Business Law Insolvency Law Committee

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

Joining a list of competing opinions on the issue, the District Court for the Eastern District of New York (the Court) recently held that a debtor may assert a homestead exemption as provided by New York law against the proceeds from a “give-up” transaction (often referred to as a carve-out) whereby a bankruptcy trustee sought to sell an over encumbered residence. Read more

The Second Circuit Court of Appeals (the Court) recently ruled that a foreclosure of a tax lien under the strict foreclosure standard established by New York law may be set aside as a fraudulent transfer in a bankruptcy proceeding, rejecting the application of BFP v Resolution Trust Corp, 511 U.S. 531 (1994) to this procedure. Gunsalus v County of Ontario, New York (In re Gunsalus), 2022 WL 2296945 (2nd Cir. June 27, 2022). Read more

In Cantwell-Cleary Co., Inc. v. Cleary Packaging, LLC (In e Cleary Packaging, LLC),___ F.3d ___, 2022 WL 2032296 (4th Cir. June 7, 2022, No. 21-1981) (“Cleary”), reversing the Bankruptcy Court, the United States Fourth Circuit Court of Appeals (the “Fourth Circuit”) held that Bankruptcy Code (the “Code”) section 523(a)’s discharge exceptions as incorporated into Subchapter V by code section 1192(2) apply not to just individuals, but to entities as well. Read more