New Cases For the Week of May 30, 2023 - June 2, 2023
2022 case summaries can be accessed by clicking here
June 2, 2023
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In re: The Roman Catholic Diocese of Rockville Centre, New York | Bankr. SD NY | In a diocese bankruptcy, the court denies a motion seeking a preliminary injunction against the prosecution of hundreds of sexual abuse claims against the debtor and non-debtor parishes. The debtor has been in Ch. 11 for over 2 years with scant progress toward a plan:
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June 1, 2023
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In re: Mallinckrodt PLC | Bankr. DE | During the negotiation of its now-confirmed plan, the Ch. 11 debtor was aware of third-party claims asserted against it by a defendant being sued in connection with radioactive material released as part of the Manhattan Project. The debtor and the third-party claimant negotiated the following term in the confirmed plan:
Post-confirmation, the plaintiffs who were suing the third-party claimant added direct claims against the debtor, who then sought to enforce the discharge injunction. The court finds that the above-referenced plan provision is ambiguous. After receiving extrinsic evidence, the court finds that the discharge does not bar the subject claims:
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In re: Karr | 11th Cir. | The bankruptcy court erred in certifying an order for appeal:
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In re: Griego | Bankr. WD TX | Counsel for the plaintiff in an adversary proceeding inadvertently filed a complaint without exhibits because his paralegal was sick and unavailable. He then filed a succession of amended complaints attempting to fix the problem and also add some edits (but no new causes of action) to the original complaint. None of the amended complaints were filed with the consent of opposing counsel or pursuant to authorization from the court. The court grants the defendants’ motion to strike the amended complaints:
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In re: Olson | Bankr. ND NY | The day after the petition date, a Ch. 13 debtor received the $377,293 proceeds of a workers compensation settlement which he scheduled as fully exempt under a state statute. The settlement was to compensate for the loss and/or reduction of debtor’s future earnings for the rest of his life. The debtor proposed to pay $150/month into a 36-month plan. The trustee objected to the exemption and also objected to confirmation, arguing that even if the money was exempt it was nevertheless disposable income. The court rejects the trustee’s exemption objection. The court, noting a split of authority, finds that the proportionate part of the settlement attributable to the commitment period of the plan, less the amounts necessary for the maintenance and support of Debtor and Debtor’s dependents, must be paid into the plan as projected disposable income:
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In re: Khan | Bankr. WD MI | In litigation arising from a large check kiting scheme, the court dismisses some of the trustee’s claims:
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In re: Steed | 11th Cir. | In a stay violation proceeding, the court finds that there was a violation but awards $2,250 rather than the $374,000 sought by the debtor:
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May 31, 2023
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In re: Purdue Pharma L.P. | 2nd Cir. | In a mass tort bankruptcy where the bankruptcy court confirmed a plan containing third party releases in favor of non-debtors who were contributing substantial funds to the plan, the court finds that the district court erred in reversing the bankruptcy court:
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In re: FTX Trading Ltd. | D DE | In an appeal to the district court of a bankruptcy court order in a large Ch. 11 crypto case denying appointment of an examiner, the court certifies the matter for direct appeal:
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Janvey, Receiver v. GMAG, L.L.C. | 5th Cir. | In a Ponzi receivership, the court finds that an investor who suffered a $79 million judgment in favor of the receiver waived his setoff defense:
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In re: Boulder Operations Holdings LLC | Bankr. DE | In a prior settlement, the bankruptcy estate released its claims against the brother of the debtor’s former principal. A creditor filed a motion seeking to conduct a Rule 2004 exam of the brother in connection with its own claims against the brother. The court denies the motion:
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In re: Davis | Bankr. SC | In a stay violation proceeding arising from repossession of a vehicle, the court awards: (i) $6,092 in actual damages, (ii) $3,500 in attorney’s fees, (iii) $12,000 in punitive damages and (iv) cancellation of the debt on the vehicle.
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In re: Fanning | Bankr. ED NC | In a Ch. 13 case, the court rejects debtors’ arguments to avoid a local rule requiring court approval before the debtors could move and finance a $1 million house:
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In re: Caswell | Bankr. WD MO | The court clarifies its 4-year old ruling that $600 is a reasonable fee for the participation of a mortgage creditor’s attorney in a routine Ch. 13 case:
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May 30, 2023
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In re: Weed Cellars, Inc. | Bankr. CD CA | The debtor rejected a licensing agreement in which the debtor was the grantor of licensing rights. Later, the debtor’s assets, including IP rights, were sold in a free and clear sale, with liens and interests, if any, attaching to the proceeds. The court finds that the counterparty has no direct lien or interest which can attach to the proceeds. However, the counterparty can file an unsecured rejection claim even though the claims bar date has passed:
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In re: Vital Pharmaceutical | Bankr. SD FL | The debtor produces the best-selling energy drink in the United States. The debtor’s success is heavily dependent on social media. In a dispute about who owns and controls some of the debtor’s social media accounts, the court previously issued a TRO requiring the debtor’s former CEO to cooperate with the debtor in making posts to the social media accounts. The former CEO did not comply and was held in contempt. The debtor is preparing to offer a free and clear sale, which may be chilled due tot the ongoing controversy over the social media accounts. The court converts the TRO to a preliminary injunction:
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In re: Kern | Bankr. KS | Pre-petition, a veterinarian treated 27 head of cattle which were brought to him by an unknown individual for treatment. The person who brought the cattle allegedly told the vet that the cattle belonged to the debtor. When the treatment was finished, the vet left voice mail messages that the cattle were ready but they were never picked up. The vet filed a veterinarian’s lien. The court finds that the vet has failed to establish his claim:
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In re: Blair House Associates Limited Partnership | Bankr. ME | A petitioning creditor appealed the bankruptcy court’s dismissal of an involuntary case and imposition of attorney’s fees and punitive damages. The appeals court largely affirmed the bankruptcy court’s ruling but remanded with instructions for the court to consider the petitioning creditor’s subjective intent. In the meantime, the petitioning creditor died. The petitioning creditor’s estate’s representative argued that it was now impossible to adjudicate the petitioning creditor’s subjective intent and sought dismissal. The court disagrees:
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In re: Motiva Performance Engineering, LLC | Bankr. NM | The court rejects a defendant’s argument that a Ch. 7 trustee’s counsel in a adversary proceeding must be replaced because a conflict of interest has developed. The alleged conflict only arises if a particular interpretation of an agreement is correct. The court finds that the defendant’s interpretation of the agreement is wrong:
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In re: The Roman Catholic Diocese of Rockville Centre, New York | Bankr. SD NY | In a dispute in a diocese bankruptcy about whether the debtor can be liable for claims predating the date that the debtor was formed, the court sustains some claim objections with prejudice and sustains other claim objections with leave to amend:
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Brown v. McDonough | D DC | The court finds that a debtor is estopped from asserting employment discrimination claims in post-discharge non-bankruptcy litigation because she failed to disclose the claims in her bankruptcy:
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