Month: April 2014

W.D.N.C.: In re Jenkins- Adjournment of §341 Meeting of Creditors


The first §341 Meeting of Creditors was conducted on May 14, 2012, but not concluded. The Trustee and Bankruptcy Administrator were granted an extension of time to file an objection to Jenkins’ discharge until “sixty (60) days after the meeting of creditors pursuant to 11 U.S.C. § 341 has been adjourned.” After finding Jenkins in contempt for failing to respond to email requests to set a new date, a second creditors meeting was eventually held on July 19, 2012, but was not concluded, only adjourned, without objection. On September 26, 2012, or 69 days later, the Trustee and B.A. brought suit seeking denial of Jenkins’ discharge, to which Jenkins objected as untimely.… Read More

Posted in North Carolina District Court Cases Tagged with: ,

Bankr. E.D.N.C.: In re Eng – Impairment of De Minimus Class; Nature as a Fixture


The Debtor purchased two gas stations, against which Petromax held Deeds of Trust, including against fixtures, in the amount of more than $2.4 million. Upon filing Chapter 11, the Debtor valued the gas stations at $1.3 million. The Debtor’s second proposed plan had eight classes of claims, but Class 7, which consisted of only $5,760.52 in unsecured claims, was the sole impaired class in favor of the plan, with the City of Greenville, holding a claim for $915.42, being the lone claimant to vote. The impairment to Class 7 was a 20 month delay in payment.

While a debtor may proceed to confirmation even in the absence of accepting ballots from all impaired classes pursuant to § 1129(b)(1) if, among other things, at least one impaired class of claims accepts the plan, and the remaining requirements of § 1129(a) are met, “there must be some other properly classified group that is also hurt and nonetheless favors the plan.” In re 266 Washington Associates, 141 B.R.… Read More

Posted in Eastern District, North Carolina Bankruptcy Cases Tagged with: , , ,

Bankr. M.D.N.C.: Walter v. Freeway Foods- Application of Attorney-Client Privilege if Attorney is Unlicensed


Walter sought discovery relating to communications between Waffle House and Jonathan Waller, who had served as general counsel to Waffle House since 2001. Waffle House, asserting attorney-client privilege, directed Waller not to respond. The difficulty, however, was that Waller provided legal services for Waffle House in Georgia, but only held an inactive law license in Illinois and no where else. Despite this, Waffle House reasonably believed that Waller was a licensed attorney and that its communications were privileged.

The bankruptcy court held that the attorney-client privilege belongs to the client and must meet the following conditions:

(1) the attorney-client relation must have existed at the time of the communication;
(2) the communication must have been in confidence;
(3) the communication must relate to a matter concerning which the attorney is employed or is being professionally consulted;
(4) the communication must have been made in the course of seeking or giving legal advice for a proper purpose; and
(5) the privilege must be asserted by the client.… Read More

Posted in Middle District, North Carolina Bankruptcy Cases Tagged with: , ,

4th Cir.: Gold v. Robbins- Commission for Chapter 7 Trustee


Trustee Gold requested a trustee commission, pursuant to 11 U.S.C. § 330(a)(7), based on the percentages set forth in § 326(a), of $17,254.61. The bankruptcy court, finding that Gold had failed to timely complete his duties, reduced the fee to $8,020.00, based on his reasonable hourly services.

The Court of Appeals started from finding that BAPCPA added § 330(a)(7) and instructs that, “[i]n determining the amount of reasonable compensation to be awarded to a trustee, the court shall treat such compensation as a commission, based on section 326.” (Emphasis added.) It contrasted the “shall” of § 330(a)(7) with the “may” used elsewhere in § 330(a).… Read More

Posted in 4th Circuit Court of Appeals Tagged with: , , ,

M.D.N.C.: Dillon v. BMO Harris Bank, N.A.- Internet Payday Lenders not required parties to action; Claims against facilitators of Internet Payday Loans


Dillon, a North Carolina resident, obtained five loans over the internet from lenders based offshore or on Indian reservations (“internet lenders”) with interest rates ranging from 139% to over 700% and, in some cases, thousands of dollars in finance charges. Mr. Dillon asserted that these loans violated North Carolina’s usury statute and various other state laws. He did not, however, sue the internet lenders themselves, but instead brought suit against the banks that served as the Originating Depository Financial Institutions (“ODFIs”) in connection with transactions related to the loans, alleging that the defendant ODFIs knew or should have known that the internet lenders were engaged in making payday loans in states where the loans were unlawful and that the ODFIs violated RICO by knowingly facilitating the collection of usurious loans.… Read More

Posted in North Carolina District Court Cases Tagged with: , , ,

Law Review: Rendleman, Doug & Weingart, Scott- Collection of Student Loans: A Critical Examination


Although the collection of college student loans centers this article, some background precedes its main topic. It begins by defining and distinguishing federal and private student loans. Next is repayment of loans, postponing repayment through deferment, forbearance, extensions, and public-interest assistance and cancellation. Perkins loan deferment, forbearance, and cancellation follow. Delinquency and default are next, including collection fees and penalties, administrative wage garnishment, state and federal income-tax-refund offsets, federal benefits offsets, and professional-license suspension. The lender’s judicial collection is followed by the borrower’s limited affirmative defenses and post-judgment tools. A borrower may exit default through consolidation and rehabilitation. There are two types of statutory discharges: school-related discharges and discharges for death and disability.… Read More

Posted in Law Reviews & Studies Tagged with: , , , , ,

Law Review: Ponoroff, Lawrence – Constitutional Limitations on State-Enacted Bankruptcy Exemption Legislation and the Long Overdue Case for Uniformity


The division of responsibility between state and federal authorities in bankruptcy is complex. The U.S. Constitution cedes the power to pass bankruptcy laws to the federal government. For political reasons, however, since 1867 the federal bankruptcy law has deferred to one degree or another to the states with respect to the designation of property exempt from administration in a bankruptcy case. The constitutionality of this practice under the uniformity requirement in the Bankruptcy Clause of the Constitution has been settled since 1902. More recently, however, considerable disagreement has arisen in the case law over whether this deference extends to exemptions enacted by a state that apply solely in bankruptcy.… Read More

Posted in Law Reviews & Studies Tagged with: , ,

Law Review: Sousa, Michael D.- Just Punch My Bankruptcy Ticket: A Qualitative Study of Mandatory Debtor Financial Education


When Congress amended the Bankruptcy Code in 2005 through the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), it mandated that individual consumer debtors undergo two debtor education courses, one as a condition precedent to filing for bankruptcy relief, and a second for later receiving a discharge of indebtedness. As for the pre-filing credit counseling course, Congressional aim was to have prospective debtors understand the potential alternatives to filing for bankruptcy relief with the goal of having some percentage of debtors settle their debt obligations outside of the bankruptcy system. Regarding the post-filing financial management course, Congress wanted debtors who utilized the bankruptcy system to learn effective financial management techniques to employ after the closing of their bankruptcy cases.… Read More

Posted in Law Reviews & Studies Tagged with: ,

Law Review: Sousa, Michael D.- A Casus Omissus in Preventing Bankruptcy Fraud: Ordering a Search of a Debtor’s Home


Most individual debtors file for bankruptcy relief with honest intentions. Nonetheless, there is also an underside to the American bankruptcy law system that often goes unreported and ignored in the scholarly literature, namely, the commission of fraud by debtors who seek protection under the Bankruptcy Code. One of the ways in which fraud upon the bankruptcy system occurs is when debtors intentionally conceal assets from the bankruptcy process. Indeed, reported bankruptcy court decisions are rife with examples of debtors attempting to hide or shield assets from their creditors. Debtors who are discovered concealing assets are subject to certain civil remedies, such as the dismissal of their bankruptcy case or the denial of the discharge of their preexisting indebtedness.… Read More

Posted in Law Reviews & Studies Tagged with: , , , ,

Bankr. M.D.N.C.: In re Jarrett- Exception from Abandonment of Assets on Conclusion of Case; Fractional Interest in Assets


Mr. Jarrett held a one-half remainder interest in real property, with the other one-half remainder interest held by his sister and the life estate in favor of his mother. The tax value of the property is $118,500, with a $42,362 mortgage. Mr. Jarrett valued his fractional interest at $7,110 and exempted $4,568.28. The Court held that Chapter 7 Trustee could not sell an entire interest in the property free and clear of the interest of the life tenant. See In re Sargent, 337 B.R. 661 (Bankr. N.D. Ohio 2006) and the Trustee did not seek to sell the remainder interests jointly under 11 U.S.C.… Read More

Posted in North Carolina Bankruptcy Cases, Western District Tagged with: , , , ,