Business Law Insolvency Law Committee

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

In a published order denying a petition for writ of mandamus to compel a district court to grant a stay pending appeal of a bankruptcy sale order, the Fifth Circuit Court of Appeals (the Court) ruled that a chapter 11 trustee could sell real property free and clear of leasehold interests which were junior to the rights of a mortgagee which could have foreclosed out those interests in a state court proceeding, but for the bankruptcy. Read more

The Bankruptcy Court for the Southern District of New York (the “Court”) recently granted a Subchapter V debtor’s motion to extend the 90-day deadline in section 1189(b) to file a plan, expounding upon the standard for extension in the statute compared to that in general business cases. Read more

In Faulkner v. Broadway Festivals, Inc. (In re Reagor-Dykes Motors, L.P.), ___ B.R. ___, 2022 WL 120199 (No. 20-0503) (Bank. N.D. Tex. January 12, 2022) (“Reagor-Dykes”), in a thoughtful decision on various aspects of preference law under Bankruptcy Code (the “Code”) § 547, the Bankruptcy Court for the Northern District of Texas (the “Court”) denied the plaintiff’s motion for summary judgment against defendant Broadway Festivals, Inc. (“Broadway”) on a preference claim by finding that Broadway established an ordinary course defense based on a single similar transaction with the debtor, even though the timing of the payments at issue in the two transactions was substantially different. Read more

The Eighth Circuit Court of Appeals (the Court) recently ruled that a judgment debtor who was mailed a copy of a garnishment summons which was served on his bank did not have standing to pursue a claim under the Fair Debt Collection Practices Act (FDCPA) because the mere receipt of a copy of the summons did not cause a concrete and particularized injury as required by Article III of the Constitution. Ojogwu v Rodenburg Law Firm, 2022 WL 433034 (8th Cir. 2/14/22). Read more