Business Law Insolvency Law Committee

The Nevada Supreme Court determined, based on a Nevada statute, that directors and officers of a corporation are not liable for acts or failures to act unless there is a breach of fiduciary duty involving intentional misconduct, fraud or a knowing violation of law. The Nevada Supreme Court did not address exclusions listed in the Nevada statute based on articles of incorporation or corporate governance documents providing for the liability involving other acts. Read more

The United States District Court in New York ruled that Amazon, as an online marketplace operator, was not liable for damages caused to an online buyer by a defective product sold by a third-party vendor based on strict liability, negligence, or breach of warranty claims. Philadelphia Indemnity Ins. Co. v Amazon.com, Inc., 2019 WL 6525624 (E.D. NY 2019). Read more

Reflecting a growing split among bankruptcy courts, a Delaware bankruptcy judge ruled that the statutory amendment which increased quarterly United States Trustee fees by as much as 833% in cases pending at the time of its enactment as well as cases filed thereafter is not impermissibly retroactive, does not amount to a taking, and does not violate the United States Constitution’s Bankruptcy Clause. Read more

The U.S. Bankruptcy Court for the Eastern District of New York ruled that nunc pro tunc employment of counsel for the chapter 7 trustee was not appropriate following a recent decision by the Supreme Court which cast doubt on nunc pro tunc orders. However, the bankruptcy court determined that professionals employed in bankruptcy cases may still be paid for work performed prior to the date of employment, subject to court approval. In re Benitez, 2020 WL 1272258 (Bankr. E.D. N.Y. March 13, 2020). Read more

In a case of first impression, the United States Court of Appeals for the Ninth Circuit held recently that a trust created by an individual for tax and estate planning purposes is entitled to receive all state and federal consumer disclosure protections for a consumer credit transaction. Gilliam v Levine, 2020 WL 1861977 (9th Cir. 4/14/20). Read more

The Bankruptcy Appellate Panel for the Eighth Circuit has held that contractual default interest provision is not subject to a liquidated damages analysis under Missouri or bankruptcy law and therefore is allowed as part of a secured claim. [In re Family Pharmacy, Inc., No. 19-6025, 2020 WL 1291112 (8th Cir. BAP Mar. 19, 2020)] Read more

In a recent case which addressed the dilemma faced by many potential chapter 7 debtors who cannot afford to pay up front a flat sum for attorney’s fees for a chapter 7 case, a bankruptcy court in Kentucky approved a “dual contract” arrangement, whereby the attorney and debtor entered into separate prepetition and postpetition contracts which bifurcated the services and the debtor’s obligation to pay for those services. Read more

In re Clinkingbeard, 2020 WL 1517932 (Bankr. D. Kan. Mar. 30, 2020) navigates the crossroad between Article 9 of the Uniform Commercial Code and a state law governing the perfection of a security interest in a motor vehicle. In this case, a discrepancy between the owner shown on the security agreement and the owner shown on an electronic certificate of title left the lender unsecured in a bankruptcy proceeding. Read more

Holding that Congress had no authority under either Article I or Section 5 of the Fourteenth Amendment to the United States Constitution to abrogate sovereign immunity for States that infringe on protected copyrights, the United States Supreme Court struck down the Copyright Remedy Clarification Act of 1990 (“CRCA”). In a discussion that may have a significant impact on the practice of Bankruptcy law, the Court affirmed that the Bankruptcy Clause is “unique” among Article I Clauses, suggesting that it would affirm its controversial Katz decision should the opportunity arise. Read more

Reversing the Bankruptcy Appellate Panel, the Eighth Circuit Court of Appeals recently held that a spouse’s earlier bankruptcy discharge did not retroactively extinguish the debtor’s joint and several liability for a fraudulent transfer judgment against the debtor and her spouse. Lariat Companies, Inc. v. Wigley (In re Wigley), 951 F.3d 967 (8th Cir. 3/9/20). Read more