where no disclosure had been made of the debtor's activities that were the basis for the investigation.
In re Charys Holding Company, Inc.
(DBN)
Bankr. DE Where an avoidance complaint alleges a preference claim and a fraudulent transfer claim, each in the alternative, the preference claim will fail on a Rule 12 motion if the claim does not specifically identify the antecedent debt that the transfer was made for, or at least aver facts from which the court can infer the antecedent debt.
     
July 14, 2010

Case

Court

Holding

In re Visteon Corp.
(DBN)
3rd Cir.

The bankruptcy court erred in finding that a debtor did not need to comply with 11 USC 1114 to terminate health and life insurance benefits when the debtor employer could unilaterally terminate those benefits outside of bankruptcy pursuant to a reservation of rights clause.

The plain language of section 1114 indicates that Congress intended to restrict a debtor’s ability to modify or terminate, except through the section 1114 process, any retiree benefits during a Chapter 11 bankruptcy proceeding, regardless of whether the debtor could terminate those benefits outside of bankruptcy.

     
July 13, 2010

Case

Court

Holding

In re Jade Management Services
(DBN)
3rd Cir.

Simultaneous representation of a debtor corporation and its sole stockholder (also a debtor) is not in and of itself improper. Where: (i) the shareholder was a guarantor of the debtor's secured debt, (ii) the value of the debtor's collateral substantially exceeded the secured debt, (iii) the shareholder never filed a claim against the estate and (iv) the secured creditor never pursued the shareholder on account of the guaranty, there was no actual conflict of interest.

Where the attorney failed to disclose simultaneous representation in her 2014 statement, the error was not material, since the shareholder was also in bankruptcy and both his case, and the corporation's case were handled by the same bankruptcy judge, who was clearly aware of the dual representation.

In re Matter Of Solis
(DBN)
7th Cir. "The legal profession has not treated debtor Luis Solis well. " The debtor's contingency fee agreement with an attorney hired to recover misappropriated settlement proceeds provided for a contingency percentage of money "recovered." The bankruptcy court did not err in denying the portion of the attorney's claim that sought a contingency percentage of money that had been paid to the debtor/client before hiring the attorney.
In re Health Trio, Inc.
(DBN)
10th Cir. BAP The Court lacks jurisdiction to review an order entered by the Delaware Bankruptcy COurt.
     
July 12, 2010

Case

Court

Holding

In re Mouzon Enterprises, Inc.
(DBN)
11th Cir. An order resolving an objection to a proof of claim, regardless of whether it is entered following settlement by the parties or a determination on the merits by the bankruptcy court, is not "entered without a contest" for the purposes of Federal Bankruptcy Rule 9024
In re Kaiser Aluminum Corporation
(DBN)
3rd Cir.

When a lawsuit that arguably violates the discharge injunction is comprised of multiple causes of action, the court must examine each cause of action individually. The mere presence of one dischargeable claim does not necessarily doom the entire lawsuit. If a cause of action seeks relief that is not a "claim" under bankruptcy law, the cause of action would not be barred by the discharge injunction.

Some of the causes of action here involve unique issues associated with affirmative injunctions requiring compliance with environmental laws. Although almost every equitable decree imposes a cost on the defendant, that does not make all equitable obligations dischargeable in bankruptcy.

     

 

 

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