In a Chapter 11 case, Summitbridge held a secured (but under secured) claim, which was satisfied, pursuant to the confirmation order, by tender of the collateral. Summitbridge then filed an additional unsecured, nonpriority claim for it attorneys fees, pursuant to its promissory note, in the amount of 15% of the outstanding indebtness, totaling more than $300,000. The bankruptcy court disallowed this unsecured claim.
In affirming, the district court recognized the line of cases that “reasoned that claims for post-petition attorneys’ fees are contingent, unliquidated claims which are not precluded by Section 502 and are thus allowable. See In re 804 Congress, L.L.C.… Read More
In their Chapter 7, the Youngs agreed, in a court approved settlement, to allow the sale of their residence, splitting the net proceeds equally with the Trustee and were to keep “only those furnishings necessary to furnish their new residence”, with the remainder of their personal property to be auctioned. After initially identifying the property they were to retain with the Trustee’s auctioneer, the Young sold all of their additional property with a different auction company, using the funds to pay for moving costs. It appears that the proceeds from the sale of the personal property amounted to $937.50. The Trustee and Bankruptcy Administrator then sought denial of the Youngs’ discharge pursuant to 11 U.S.C.… Read More
In 1978, Congress made it illegal for government employers to deny employment to, terminate the employment of, or discriminate with respect to employment against a person who has filed bankruptcy. In 1984, Congress extended this prohibition to private employers by making it illegal for such employers to terminate the employment of, or discriminate with respect to employment against a person who has filed bankruptcy. Under the law as it currently exists, private employers can refuse to hire a person who has filed bankruptcy solely because that person has filed for bankruptcy. Meanwhile, employers have substantially increased their use of credit history checks as a pre-employment screening device.… Read More
Ms. Redding’s Chapter 11 plan was confirmed providing that she was to have six months in which to market and sell her principal residence and was required to make adequate protection payments on the mortgage claim of $1,000.00 per month during that time. After failing to do either, Ms. Redding filed a motion to modify, asserting that the a possible increase in the value of the real property, due to potential grants to ameliorate flooding problems.
The bankruptcy court found that the standard for modification of a Chapter 11 plan was same the “substantial and unanticipated circumstances” standard in Chapter 13.… Read More
The Bankruptcy Administrator sought dismissal of Mrs. Gonyo’s Chapter 7 arguing that she improperly excluded several of her non-filing husband’s expenses as “marital adjustments” from her Current Monthly and also failed to include both the couple’s tax refund and her husband’s incentive pay in that calculation.
In reaching the later conclusion, the bankruptcy court defined “income” as “a gain or recurrent benefit . . . that derives from capital or labor.” In re Sanchez, No. 06-40865, 2006 WL 2038616, at *2 (Bankr. W.D. Mo. 2006) and that her husband’s incentive pay received during the preceding six calendar months was included in CMI.… Read More
Mr. Barth commenced an adversary proceeding seeking a declaratory judgment that various state court actions by Mr. Spoor could have been brought by the bankruptcy trustee, who had previously signed a release of such actions, and that Mr. Spoor should be required to dismiss those actions. The bankruptcy court instead dismissed Mr. Barth’s adversary proceeding on the grounds that such relief was prohibited by the Anti-Injunction Act, 28 U.S.C. § 2283. The bankruptcy court declined, however, to award the sanctions sought by Mr. Spoor pursuant to North Carolina Rule of Civil Procedure 11, 28 U.S.C. § 1927, 11 U.S.C. § 105, and Bankruptcy Rule 9011, against Mr.… Read More
Bankruptcy reform in 2005 restricted debtors’ ability to discharge private student loan debt. The reform was motivated by the perceived incentive of some borrowers to file bankruptcy under Chapter 7 even if they had, or expected to have, sufficient income to service their debt. Using a national sample of credit bureau files, we examine whether private student loan borrowers distinctly adjusted their Chapter 7 bankruptcy filing behavior in response to the reform. We do not find evidence to indicate that the moral hazard associated with dischargeability appreciably affected the behavior of private student loan debtors prior to the policy.
As the authors conclude that, absent any evidence of moral hazard by allowing borrowers to discharge private student loans, “policymakers are faced with the challenge of weighing the burden placed by restrictions to bankruptcy protection on struggling nonopportunistic debtors against the benefits of expanded credit availability.”
While certainly a valuable corrective to the prevailing belief that borrowers are the parties that game the system, this study is only partially accurate or complete.… Read More
Through a complicated series of transactions and guarantees, Georgia Spiliotis sought to subrogate to the rights of Bank of North Carolina against the debtors, Nicolas & Mary Spirakis.
The bankruptcy court first differentiated between conventional subrogation, “is founded upon the
agreement of the parties.” Joyner v. Reflector Co., 176 N.C. 274, 276, 97 S.E. 44, 46 (1918), and legal subrogation which “is an equitable remedy applied as a “means to substitute, to put one
person in the place of another; and is usually exercised where one person has become liable for, or
has been compelled to pay money for, another.” Vaughan v.… Read More
Ms. Morgen brought suit alleging violations of the Fair Credit Reporting Act and Student Loan Finance (“SLF”) moved for a change of venue to South Dakota based on a forum selection clause in the contract.
Ms. Morgen’s initial objection that the loan applications and promissory notes proffered by SLF had no affidavits from record keepers denied as the court held that such would be precluded as evidence in a consideration of a motion for summary judgment, but, in part because “there is no plausible contention that these documents are inauthentic,” allowed them for determination of venue.
In evaluating the forum selection clause, the court first determined whether it was mandatory or permissive, with only mandatory forum selection being binding. … Read More