Business Law Insolvency Law Committee

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In an unpublished but analytical opinion, the Bankruptcy Appellate Panel for the Tenth Circuit (the BAP) recently affirmed a bankruptcy court decision which held that under the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

In Akhlaghpour v Orantes, 86 Cal. App. 5th 232 (2022), the California Court of Appeal reversed a trial court decision which granted a demurrer without leave to amend and dismissed a lawsuit filed by a former chapter 11 debtor against her chapter 11 attorney for malpractice. Read more

The New York Court of Appeals (the Court) recently held that under the Uniform Commercial Code (UCC) the holder of an exercisable security interest in a borrower’s receivables is an “assignee” under UCC § 9-406, such that once the holder gives notice to the borrower’s account debtor, the account debtor must pay the holder, not the borrower, to receive credit for the payment.  Read more

Addressing a matter of first impression in the Fifth Circuit, the United States Bankruptcy Court for the Western District of Texas (the “Court”) in Avion Industries, LLC v. GFS Indus., LLC, (In re GFS Industries, LLC) 2022 Bankr. LEXIS 3199; 2022 WL 16858009 (Bankr. W.D. Tex., San Antonio Div. November 10, 2022) recently dismissed an adversary proceeding under Federal Rule 12(b)(6), holding that “corporate debtors electing to proceed under Subchapter V of Chapter 11 are not subject to complaints to determine dischargeability pursuant to [section] 523(a)” and that section 727 is inapplicable in Subchapter V cases.  Read more