California Lawyers Association

Business Law Insolvency Law Committee

Updates from the BLS Insolvency Law Committee

The Seventh Circuit Court of Appeals (the Court) recently ruled that an asset purchaser who knew of but ignored a third party’s right of first refusal was not a good-faith purchaser protected by §§ 363(f) and (m) of the Bankruptcy Code. Archer-Daniels-Midland Company v. Country Visions Cooperative, 2022 WL 998984 (7th Cir. April 4, 2022). Read more
In Thakkar v. Good Gateway, LLC, 2022 WL 552743 (Nos. 20-4792 and 20-4800) (N.D. Ga. January 12, 2022) (“Thakkar”), the United States District Court for the Northern District of Georgia (the “Court”) rule that because he did not have a direct pecuniary interest in the matter, an LLC member of the debtors lacked standing to appeal the Bankruptcy Court’s ruling denying the debtors’ motions against a creditor for sanctions for allegedly violating the automatic stay and a mediation order in their bankruptcy cases. Read more
The 9th Circuit Court of Appeals held that a bankruptcy court’s order denying a motion for relief from the automatic stay “without prejudice” conclusively resolved the requested relief and therefore was an appealable final order under 28 U.S.C. section 158(a). See In re Mayer (9th Cir. 2022) 2022 WL 679085. Read more
On June 21, 2022, President Joseph Biden signed S.3823 into law. The law, which is effective immediately, makes the following material changes to the Bankruptcy Code. Read more
Although it recognized that the doctrine of equitable estoppel could be used to defeat an amendment to a bankruptcy exemption under California law, the Bankruptcy Appellate Panel for the Ninth Circuit (the BAP) ruled in a recent case that the trustee had not proved all the necessary elements and reversed a bankruptcy court ruling that had disallowed the amendment. Guevarra v Whatley (In re Guevarra), 2022 WL 884595 (9th Cir. BAP 3/25/22). Read more
In Springfield Hospital, Inc. v. Guzman, ___F.4th ___, 2022 WL 790689 (No. 20-30902) (2d Cir. March 16, 2022) (“Guzman”), in a fifty-three page opinion, the United States Court of Appeals for the Second Circuit (the “Court”) held that the Small Business Administration can deny a Paycheck Protection Program loan to a debtor simply because the debtor is in bankruptcy, concluding that Bankruptcy Code § 525(a)’s prohibition against governme Read more
The following is a case update written by Robert G. Harris (rob@bindermalter.com), a partner in the Silicon Valley bankruptcy boutique, Binder & Malter, LLP, analyzing a recent decision of interest. Read more
The Ninth Circuit Court of Appeals (the Court) allowed former chapter 7 debtors to deduct from their taxes the interest credited as paid to the lender from the proceeds of a short sale, overruling a determination by the Internal Revenue Service that they were not entitled to the interest deduction. Read more
The Court of Special Appeals of Maryland (the Court), interpreting its version of UCC § 3-309, recently held that an entity that lost a note in its possession may assign that lost note, along with the right to enforce it, so long as the initial entity was entitled to enforce the note when it lost possession. Jones v. Ward, 2022 WL 556977, ___ A. ___ (Md. Court of Special Appeals, 2/24/22). Read more
Bankruptcy Judge Montali applied California law to find that a “settlement agreement” extending the term of a business purpose mortgage loan was usurious, and that a late charge, applied to a balloon payment was unenforceable as liquidated damages. Read more

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