Case Summaries

Bankruptcy Law

[06/23] In re: Trout
In a bankruptcy trustee's appeal from a decision of the bankruptcy appellate panel affirming the bankruptcy court's determination that, having successfully avoided a preferential vehicle lien under 11 U.S.C. section 547, the trustee was not entitled to a money judgment equal to the value of the avoided liens under section 550(a), the order is affirmed where the bankruptcy estate had been sufficiently returned to its pre-transfer status by avoiding the preferential lien at issue and stepping into the lien priority of the avoided creditor under 11 U.S.C. section 551.

[06/23] In re McKinney
An appeal by a tax debt owner in Chapter 13 proceedings, arising from the bankruptcy court's denial of its objections to the debtor's proposed plan to pay off the tax debt with interest within five years, is dismissed for lack of jurisdiction as, although the issue that the tax debt owner cares about may have been resolved, its basic dispute with the bankruptcy estate has not been resolved and therefore the judgment of the bankruptcy court is not final.

[06/22] RLI Ins. Co. v. All Star Transp., Inc.
In an interpleader action by an insurance company to determine its obligations to pay truckers hired by its bankrupt insured under a surety bond, summary judgment for plaintiff-insurer is affirmed where Form BMC 84, which governed such bonds, plainly stated that the face value of the bond was the sum of $10,000 for all claims combined.

[06/22] In re: Delta Airlines, Inc.
In creditors' appeal from a bankruptcy court's order upholding debtor's objections to their claims under tax indemnification agreements, the order is vacated where: 1) the bankruptcy court's construction of "pay" as that term was used in an agreement at issue nullified debtor's obligation to pay the "Owner Participant" under the agreement upon the occurrence most likely to call its provisions into play ? the debtor's insolvency; and 2) the bankruptcy court effectively nullified the agreements by stripping them of their ability to protect the Owner Participant in the event of debtor's default.

[06/21] In re: Wilborn
In an interlocutory appeal from a bankruptcy court's certification of a class action in an adversary proceeding, the order is vacated where a bankruptcy judge may certify a class of debtors under appropriate circumstances but the proposed class in this case did not satisfy the requirements of Federal Rule of Civil Procedure 23 and Federal Bankruptcy Rule of Procedure 7023.

[06/17] Schwab v. Reilly
In a Chapter 7 bankruptcy trustee's appeal from the Third Circuit's affirmance of the bankruptcy court's order denying the trustee permission to auction certain equipment so that the debtor could receive the money she claimed exempt and the estate could distribute the remaining value to creditors, the order is reversed where, because debtor gave "the value of [her] claimed exemption[s]" on Schedule C dollar amounts within the range the Code allows for what it defines as the "property claimed as exempt," the trustee was not required to object to the exemptions in order to preserve the estate's right to retain any value in the equipment beyond the value of the exempt interest.

[06/15] In re: Nosek
In a creditor's appeal from a $250,000 sanction issued sua sponte by the bankruptcy court, the sanction is reduced to $5,000 where: 1) nothing indicated that creditor's claim that it was the holder of the mortgage at issue was a deliberate falsehood or intended in any way to mislead the court or debtor or achieve anything for creditor; and 2) the bankruptcy court did not identify any actual prejudice from the inaccurate claim of holder status.

[06/15] SEC v. Byers
In nonparties' appeal from the district court's order holding that its jurisdiction in rem and its equitable powers provided it with sufficient authority to issue an injunction barring non-parties from filing involuntary bankruptcy petitions against any of the defendants, the order is affirmed where, while it should be sparsely exercised, district courts possess the authority and discretion to enter anti-litigation orders, including those that bar the filing of involuntary bankruptcy petitions absent the district court's permission.

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