New Cases For the Week of October 2, 2000 - October 6, 2000

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October 5, 2000

Case

Court

Holding

In re Bonham 9th Cir. Pursuant to its general equity powers, the bankruptcy court has authority to substantively consolidate non-debtor corporations with the estate of a Chapter 7 individual debtor  where the debtor and the corporations commingled assets, and disregarded corporate formalities.

The test for such consolidation is (1) whether creditors dealt with the entities as a single economic unit and did not rely on their separate identity in extending credit; or (2) whether the affairs of the debtor are so entangled that consolidation will benefit all creditors.  The test is disjunctive.  The presence of either factor justifies substantive consolidation.

October 4, 2000

Case

Court

Holding

Buncher Company v. Official Unsecured Creditor Committee of Genfarm Limited Partnership 3rd Circuit The prepetition settlement of litigation in which a debtor's limited partners sold their equity interests to the debtor/partnership was a fraudulent transfer. The transfers form the debtor to the limited partners caused the debtor's future insolvency. Despite the fact that the debtor received a release as part of the settlement, the release was of no benefit to the debtor, since no claims had been asserted against the debtor in the litigation, and there was no proof that other viable claims existed.
In re Eggleston Works Loudspeaker Co. 6th Cir. BAP In spite of the 1994 amendments to the Section 330 of the Bankruptcy Code, a Chapter 7 debtor's attorney who renders services necessary for the administration of the estate may be awarded fees from the bankruptcy estate (disagreeing with the 5th and 11th Circuits, and agreeing with the 9th and 2d Circuits).

October 3, 2000

Case

Court

Holding

In re Bowman
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8th Cir. BAP Putative farmers/debtors who lacked: (i) equity in their farm land, (ii) capital to operate a farm, and (iii) farming experience in the type of farming proposed by their plan, and who had previously proposed two rejected plans of reorganization, failed to prove that they had a reasonable likelihood of reorganization, warranting relief from stay to allow secured creditor to foreclose on farm property.

October 2, 2000

Case

Court

Holding

 
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