Reprinted from the Norton Bankruptcy Law Adviser, with permission of Thomson/West. For more information about this publication please visit http://www.west.thomson.com/
In re Marrama
--- F.3d ----, 2007 WL 517340 (
Holding: Debtor who made false statements and concealed assets and transfers may not convert case from one under Chapter 7 to one under Chapter 13. Pursuant to § 1307(c), a Chapter 13 case may be converted or dismissed for cause, including the debtor’s bad faith conduct. A ruling that a Chapter 13 case may be converted or dismissed for bad faith conduct is tantamount to a ruling that the debtor does not qualify under Chapter 13. Under § 706(d), a case may not be converted unless the debtor may be a debtor under the chapter to which the case is being converted. Accordingly, a bad faith debtor may not convert his case from Chapter 7 to Chapter 13. Dissenting, four justices would have allowed conversion because conversion or dismissal under § 1307(c) differs from eligibility to be a debtor under § 109 and does not implicate the § 706(d) limitation on conversion of a case under Chapter 7 to one under Chapter 13.
In re Brannon
--- F.3d ----, 2007 WL 399633 (3rd Cir. Feb. 7, 2007)
Holding: Where married debtors held exempt property as tenants by the entirety pursuant to
In re O'Lexa
--- F.3d ----, 2007 WL 402689 (3rd Cir. Feb. 7 2007)
Grochal v. Ocean Technical Services Corporation (In re
--- F.3d ----, 2007 WL 430767 (4th Cir. Feb. 9, 2007)
Holding: Subcontractors' interest in interpleaded funds owed to government contractor debtor did not place the funds outside the debtor's estate pursuant to § 541. The bankruptcy court and district court erroneously compared the subcontractors' interest to that of a surety, whose interest would be excluded from the estate. Fourth Circuit reversed and remanded for determination of whether subcontractors' claims could nonetheless trump those of other creditors, such as through a theory of equitable trust.
In re Kreisler
--- F.3d ----, 2007 WL 572125 (4th Cir. Feb. 26, 2007)
Holding: Ejectment action against non-debtor wholly owned subsidiary of Chapter 11 debtor did not violate automatic stay. Action was not against the debtor under § 362(a)(1) because the tenant had not filed a bankruptcy petition. Debtor and tenant argued that “unusual circumstances” caused the stay to apply to the non-debtor tenant, but the court disagreed, finding that there was no identity between the debtor and tenant and a judgment against the tenant would not effectively operate as a judgment against the debtor. Action was not against property of the estate under § 362(a)(3) because the debtor had no interest in the leased premises despite its ownership of the tenant. Additionally, even though the ejectment action will likely cause the debtor’s interest in the tenant to lose value, the stay nonetheless did not apply.
Nunnery v. Rountree (In re Rountree)
--- F.3d ----, 2007 WL 586568 (4th Cir. Feb. 27, 2007)
Holding: Debtor’s obligation to creditor did not meet the requirements of § 523(a)(2)(A) and, thus, was dischargeable. Debtor was a
--- F.3d ----, 2007 WL 328585 (8th Cir. Feb. 6 2007)
Pre-petition income from estate property does not constitute "proceeds ... or profits of or from property of the estate" pursuant to § 541(a)(6). Eighth Circuit reversed debtor's criminal conviction pursuant to 18 U.S.C. § 152(1) for failing to disclose such income.
475 F.3d 1150 (9th Cir. Feb. 5 2007)
Holding: Ninth Circuit reversed criminal defendant's conviction for "fraudulently obstruct[ing]" creditor landlords, where
--- F.3d ----, 2007 WL 582719 (9th Cir. Feb. 27, 2007)
Holding: Company that sold web-based software that prepares bankruptcy petitions was a “bankruptcy petition preparer” subject to penalties for violating § 110. The software solicited information from customers, translated the information into responses to questions on the bankruptcy forms and prepared completed bankruptcy forms for filing using those responses. The company charged fees for this service. Accordingly, the company was a “bankruptcy petition preparer” under § 110(a)(1). The company violated § 110(b) by not including the company’s name and address on the petition, § 110(c) by not including the social security number of the preparer and § 110(f) by using the words “law” and “legal” in its advertisements. Bankruptcy court properly acted under the authority granted by § 110(i) and (j) in enjoining the company from acting as a bankruptcy petition preparer and certifying to the district court the question of damages.
Hill v. Akamai Technologies, Inc. (In re MS55, Inc.)
--- F.3d ----, 2007 WL 464781 (10th Cir. Feb. 13 2007)
Holding: Chapter 7 Trustee was barred from asserting claims against creditor, where pre-conversion Chapter 11 debtor-in-possession waived said claims. Causes of action retained by the Chapter 11 creditors' committee did not belong to Trustee but dissolved in the conversion.
Thompkins v. Lil' Joe Records, Inc.
--- F.3d ----, 2007 WL 316302 (11th Cir. Feb. 5 2007)
Record label's § 365 rejection of contract with recording artist did not rescind contract and revert intellectual property rights to artist. Upon rescission, artist's remedy was to file a claim for rejection damages, and his failure to do so precluded his later claims based on contract law, Lanham Act, and other theories.
Dzikowski v. Northern Trust Bank Of
--- F.3d ----, 2007 WL 445368 (11th Cir. Feb. 13, 2007)
Holding: Single satisfaction requirement of § 550(d) looked to federal common law and not to Florida state law to determine whether Trustee's fraudulent transfer claim had been satisfied in previous settlement with other defendants. State law was inapplicable because the doctrine of single satisfaction governs procedure rather than substantive law, application of Florida law would frustrate the equitable purposes of the Bankruptcy Code, and the doctrine arises only when a bankruptcy court has authorized settlement of a federal cause of action in a core bankruptcy proceeding. Pursuant to federal common law, the lack of an up-front allocation of damages by settling parties is neither dispositive nor useful in determining whether the settlement has led to a single satisfaction of a trustee's claims against a non-settling obligor. The bankruptcy court must value the claims at issue, as in the settlement approval process pursuant to Fed. R. Bankr.P. 9019, or the valuation of a claim pursuant to § 502(c).
--- F.3d ----, 2007 WL 548781 (11th Cir. Feb. 23, 2007)
Holding: Bankruptcy court erred in denying motion to compel arbitration of dispute concerning how much general contractor owed subcontractor that was Chapter 11 debtor. General contractor had resolved payment dispute with landowner on behalf of all subcontractors. While general contractor was negotiating with landowner, general contractor and debtor entered into a tolling agreement that included an arbitration provision. After the resolution with the landowner, general contractor and debtor disputed the amount of the settlement funds that should be paid to debtor. Bankruptcy court erroneously concluded that this was a core matter. The dispute between debtor and the general contractor was not of the type listed in 28 U.S.C. § 157(b)(2), it did not involve a right created by federal law and it was not a proceeding that would arise only in bankruptcy. Accordingly, this was a non-core matter. Furthermore, even if this had been a core matter, the bankruptcy court failed to determine whether the arbitration of the dispute would have inherently conflicted with the underlying purposes of the Bankruptcy Code.