On November 15, 2019, the U.S. Bankruptcy Court for the Central District of California (the “Court”) issued an opinion in the case of Naylor v. Farrell (In re Farrell), Ch. 7 Case No. 14-11729-MW, Adv. No. 16-01123 (Bankr. C.D. Ca. Nov. 15, 2019), finding, among other things, that Betty Farrell (“Betty”), a member of
Bankruptcy Litigation
Third Circuit Decision is a Cautionary Tale about the “Security” of Tax Lien – Certificate Holders’ Security in Bankruptcy
Tax lien certificates are a marketable commodity in several jurisdictions, including New Jersey. The Third Circuit’s recent decision in In re Hackler v. Arianna Holdings Company, LLC, No. 18-1650, __ F.3d __, 2019 2019 WL 4309510 (3d Cir. Sept. 12, 2019), however, will leave certificate holders insecure about their tax lien rights in the…
First Circuit Rejects “Special Circumstances” Exception to Numerosity Requirement of Bankruptcy Code Section 303(B)(1)
On April 24, 2019, the U.S. Court of Appeals for the First Circuit (the “First Circuit”) issued an opinion in the case of Popular Auto, Inc. v. Reyes-Colon (In re Reyes-Colon), Nos. 17-1971-72, 2019 WL 1785039 (1st Cir. Apr. 24, 2019), holding that bankruptcy courts cannot utilize their equitable powers to override the explicit…
Petitioning Creditors Beware: No Right To Setoff For Punitive Damages From Bad Faith Involuntary Bankruptcy Filings
Creditors often think that an involuntary bankruptcy petition is a great bargaining chip when faced with a recalcitrant debtor. However, the actual filing of an involuntary bankruptcy petition (when that petition is filed in “bad faith”) confers a considerable risk to the petitioning creditors. Recently, the United States Court of Appeals for the Third Circuit…
Bankruptcy Court Can Enter Default Judgment Against Foreign Defendants in an Adversary Proceeding
On Jun 29, 2018, Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York issued an opinion in which he granted a motion for entry of default judgment against foreign adversary proceeding defendants. Peter Kravitz v. Deacons (In re Advance Watch Company, Ltd.), Case No. 17-01137 (MG). The plaintiff,…
New York Bankruptcy Court Permits Discovery Requests in Chapter 15 Case Despite Potentially Conflicting Cayman Islands Law
On April 17, 2018, the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) issued a decision requiring CohnReznick LLP (“CohnReznick”) to produce documents requested by the foreign representatives (the “Foreign Representatives”) in the chapter 15 case of Platinum Partners Venture Arbitrage Fund (International) Limited (in…
The Supreme Court Clarifies the Scope of Section 546(e)’s Safe Harbor for Securities Related Transactions in Merit Management Group, LP v. FTI Consulting, Inc.
The Bankruptcy Code gives a bankruptcy trustee, or the debtor in possession, the power to “avoid” certain transfers made by the debtor at various times before filing for bankruptcy relief. Congress provided a number of limits on these significant avoidance powers, whether within the sections granting the powers themselves (e.g., in Section 547(c), which sets…
Virginia is for Lovers … And Chapter 11?
It’s no secret that Delaware, New York (Southern District), and Texas (at least since the oil and gas crisis) have become known as the “hotspots” for filing large chapter 11 bankruptcy cases. Whether due to desirable precedent, well qualified judges, the responsiveness of the Courts to the need for prompt scheduling of hearings, or a…
The Bankruptcy and Construction Junction: Making Your Texas Mechanic’s Lien Function Better in Bankruptcy
In order to secure a real property owner’s payment obligation, contractors, mechanics, materialmen, and other workmen are often granted a lien referred to by a variety of names including, materialmen’s liens, workmen’s liens, and mechanic’s liens. While the parlance varies by jurisdiction, they are generally referred to as mechanic’s liens in Texas—even in the context…
A Degree Too Far: NY Bankruptcy Court Denies Debtors’ Request For Bankruptcy Rule 2004 Examination in Connection with Third-Party Litigation
History: In a June 14, 2017, bankruptcy blog titled “Six Degrees of Separation: Use of Bankruptcy Rule 2004 Examination in Connection with Third-Party Litigation“, we reported on what appeared to be a case of first impression that arose in a case pending before United States Bankruptcy Judge Stuart Bernstein in the…