(United States Ninth Circuit) – Affirmed that Chapter 11 of the Bankruptcy Code did not permit the co-founders of several real-estate management companies to discharge a debt arising from a state-court judgment for fraud and misrepresentation. The central issue in this case was whether the individuals continued to engage in business after consummation of the Chapter 11 plan. Concluding that they did not, the Ninth Circuit held that they could not discharge the debt.
(United States Third Circuit) – Held that a company that entered into an unconsummated merger agreement was not entitled to payment of a $275 million termination fee. The proposed merger had been approved by a bankruptcy court because one of the parties was in Chapter 11 bankruptcy. The Third Circuit held that the bankruptcy court did not err in narrowing the circumstances under which the termination fee would be triggered, resulting ultimately in no fee being paid.
(United States Third Circuit) – Held that the bankruptcy court correctly disallowed a claim brought by the debtor’s former employee. A former television station employee argued that the station, whose owner was now in bankruptcy, was liable for unlawful racial discrimination. Affirming summary judgment against his claim, the Third Circuit concluded that he failed to raise a triable issue and, further, that it was too late for him to challenge the bankruptcy court’s jurisdiction to hear his discrimination claim, since he never objected to this during bankruptcy proceedings.
(United States Ninth Circuit) – Held that the Internal Revenue Service could be liable for emotional-distress damages for willfully violating an automatic stay by sending collection notices to a couple who had filed for bankruptcy. The government argued that it was protected from liability by sovereign immunity. Disagreeing, the Ninth Circuit held that the Bankruptcy Code unambiguously waived sovereign immunity. The panel therefore reversed and remanded with instructions to consider the government’s challenge to the merits of the debtors’ claims.