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New Cases For the Week of October 23, 2000 - October 27, 2000
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October 27, 2000
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Case
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Court
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Holding
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| SEC v. Brennan |
2d Cir. |
Although
an exception to the automatic stay applies to allow the SEC to obtain a
money judgment against a debtor, enforcement of such money
judgments is not within the scope of the stay. The SEC's
efforts to obtain an order from a nonbankruptcy court requiring the
debtor to repartiate his offshore trust, under penalty of contempt,
violated the automatic stay in the debtor's bankruptcy even though the
SEC appeared to be acting in good faith and indicated it intended to
submit any recovery to the bankruptcy court for allocation according to
Bankruptcy Code priorities. |
| In re Schultz |
6th Cir. BAP |
Although
"'excusable neglect' is not defined by the Bankruptcy Rules, the
concept has been appropriately characterized as the failure to timely
perform a duty due to circumstances which were beyond the reasonable
control of the person whose duty it was to perform.
Where debtor's attorney's wife was in critical
condition in the hospital during the appellate period, and debtor was
only able to attend to his sole practitioner law practice intermittently
during such period, the bankruptcy court abused its discretion in
determining that the Debtor's failure to timely file a notice of appeal
or a request for an extension of the time to appeal was not attributable
to excusable neglect.
The Court distinguished this situation from the
"law office upheaval" line of cases (which generally decline
to find excusable neglect based on a lawyer's heavy workload or the
illness of a firm's staff member), finding that the illness of the
debtor's attorney's wife, when the debtor's attorney was the primary
caregiver, is excusable. |
| Key Energy v. Merrill |
10th Cir. |
Although
appellant's counsel was in the hospital during most of the 10-day period
during which appellant could object to the findings of a magistrate
appointed by the district court to review a bankruptcy appeal, appellant
failed to demonstrate that the interests of justice required relief from
the firm waiver rule. Appellant's counsel received a copy of the
magistrate's report during the applicable period, and could have
requested an extension of time. The Court is disinclined to grant relief
where counsel was able to file or have filed a timely motion for
extension of time. |
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October 25, 2000
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Case
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Court
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Holding
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| In re Nolan |
6th Cir. |
As
a matter of law, a Chapter 13 debtor may not modify her confirmed plan
to surrender depreciated collateral (an automobile) to a secured
creditor in order to require the secured creditor to sell the collateral
and recover the balance of its deficiency claim as an unsecured
claim. Once the plan has been confirmed, the rights of the secured
creditor are fixed, and the debtor cannot use the modification power to
transfer the risk of postconfirmation depreciation to the secured
creditor. |
| Gulf
Marine & Industrial Supplies, Inc. v. Golden Prince M/V |
5th Cir. |
Legal
services rendered in connection with a vessel are not
"necessaries" under the Federal Maritime Law Act, and thus a
claim for such services does not trump the priority rights of a prior
ship mortgage. |
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October 24, 2000
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Case
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Court
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Holding
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| In re Berg |
9th Cir. |
The
imposition of a sanction by an appellate court against a debtor/attorney
for pursuing a frivolous appeal was not subject to the automatic
stay. The award of sanctions the award of sanctions falls under
the "government regulatory power" exemption of 11 USC
362(b)(4) |
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October 23, 2000
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Case
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Court
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Holding
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| In re GWI PCS 1 |
5th Cir. |
The
debtors' obligation to pay the FCC $894 million for the winning bid in a
spectrum auction is avoidable as a constructive fraudulent transfer or
obligation, since, at the time the obligation was incurred, the value of
the subject licenses had declined from $1.06 billion (the auction date
value) to $166 million (the value on the date [appx. six months after
the auction] that the licenses were conditionally granted to the debtor
by the FCC). The debtors were permitted to keep the licenses, subject to
payment of $60 million of the original $954 million unpaid purchase
price.
Although the bankruptcy court may have erred in
issuing the avoidance judgment, the debtors' confirmation and
implementation of a plan incorporating the fraudulent transfer judgment
made the FCC's appeal of the avoidance judgment and the plan equitably
moot, since the FCC had not obtained a stay pending appeal. |
| Kittay v. Kornstein |
2d Cir. |
When
both the debtor and its limited partner claimed an interest in a
judgment against the debtor's general partner, and the debtor sought to
hire the limited partner's lawyer as special counsel for the debtor to
pursue the judgment, the bankruptcy court eliminated any potential
conflict of interest when the court ordered, and the special counsel
agreed, that any recovery form the judgment would be placed in escrow to
be divided by the bankruptcy court regardless of how the judgment was
awarded in State court.
However, where it was alleged that special counsel's
actions, after the judgment was collected, caused the settlement
proceeds to not be deposited in the Court-ordered escrow account, a
cognizable cause of action was stated against such special counsel. |
| In re Annis |
10th Cir. |
A
tax refund is not "earnings" or "wages" within the
meaning of an Oklahoma exemption statute exempting personal service
earnings. |
Empire Funding Corp. v. Armor
(unpublished) |
4th Cr. |
When,
before filing his Chapter 13 case, a debtor prevailed on affirmative
claims for relief for construction defects against a contractor and
subcontractor, but the State court failed to rule on the debtor's claim
to have the construction loan obligation (assigned to a third party by
the contractor) set aside, the debtor was not barred by claim preclusion
from asserting his defenses against the loan assignee as a claim
objection in his Chapter 13 bankruptcy. Under North Carolina law,
the court's failure to rule on the debtor's request to set aside the
loan obligation deprived the judgment of final effect as to that claim
for relief, and enabled the debtor to continue to assert the claim
post-judgment. |
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