Business Law Insolvency Law Committee

In the most recent bankruptcy case dealing with the question of whether private student loans made by Navient Credit Finance Corporation (Navient) are nondischargeable under Bankruptcy Code § 523(a)(8), on cross summary judgment motions the Bankruptcy Court for the Northern District of New York (the Court) ruled (1) for the debtor that the loans were not “part of a program funded in part by the government” as required for nondischargeability under § 523(a)(8)(A)(i) but (2) for the creditor that the debtor’s loan was nondischargeable under § 523(a)(8)(B).  Mazloom v Navient Solutions, LLC (In re Mazloom), 648 B.R. 1 (Bankr. N.D.N.Y. 2023). Read more

In a recent published opinion, the Seventh Circuit Court of Appeals (the Court) reversed its own precedent in ruling that federal, not state law, defines the meaning of “transfer” in § 547 of the Bankruptcy Code, the statutory authority which allows a trustee to recover preferential transfers for the benefit of the estate.  Warsco v Creditmax Collection Agency, Inc., 56 F.4th 1134 (7th Cir. 2023). Read more

Answering a question that has been addressed by multiple bankruptcy courts with mixed results, the Bankruptcy Court for the Western District of Missouri (the Court) ruled that when debtors sell real property they own when a chapter 13 is filed, the proceeds from the sale are new property that replenishes the chapter 13 estate and may be available for distribution to creditors.  In re Marsh, 647 B.R. 725 (Bankr. W.D. Mo. 2023). Read more

Court) denied a debtor’s motion to abandon an exempt homestead, concluding that pending adversary proceedings which asserted claims that debts were excepted from discharge under 11 U.S.C. § 523(a)(2) and (4) could result in decisions which would limit the debtor’s homestead exemption under 11 U.S.C. § 522(q)(1)(B)(ii).  Therefore, abandonment was premature.  In re Oliver, ___ B.R. ___, 2023 WL 2620032 (Bankr. E.D. CA. 3/23/23).  Read more

In a chapter 13 case which pitted the antimodification provisions of § 1322(b)(2) of the Bankruptcy Code against the preclusive finality of a confirmed plan under § 1327(a), the Eleventh Circuit Court of Appeals (the Court) determined that the statutory mandate pertaining to antimodification prevails. Mortgage Corp. of the South v. Bozeman (In re Bozeman), 57 F.4th 895 (11th Cir Jan. 10, 2023). Read more

In a recent published opinion, the Eleventh Circuit Court of Appeals (the Court) ruled that if a modification of a proposed chapter 11 plan materially and adversely changed the way that equity holders were treated, they were entitled to a new disclosure statement and a second chance to cast ballots despite their failure to vote on the original plan.  Braun v America-CV Station Group, Inc., 56 F.4th 1302 (11th Cir. Jan. 5, 2023).  Read more

The Seventh Circuit Court of Appeals (the Court) recently held that an order, which arose from a workers’ compensation action, directing a debtor’s employer to deposit funds in debtor’s lawyer’s trust account for payments to medical creditors created an express trust such that the funds were excluded from the debtor’s chapter 7 bankruptcy estate and he was not entitled to claim an exemption in them.  Ryan v. Branko Prpa MD, LLC, 55 F.4th 1108 (7th Cir. 2022). Read more

In Bennetti et al. v. Oxford Restructuring Advisors LLC et al. (In re CPESAZ Liquidating, Inc.), No. CC-22-1090, 2022 WL 18067792 (B.A.P. 9th Cir. Dec. 29, 2022), the Ninth Circuit Bankruptcy Appellate Panel (the “BAP”) affirmed the bankruptcy court’s award of fees to the debtors’ law firm over the objection of certain participants in the debtors’ employee stock ownership plan (the “ESOP Participants”). Read more

In an unpublished decision, the Ninth Circuit Bankruptcy Appellate Panel (the “BAP”) addressed the standard for challenging a dismissal of a chapter 11 case when it affirmed dismissal of the debtor’s voluntary chapter 11 petition. Read more

The Seventh Circuit Court of Appeals (the Court) recently held that an order, which arose from a workers’ compensation action, directing a debtor’s employer to deposit funds in debtor’s lawyer’s trust account for payments to medical creditors created an express trust such that the funds were excluded from the debtor’s chapter 7 bankruptcy estate and he was not entitled to claim an exemption in them.  Ryan v. Branko Prpa MD, LLC, 55 F.4th 1108 (7th Cir. 2022). Read more