(California Court of Appeal) – In a case brought by a bankruptcy trustee against a former attorney of the debtor company, claiming he helped the managers of the debtor company perpetrate a fraud, trial court grant of the attorney’s demurrer without leave to amend, finding the Trustee’s claims barred by the in pari delicto doctrine, is affirmed where: 1) Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, was correctly decided and holds that if this doctrine would have barred claims if asserted by a company prior to bankruptcy, the doctrine also bars them when asserted by the bankruptcy trustee suing on behalf of the company’s bankruptcy estate; and 2) trustee’s Civil Code section 2306 does not defeat the in pari delicto defense.
(United States Ninth Circuit) – In a bankruptcy action, the bankruptcy court’s order sustaining California Bank’s objection to the debtor’s reorganization plan is affirmed where the absolute priority rule contained in 11 U.S.C. section 1129(b)(2)(B)(ii) continues to apply in individual chapter 11 reorganizations following the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
(United States First Circuit) – In chapter 7 proceedings, the bankruptcy court’s denial of a discharge for the debtor is affirmed where the debtor’s lack of documentation was “shocking and disturbing” and he had not satisfactorily explained the disposition of his assets.
(United States Third Circuit) – In a bankruptcy action, the Bankruptcy Court’s grant of debtor’s motion to reject its collective bargaining agreement (CBA) with UNITE HERE Local 54 is affirmed. The court held that a Chapter 11 debtor-employer can reject the continuing terms and conditions of a CBA under 11 U.S.C. section 1113, despite the National Labor Relations Act’s prohibition on employers unilaterally changing the terms and conditions of a CBA after expiration under 29 U.S.C. section 158(a)(5).
(United States Ninth Circuit) – In a bankruptcy action, the district court’s order is affirmed where the debtor’s interests in the term life insurance policies, including their secondary market value and resulting life settlements, constitute a recoverable interest of the debtor in property under 11 U.S.C. section 548(a)(1).
(United States Ninth Circuit) – In a bankruptcy action, the bankruptcy court’s determination that Eden Place, LLC violated the automatic stay provisions of the Bankruptcy Code by evicting debtor from a residential property is reversed where debtor had no legal or equitable interest in the property following an unlawful detainer judgment and writ of possession in state court.
(United States Second Circuit) – In a debt collection action arising from an underlying bankruptcy, the district court’s dismissal of plaintiff’s Fair Debt Collection Practices Act (FDCPA) claims is reversed where the Bankruptcy Code does not broadly repeal the FDCPA for purposes of FDCPA claims based on conduct that would constitute alleged violations of a discharge injunction.
(United States Second Circuit) – In a bankruptcy action, the bankruptcy court’s denial of appellant’s motion for reconsideration as to its claim against debtor is reversed and remanded with instructions to vacate the claim disallowance order and reinstate appellant claim.
(United States Second Circuit) – In a securities action seeking to enforce a $300 million disgorgement order, the district court’s freezing of defendants’ assets despite their filing for Chapter 11 bankruptcy protection is affirmed where the court’s asset freeze order fell within the “governmental unit” exception to the automatic stay provision of the Bankruptcy Code, 11 U.S.C. section 362.
(United States Second Circuit) – In an action arising out of the Lehman Brothers bankruptcies brought by underwriters seeking contribution and reimbursement from debtor, the district court’s order is affirmed where section 510(b) of the Bankruptcy Code, 11 U.S.C. section 510(b), subordinates claims or interests represented by an affiliate’s securities to all claims or interests senior or equal to claims in the bankruptcy proceedings that are of the same type as the underlying securities.