Im Re: Linear Electric Co., Inc.

(United States Third Circuit) – In a case concerning the relationship between the New Jersey Construction Lien Law and federal bankruptcy law, presenting the question of whether a supplier can file a construction lien under New Jersey law when the contractor has filed a petition for bankruptcy, which automatically stays any act to create or perfect any lien against the contractor’s property, the district court’s decision affirming the bankruptcy court’s decision that the automatic stay prevented filing the liens is affirmed where: 1) the accounts receivable were part of the bankruptcy estate because they complied with the definition of property of the estate under 11 U.S.C. section 541; and 2) the ability of a supplier to create a construction lien depended on the existence of the bankrupt contractor’s accounts receivable.

LVNV Funding, LLC v. Harling

(United States Fourth Circuit) – In a Chapter 13 bankruptcy appeal of a bankruptcy court order which disallowed its claims as an unsecured creditor in two proceedings, the court order is affirmed over creditor’s claim that the bankruptcy court’s Chapter 13 plan confirmation orders barred the objections to creditor’s claims because those objections were filed after entry of the Confirmation Orders.

Goat Island South Condominium v. IDC Clambakes, Inc.

(United States First Circuit) – In a bankruptcy appeal in a decades-long litigation over the Regatta Club, a lucrative banquet facility which was constructed on a parcel of land at a time when the validity of the development rights to that parcel was in dispute, the district court’s decision, which found clear error in the bankruptcy court’s characterization of the benefit conferred on debtor as merely a ground lease and in its unjust enrichment analysis, is reversed where the bankruptcy court properly decided: 1) to award no equitable relief to the Associations, where no implied-in-fact contract existed between the parties; and 2) as to unjust enrichment, there is nothing in the America opinions to suggest that their holding regarding the Regatta Club’s ownership should bear on the question of whether principles of equity entitle the Associations to even more relief than the Rhode Island Supreme Court already afforded them. Thus there wa no abuse of discretion in the bankruptcy court’s ultimate decision that the Associations failed to meet their burden of showing that inequity would result if debtor did not pay them for the use and occupancy of the Regatta Club during the claim period.

Gugliuzza v. Federal Trade Commission

(United States Ninth Circuit) – In an adversary proceeding brought by the Federal Trade Commission, the district court’s order which reversed in part a bankruptcy court’s grant of summary judgment against a bankruptcy debtor and remanded for further fact-finding, the appeal is dismissed where the court lacks jurisdiction to review the district court’s order.

Carmack v. Reynolds

(Supreme Court of California) – In response to a certified question from the Ninth Circuit Court of Appeal, in an underlying bankruptcy case in which a debtor who was to receive money from a family spendthrift trust declared bankruptcy before receiving his first trust payment, and the bankruptcy trustee seeks to determine what interest the bankruptcy estate has in the trust, the Court concludes that a bankruptcy trustee, standing as a hypothetical judgment creditor, can reach a beneficiary’s interest in a trust that pays entirely out of principal in two ways: 1) it may reach up to the full amount of any distributions of principal that are currently due and payable to the beneficiary, unless the trust instrument specifies that those distributions are for the beneficiary’s support or education and the beneficiary needs those distributions for either purpose; and 2) separately, the bankruptcy trustee can reach up to 25 percent of any anticipated payments made to, or for the benefit of, the beneficiary, reduced to the extent necessary by the support needs of the beneficiary and any dependents.

Czyzewski v. Jevic Holding Corp.

(United States Supreme Court) – In consolidated appeals arising out of lawsuits filed against a Chapter 11 bankruptcy debtor that declared bankruptcy after it was purchased in a leveraged buyout, the Third Circuit Court of Appeals’ decision affirming the Bankruptcy Court’s approval of a settlement agreement, which called for a structured dismissal of debtor’s Chapter 11 bankruptcy, nonpayment of Worker Adjustment and Retraining Notification (WARN) claims, and payment to lower-priority general unsecured creditors — thereby violating the Bankruptcy Code’s priority rules by paying general unsecured claims ahead of WARN claims — is reversed where: 1) petitioners have Article III standing; and 2) Bankruptcy courts may not approve structured dismissals that provide for distributions that do not follow ordinary priority rules without the consent of affected creditors.