Business Law Insolvency Law Committee

This program is presented jointly by the Insolvency Law Standing Committee of the Business Law Section of the California Lawyers Association and the San Diego Bankruptcy Forum. Read more

In Todeschi v. Juarez (In re Juarez), 603 B.R. 610 (9th Cir. BAP 2019), the United States Bankruptcy Appellate Panel for the Ninth Circuit, in a case of first impression in the circuit, affirmed the confirmation of the debtor’s chapter 11 plan and held that exempt property is not properly included within the phrase “any property” under the absolute priority rule, which generally prohibits a debtor from retaining “any property” under a plan that does not pay creditors in full. Accordingly, the debtor did not need to provide new value for the exempt property he was retaining in order to meet the requirements of Section 1129(b) for confirmation. Read more

The U.S. Court of Appeals for the Ninth Circuit held that a trustee’s lien avoidance power extends to unperfected proceeds of consigned goods. In re Pettit Oil Co., 917 F.3d 1130 (9th Cir. 2019). Read more

Addressing a possible conflict between state and federal precedents, the Bankruptcy Appellate Panel for the Ninth Circuit, in Highland Greens Homeowners Ass’n v. de Guillen (In re de Guillen), 604 B.R. 826 (9th Cir. BAP 2019), held that assessment liens of a homeowners association (“HOA”) are secured claims in bankruptcy only to the extent of the amount stated in the recorded lien. HOA liens are not continuing liens unless the CC&Rs so provide. Read more

hillips v. Gilman (In re Gilman), 603 B.R. 437 (9th Cir. BAP 2019), the U.S. Bankruptcy Appellate Panel of the Ninth Circuit ruled that following a bankruptcy filing, 11 U.S.C. § 108(c)(2) does not toll the two-year period for requesting postpetition, post-judgment fees and costs under California Code of Civil Procedure § 685.080. Read more

In United States Dep’t of Agriculture v. Hopper (In re Colusa Reg’l Med. Ctr.), 604 B.R. 839 (9th Cir. BAP 2019), the U.S. Bankruptcy Appellate Panel of the Ninth Circuit vacated a bankruptcy court's order surcharging a secured creditor for a substantial portion of the attorneys’ fees, and the entire statutory fee, of a chapter 7 trustee. The basis for the decision was that the bankruptcy court failed to correctly apply either the objective test for surcharge adopted by the Ninth Circuit (that the funds were expended directly, specifically and primarily for the benefit of the secured creditor) or the subjective test for surcharge (that the secured creditor consented to the expenditure). Read more

The following is a profile of the Honorable Margaret M. Mann, Chief Judge of the United States Bankruptcy Court for the Southern District of California. Read more

In In re Rosenberg (Rosenberg v. N.Y. State Higher Education Services Corp., et al.), No. 18-09023, 2020 WL 130302, 2020 Bankr. LEXIS 73 (Bankr. S.D.N.Y., Jan. 7, 2020), Chief Judge Cecelia Morris of the United States Bankruptcy Court, Southern District of New York, in a decision to be published, granted Kevin Rosenberg’s summary judgment motion, finding that his student loan obligations were dischargeable pursuant to 11 U.S.C. § 523(a)(8). A Notice of Appeal and Memorandum For Leave to Appeal Interlocutory Order seeking District Court review were filed in the bankruptcy case on January 17, 2020. The bankruptcy court entered the Order Granting Leave to Appeal on January 17, 2020. Read more

In G&G Prods., LLC v. Cecchi Gori Pictures (In re Cecchi Gori Pictures), No. 18-1042, 2019 Bankr. LEXIS 1062, 2019 WL 1448116 (9th Cir. BAP Mar. 29, 2019), the United States Bankruptcy Appellate Panel for the Ninth Circuit, in an unpublished memorandum pertaining to a fraudulent transfer action, reversed a judgment granting debtors’ partial summary judgment motion and ordering turnover of the transferred property. The BAP concluded that the bankruptcy court improperly excluded parol evidence pertaining to the value given in exchange for the transfer, which evidence, if properly considered, created a triable issue of material fact such that the partial summary judgment was improperly granted. Read more

In Ritzen Group, Inc. v. Jackson Masonry, LLC, 589 U.S. ___, No. 18-938 (Jan. 14, 2020), the U.S. Supreme Court unanimously held that an order unreservedly granting or denying a motion for relief from the automatic stay is a final, appealable order. However, at least as to orders denying stay-relief motions, a footnote at the end of the opinion undermines the Court’s ruling. To read the full decision, click here. Read more