(United States First Circuit) – In an ethics action, the district court’s order of sanctions under Federal Rule of Bankruptcy Procedure 9011(b)(2) against debtor’s attorney, ordering him to enroll in a one-semester class on legal ethics or professional responsibility at an ABA accredited law school, is affirmed where it was not an abuse of discretion to order such a sanction following the attorney’s multiple misstatements of the law.
(United States Supreme Court) – In a suit to enjoin the Puerto Rico Public Corporation Debt Enforcement and Recovery Act, portions of which mirror Chapters 9 and 11 of the Federal Bankruptcy Code and enable Puerto Rico’s public utility corporations to restructure their climbing debt, the where section 903(1) of the Bankruptcy Code pre-empts Puerto Rico’s Recovery Act, the First Circuit’s affirmance of the District Court’s judgment enjoining the Act, on grounds that the Bankruptcy Code’s definition of “State” to include Puerto Rico, except for purposes of defining who may be a debtor under Chapter 9 section 101(52), did not remove Puerto Rico from the scope of the pre-emption provision, is affirmed where section 903(1) of the Bankruptcy Code pre-empts Puerto Rico’s Recovery Act.
(United States Ninth Circuit) – In a Chapter 7 bankruptcy creditor’s adversary proceeding seeking an exception to discharge on the basis of a fraudulent transfer of property under 11 U.S.C. section 727(a)(2), the Bankruptcy Appellate Panel’s decision affirming the bankruptcy court’s summary judgment in favor of debtor is affirmed where section 727(a)(2), which prevents the bankruptcy court from granting a debtor a discharge if the debtor improperly transferred property within one year before the date of the filing of the bankruptcy petition, is not subject to equitable tolling.
(United States Ninth Circuit) – In a bankruptcy case, in which the bankruptcy courted granted a party’s motion for relief from the automatic bankruptcy stay so that it could proceed with foreclosure sale, the debtors’ appeal to the District Court without seeking a stay of the bankruptcy court’s order pending appeal, allowing the foreclosures to occur, the debtors’ appeals are dismissed where they were constitutionally moot because there no longer was any case or controversy.
(United States Supreme Court) – In a case involving a dispute over whether a debt could be discharged by a Chapter 7 bankruptcy filing, the Fifth Circuit’s decision affirming the District Court’s judgment that defendant was personally liable under state law but that the debt was not “obtained by…actual fraud” under 11 U.S.C. section 523(a)(2)(A) and thus could be discharged in bankruptcy, is reversed where the term ‘actual fraud’ in section 523(a)(2)(A) encompasses fraudulent conveyance schemes, even when those schemes do not involve a false representation.
(United States Ninth Circuit) – In an bankruptcy case, the district court’s decision affirming the bankruptcy court’s denial of a motion to compel arbitration in a bankruptcy trustee’s adversary proceeding seeking avoidance of fraudulent transfers, is affirmed where: 1) the bankruptcy trustee’s fraudulent conveyance, subordination, and disallowance causes of action were core proceedings, thereby giving the bankruptcy court discretion to weigh the competing bankruptcy and arbitration interests at stake; and 2) the bankruptcy court properly determined that the arbitration provisions at issue conflicted with the Bankruptcy Code purposes of having bankruptcy law issues decided by bankruptcy courts, of centralizing resolution of bankruptcy disputes, and of protecting parties from piecemeal litigation.
(California Court of Appeal) – In a suit alleging defendants defrauded her of hundreds of thousands of dollars after her husband died, the trial court’s entry of judgment based on terminating sanctions against plaintiff and entry of monetary sanctions against plaintiff and her attorney are reversed where plaintiff did not sue former bankruptcy debtor in this action for fraud and related claims, but rather his business partners, and principles of res judicata and collateral estoppel do not apply to insulate defendants from answering for what plaintiff claims are their fraudulent activities.
(United States Fourth Circuit) – In a case where the rate of interest on the debtors’ residential mortgage loan was increased upon default, the District Court’s judgment is affirmed in part and reversed in part where a “cure” under section 1322(b) of the Bankruptcy Code does not allow their bankruptcy plan to bring post-petition payments back down to the initial rate of interest, as a change to the interest rate on a residential mortgage loan is a “modification” barred by the terms of section 1322(b)(2).
(United States Third Circuit) – In a bankruptcy proceeding, in which a party asserted maritime liens on debtor’s goods then in its possession, the district court’s judgment, that certain contractual modifications to those liens were unenforceable, is reversed where the modifications were enforceable as to goods then in possession.
(United States Ninth Circuit) – In a bankruptcy action, arising after debtor’s publicly-financed affordable housing project collapsed, the bankruptcy court’s confirmation of the chapter 11 reorganization plan is reversed where the value of creditor First Southern National Bank’s secured interest in real property should not be reduced by the impact of the affordable housing restrictions after the debtor has exercised the ‘cram down’ option under 11 U.S.C. section 1325(a)(5)(B).