Business Law Insolvency Law Committee

The United States District Court for the Southern District of Texas (the Court), ruling on a Bankruptcy Code § 523(a)(6) nondischargeability issue arising from a California judgment, agreed with bankruptcy courts in the Ninth Circuit that a jury finding that a plaintiff is entitled to punitive damages does not automatically mean the debt arose from willful and malicious conduct. Mahadevan v Bikkina (In re Mahadevan), 2022 WL 2979726 (S.D. Tex. July 26, 2022). Read more

Two recent published decisions addressed the applicability of the economic loss rule to claims for damages, one in the California Court of Appeal, M & L Financial, Inc. v Sotheby’s, Inc., 2022 WL 2734399 (July 14, 2022), and the other in the 10th Circuit Court of Appeals arising out of a bankruptcy appeal, Glencove Holdings, LLC v. Bloom (In re Bloom), 2022 WL 2679049 (10th Cir. July 12, 2022). Read more

The United States Bankruptcy Court for the Southern District of Illinois (the Court) recently ruled that a chapter 11 debtor may sell all of its assets free and clear of successor liability claims relating to the debtor’s withdrawal from pension plans under the authority of Bankruptcy Code (Code) § 363(f)(5). In re Norrenberns Foods, Inc., 2022 WL 2657213 (Bankr. S.D. Ill. July 8, 2022). Read more

In JJ Cranston Construction Corp. v. The City of New York, ___ F. Supp.3d ___, 2022 WL 1289690 (E.D.N.Y. April 29, 2022) (“Cranston”), the United States District Court for the Eastern District of New York (the “District Court”) dismissed the debtor’s complaint without leave to amend but without prejudice because it sought damages for an alleged violation of the automatic stay and, under Second Circuit authority, the bankruptcy court had exclusive subject matter jurisdiction to address stay violations. Read more

In In re Censo, LLC, the U.S. Bankruptcy Appellate Panel for the Ninth Circuit held an order entered by United States District Court for the District of Nevada was entitled to preclusive effect as several exceptions applied to prevent the order from being considered void for violation of the automatic stay under 11 U.S.C. § 362(a)(1), (a)(3), (a)(4), or (a)(5) Read more

Agreeing with the reasoning of a dissent in a Ninth Circuit case, the First Circuit Court of Appeals (the Court), ruling in the reorganization case for the Commonwealth of Puerto Rico, held that otherwise valid Fifth Amendment takings claims arising prepetition cannot be discharged in bankruptcy proceedings without payment of just compensation in full.  Read more

The United States Bankruptcy Court for the District of Columbia (the “Court”), in a case of first impression, a year after having dispossessed a small-business membership association debtor, revoked its Subchapter V designation, then ordered the appointment of a Chapter 11 trustee and directed the case to proceed as a standard Chapter 11. Read more

On June 27, 2022, the U.S. Supreme Court granted a petition for writ of certiorari on the issue of whether Bankruptcy Code § 363(m) is a jurisdictional bar to appellate review of certain sale-related orders. Read more

The California Supreme Court (the Court) recently analyzed the scope and breadth of privity in connection with a claim preclusion scenario, limiting the reasoning and holding of Castillo v. Glenair, Inc., 23 Cal. App. 5th 262 (2018). Read more

In In re Pietro Cimino, 2021 WL 4593375 (9th Cir. B.A.P. Oct. 6, 2021), the United States Bankruptcy Appellate Panel of the Ninth Circuit (BAP), affirmed the bankruptcy court’s ruling, which applied issue preclusion to a state court judgment to grant summary judgment in a non-dischargeability claim under Section 523(a)(2)(A) and (a)(6).  Read more