California Lawyers Association

Business Law Insolvency Law Committee

Updates from the BLS Insolvency Law Committee

The Second Circuit Court of Appeals (the Court) held that when the question of whether student debt has been discharged in a prior bankruptcy is subject to a legal, not factual, dispute, a credit reporting agency that shows the debt as outstanding and past due on a credit report is not in violation of 15 U.S.C. § 1681e(b) of the Fair Credit Reporting Act (“FCRA). Mader v. Experian Info. Sols., Inc., 56 F.4th 264 (2d Cir. 2023). Read more
The Ninth Circuit Court of Appeals (the Court) recently ruled that a student financial aid advisor, who mailed solicitation packets to current and prospective college students pertaining to their ability to apply for scholarships and grants in aid, was a “covered person” subject to the Consumer Financial Protection Bureau’s (CPFB) civil enforcement authority and that the net impression of the solicitations was deceptive.  Consumer Fin. Prot. Bureau v. Aria, 54 F.4th 1168 (9th Cir. 2022). Read more
In Milestone Financial, LLC v. Moon, (In re Moon), 648 B.R. 73 (B.A.P. 9th Cir. 2023), the Bankruptcy Appellate Panel for the Ninth Circuit (“BAP”) recently affirmed a bankruptcy court decision which had concluded that: (1) a forbearance agreement was usurious and not exempted from usury just because the orginal loan might have been exempt and (2) the creditor was entitled to post-maturity interest on the loan under California law.  Read more
Colorado Bankruptcy Court grants motion to convert case from Chapter 11 to Chapter 7, concluding that debtor’s bad faith filing did not justify dismissal of the case despite debtor's possible ownership interests in cannabis-related entities, as conversion to Chapter 7 was in the best interest of creditors.  See In re Roberts, 644 B.R. 220 (Bankr. D. Colorado 2022).  Read more
In a recent opinion, the United States Bankruptcy Court for the District of Kansas (the Court) ruled that when the contingency on a chapter 13 debtor’s interest in trust property was removed post petition, the value of that interest became property of the bankruptcy estate, was subject to the best interest of creditors’ test, and therefore must be distributed to unsecured creditors by way of a modified chapter 13 plan.  In re Wright, 2022 WL 17661135 (Bankr. D. Kan. Dec. 13, 2022). Read more
On February 22, 2023, the United States Supreme Court held that 11 U.S.C. §523(a)(2)(A) bars a debtor from discharging a debt “obtained by … fraud,” regardless of her mental culpability with respect to incurring the debt. Bartenwerfer v. Buckley, No. 21-908, slip opinion, 506 U.S. ___ (2023). Read more
The United States Bankruptcy Court for the Southern District of New York held in In re Wansdown Properties Corp. N.V., 647 B.R. 23 (Bankr. S.D.N.Y. 2022), that genuine issues of material fact precluded summary judgment on the defendant’s summary judgment motion on constructive fraudulent transfer claims but granted the debtor’s motion for partial summary judgment because the defendant’s affirmative defenses of unclean hands and fraud were inapplicable to avoidance action claims as a matter of law.  Read more
In an unpublished but analytical opinion, the Bankruptcy Appellate Panel for the Tenth Circuit (the BAP) recently affirmed a bankruptcy court decision which held that under the Limited Liability Company Act of Oklahoma (the Act) a chapter 7 trustee may not sell or assign a debtor member’s purely economic interests in Limited Liability Companies(“LLCs”) without complying with restrictions on such transfers contained in the LLCs’ Operating Agreements. Malloy v Kramer (In re Kramer), 2022 WL 17176411 (10th Cir. BAP Nov. 23, 2022).   Read more
On October 7, 2022 the California Court of Appeal, First District, Division 4 (“Court of Appeals”) reversed the trial court’s Anti-SLAPP order striking the complaint filed by Kacie Lynn Young (“Plaintiff”), and held that Cal. Civ. Code § 1788.17 incorporates into the Rosenthal Fair Debt Collection Practices Act the strict liability standard of 15 U.S.C. § 1692(e) for false statements made in collecting a debt or regarding the legal status of the debt.  To review, click here. Read more
The following is a case update written by Marc Lieberman of FLP Law Group LLP analyzing a recent decision of interest, Elissa Miller v Slotkin Defective Trust of December 14, 2021 et al (In re Mark Abbey Slotkin), No. 20-bk-12042-BB, 2022 WL 16835524 (Bankr. C.D. Cal. Oct. 13, 2022) (“Slotkin”). Read more

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