While Ms. Sparrow’s civil action for equitable distribution was pending in state court, she file a voluntary Chapter 11 bankruptcy. The primary assets of her bankruptcy estate consist of a fee simple interest in a house and lot located in Durham, North Carolina and a one-half undivided tenant-in-common interest in five tracts of real property located in Granville County, North Carolina, the stated intention being that the plan would liquidate these assets and pay creditors, potentially in full. Ms. Sparrow first commenced an Adversary Proceeding against Mr. Drew, her ex-husband, seeking to sell the Granville Property pursuant to 11 U.S.C.… Read More
Following In re: Official Committee of Unsecured Creditors for Dornier Aviation (North America), Inc., 453 F.3d 225 (2006), the Court of Appeals affirmed the recharacterization by bankruptcy court
of an equity investment as debt. The Dornier factors are:
(1) the names given to the instruments, if any, evidencing the indebtedness;
(2) the presence or absence of a fixed maturity date and schedule of payments;
(3) the presence or absence of a fixed rate of interest and interest payments;
(4) the source of repayments;
(5) the adequacy or inadequacy of capitalization;
(6) the identity of interest between the creditor and the stockholder;
(7) the security, if any, for the advances;
(8) the corporation’s ability to obtain financing from outside lending institutions;
(9) the extent to which the advances were subordinated to the claims of outside creditors;
(10) the extent to which the advances were used to acquire capital assets; and
(11) the presence or absence of a sinking fund to provide repayments.… Read More
Following the disclosure in more than 4,200 Proofs of Claim by Wake Med of personal identifying information, several Debtors sought sanctions for violations of Federal Rule of Bankruptcy Procedure 9037, HIPAA, and 11 U.S.C. §107.
The bankruptcy court held that it was not a “HIPAA compliance tribunal” and might not have jurisdiction to decide such claims. Further, “[t]he case law overwhelmingly holds that there is no private right of action under HIPAA or §107 ”, leaving Rule 9037 as the primary remedy. Where, however, ““it was shown that a creditor flaunted the law with knowledge of its proscriptions, failed to take remedial action once violations were discovered, or acted deliberately as opposed to mistakenly or inadvertently”, Carter v.… Read More
This is the latest of a line of decisions resulting from a complicated set of commercial transactions (which this consumer bankruptcy blog will leave for others to explicate).
It does, nonetheless, have few nuggett of use in consumer cases, specifically in Footnote 1 which recognizes that “it is possible that the Counterclaim constitutes a claim filed against the estate.” Cf. Carroll v. Farooqi, 486 B.R. 718, 722-23 (Bankr. N.D. Tex. 2013). As such an objection/answer to the counterclaim may, pursuant to Rule 3006, preclude such claim being withdrawn “except on order of the court after hearing and notice….”
For a copy of the opinion, please see:
NC & VA Warranty-Informal Proof of Claims… Read More
This case involved a valuation duel between Ms. Sweeney and Ditech over a 1999 Horton Mirage II 24′ x 52′ mobile home, which all parties agreed was personal property.
At the valuation hearing. Ms. Sweeney testified both as to her belief that the property suffered from “extensive water damage” and general disrepair, having a value of $10,000-$11,000. Ms. Sweeney based this on the county tax value of $9,850.
Ditech presented Mr. Joseph Cordoni, who testified that based on a physical inspection of the mobile home and the National Appraisal System (“NAS”), finding the trailer to be in fair condition and deducting $6,331.00 for the removed wheels and estimated repair costs.… Read More
Bankruptcy Court Characterization of Equitable Distribution Awards
Cheryl Jones brought motions against the Debtor, her ex-husband, Sean Jones, seeking relief from the stay and for determination of Domestic Support Obligation, with the primary question being whether the family court’s Equitable Distribution Order award of $116,182 from the debtor’s 401(k) plan and $63,736 from the debtor’s retirement account were in the nature of a domestic support obligation, pursuant to §§ 101(14A) and 523(a)(5), or, as argued by the debtor, were property distributions within the scope of §523(a)(15). If the former, the obligation would be nondischargeable, but the latter would be discharged in a Chapter 13 case, pursuant to § 1328(a).… Read More
While factually complicated, this case presents two issues of first impression under North Carolina law, first regarding the interpretation of the term “transfer” the North Carolina Uniform Voidable Transactions Act, N.C.G.S. § 39-23.9, and secondly, whether this is a statute of limitations or repose.
The Court of Appeals held that based on both the plain language of the statute and the legislative history, the term “transfer” refers to the actual date on which an asset was transferred, rather than the date when its fraudulent nature became apparent to a creditor.
Further, and that the statute is one of repose and not limitation.… Read More
The parties in this case, where the Plaintiff alleged that personal identifying information had been disclosed in a Proof of Claim, reached a settlement but sought a Motion to Seal in order so that such settlement would not be construed as binding for similar claims.
The bankruptcy court, however, found that 11 U.S.C. § 107(a) was very restrictive, allowing only sealing of documents to “protect an entity with respect to a trade secret or confidential research, development, or commercial information; or protect a person with respect to scandalous or defamatory matter . . . .” The disclosure of personal information (while itself subject to being sealed) did not fit either narrow criteria.… Read More
After the filing of her Chapter 7 bankruptcy, the Debtor found a cashier’s check payable to her ex-husband in the amount of $11,000.00. This check was not listed as an asset in the Debtor’s schedules, but her ex-husband was listed as holding a priority claim for $0.00 for alimony. The Debtor contended that this was for unpaid alimony and her ex-husband, in fact, had the sole allowed DSO priority claim for $15,000.00 in the case. The Debtor argued that the cashier’s check was not an asset of the bankruptcy estate and that it would be more efficient and maximize the amount received creditors, namely her ex-husband, if the cashier’s check was simply tendered to him.… Read More