Bankruptcy Law Section

2008 ALL F

Newsletter Fall 2008

A PUBLICATION OF THE BOSTON BAR ASSOCIATION BANKRUPTCY LAW SECTION

FALL 2008 1 Section Co-Chair Corner

Dear Friends and Colleagues: To add to this impressive list of initiatives, the Section is presently working to update its website to include information about all of the Section’s Our Section is very busy indeed! Thanks to Committees and co-chairs, their mission and the hard work of the Section’s newly formed their goals for the upcoming year. When was the Education Committee and its Co-Chairs, Nina last time you looked at the Section’s webpage on Parker and Jeanne Darcey, we started the the BBA website? Take a minute to look at the new year in September with a full schedule Section’s webpage on the BBA’s site, http://www. of Brown Bag lunches running through June bostonbar.org/sc/bk/index.htm, and contact one 2009 on a wide variety of business and con- of the co-chairs of the Committees listed there sumer topics. The Section has also scheduled and consider getting involved. I look forward to many important CLE programs and remains greeting you at one of the Section’s events in the very responsive to the needs of its members, coming year. most recently adding a program on November 3 that covered important issues in bankruptcy practice arising as a result of the developing --Don Lassman Credit Crisis. The Section offers many opportunities to stay on top of the latest developments in the law and connect with fellow Section Co-Chairs bankruptcy practitioners and I encourage everyone to take advantage of the wonderful Donald R. Lassman, Esq. programs that the Education Committee has Law Ofﬁ ce of Donald R. Lassman P.O. Box 920385 put together. I also encourage you to get in Needham, MA 02492 touch with Nina or Jeanne if you have any (781) 455-8400 programming ideas for the coming year. [email protected]

Adrienne K. Walker The Section has embarked on a number of Mintz, Levin, Cohn, Ferris, very exciting projects over the past year. Right Glovsky and Popeo P.C. now, the Section is in the midst of a Strate- One Financial Center gic Planning initiative. A special task force, Boston, MA 02111 co-chaired by Michael Pappone and Nina (617) 542-6000 Parker, has been hard at work over the past [email protected] year talking to members to learn fi rst hand about the Section’s strengths, weaknesses, opportunities and threats. I am looking forward to completion of the task force report and sharing the fi ndings and recommenda- tions with the membership as we continue CONTRIBUTORS to look for new ideas to maintain the vitality and relevance of the Section for its mem- Janet E. Bostwick bers. In addition, the Section is continuing its consideration of problems in the area of Joseph J. Koltun Consumer Finance. Adam Ruttenberg chairs Kathleen A. Rahbany the Section’s task force exploring legal issues in consumer fi nance that have arisen as a result of the recent credit crisis. The task force EDITORS reaches across a number of BBA Sections , public and non-profi t agencies in an effort to John T. Morrier determine what role the BBA might play in this Brendan C. Recupero rapidly changing area of the law.

2 FALL 2008 Board of Editors Inside this Issue: The Editors are now accepting applications for appointment to the Board of Editors of the 2008-2009 Section Meeting Dates Page 4 Bankruptcy Section Newsletter for 2008- 2009. Members of the section with an interest Members on the Move in getting more involved with the Section, writing Page 4 on practice and procedure or substantive Case Summaries developments, or sharing a obsession with Page 5 where the comma goes should contact the M. Ellen Carpenter Financial Literacy Program 2008 - 2009 editors: Page 7 Section Leadership John Morrier Page 8 (617) 348-3051 [email protected]

Brendan Recupero (617) 367-9500 [email protected]

ATTENTION PRACTICE LEADERS: PLEASE CONFIRM THAT YOUR ATTORNEYS ARE MEMBERS OF THE BANKRUPTCY SECTION!

If your fi rm coordinates and pays BBA membership dues for you, please confi rm that they are signing up all of the bankruptcy attorneys in your fi rm for the section. Accurate and complete membership lists are vital to ensuring the section effectively communicates with its members. We have some concerns that we are not reaching all interested attorneys at BBA member fi rms, so please take the time to confi rm that your fi rm attorneys signed up to fully participate in the Bankruptcy Section.

Curious about your member status? Call the BBA at 617-742-0615.

FALL 2008 3 2008 – 2009 Calendar Dates: Friday, March 13, 2009 Friday, April 10, 2009 Friday, May 08, 2009 Friday, June 12, 2009

The Bankruptcy Section meets the 3rd 2009 Bench Bar Conference: Tuesday of every month at 12:15 pm. Thursday, May 14, 2009 The Steering Committee meets the 2nd Friday of every month at 8:30 am

Meetings are held at the BBA, 16 Beacon Street, Boston

Pack Those Brown Bag Lunches And Come Members on the Move On Down Mark your calendar for the upcoming dates and John Loughnane has joined the Boston offi ce watch for full details and program descriptions. of Eckert Seamans Cherin & Mellott, LLC as If you have a suggestion for a topic for any a Member, practicing in the fi rm’s Business of the remaining dates please contact the Division. chairpersons of the CLE Committee Nina Parker at [email protected] or Jeanne Darcey Robert Somma has joined Posternak Blankstein at [email protected]. & Lund LLP of Boston as Senior Counsel in the fi rm’s Bankruptcy, Workout and Business Brown Bag Lunch Meetings: Reorganization practice. Tuesday, December 16, 2008 Using ADR in Consumer Bankruptcy Matters Tuesday, January 20, 2009 Any section member with news to share with the Tuesday, February 17, 2009 section should feel free to contact the editors. Chatting with the Chapter 13 Trustee Tuesday, March 17, 2009 The “new” homestead law Tuesday, April 21, 2009 Tuesday, June 16, 2009

Financial Literacy Program Dates: January 7, 2009, 4:00 - 5:00 pm Volunteer Training January 7, 2009, 5:00 pm Volunteer Appreciation Reception

Steering Committee Meetings: Friday, December 12, 2008 Friday, January 09, 2009 Friday, February 13, 2009

4 FALL 2008 Case Summaries, by Joseph J. Koltun Craig & Macauley, Boston

Late-discovered failure to complete defendants. In 2004, the Court granted motions credit counseling does not result in to dismiss made by L&H’s investment banker and dismssal other defendants based on the doctrine of in pari delicto, and the Court’s decision was affi rmed by In re Mattingly, 2008 Bankr. LEXIS 1925 (Bankr. the First Circuit. See Nisselson v. Lernout, 469 F.3d 143 (1st Cir. 2006). Former directors of D. Mass. 2008) (Hillman, J.) Dictaphone then moved to dismiss the remaining A Chapter 7 debtor failed to complete and fi le a claim against them for breach of fi duciary duty Certifi cate of Credit Counseling as required by 11 based various grounds, including (i) the in pari U.S.C. § 109(h), and instead completed a course delicto doctrine, and (ii) Delaware Code Section on personal fi nancial management and fi led a 102(b)(7). certifi cate to that effect. No parties in interest The Court fi rst noted that generally speaking the fi led an objection based on the lack of a Certifi - in pari delicto defense bars plaintiffs from recov- cate of Credit Counseling. The Court held that ering damages resulting from their own wrongdo- it would be inequitable to dismiss the Debtor’s ing. In order to apply in pari delicto, the Court case at such a late stage and entered an order stated two criteria must be met: (i) the plaintiff, waiving the credit counseling requirement after as compared to the defendant, bears at least fi nding (i) the Debtor reasonably attempted to substantially equal responsibility for the wrongs comply with the statutory provisions, (ii) the late the plaintiff seeks to redress, and (ii) preclusion discovery of the mistake precluded any efforts by of the claim would not interfere with the law or the Debtor to cure the mistake, and (iii) no party otherwise contravene the public interest. The in interest objected or sought dismissal of the Court fi rst held that the law of the case doctrine Debtor’s case on that basis. did not apply and that an independent inquiry Plan litigation trustee’s claims barred by was necessary, because the wrongs being alleged application of in pari delicto doctrine by the DLT were different that those previously dismissed by the First Circuit. Notwithstanding this fi nding, the Court went on to conclude that Nisselson v. Lernout, et al., 2008 U.S.Dist LEXIS New Dictaphone was as complicit in the wrongs 56216 (D.Mass. 2008) (Saris, J.) alleged, that the corporate insider exception to Lernout & Hauspie Speech Products N.V. (“L&H”) the in pari delicto doctrine did not apply, that the and Dictaphone Corporation (“Dictapohone”) equities were not clear cut and thus did not lie completed a stock for stock merger in 2000. The in the DLT’s favor, and that the DLT’s claims for merger was completed by merging Dictaphone breach of fi duciary duty were thus barred by the into a wholly owned subsidiary of L&H, which cor- in pari delicto defense. porate entity survived and then changed its name The DLT also argued that the directors violated to Dictaphone or “New Dictaphone” as set forth their fi duciary duties under Delaware law by fail- in the Court’s opinion. Shortly after the comple- ing to learn of the alleged fraud at L&H. Defen- tion of the merger, numerous allegations of fraud dants countered by claiming that Old Dictaphone were made against L&H, L&H’s stock plum- had a provision in its certifi cate of incorporation meted and L&H and New Dictaphone fi led for pursuant to Delaware Code Section 102(b)(7) bankruptcy protection. All of New Dictaphone’s that eliminated its directors liability for damages claims arising from the merger were assigned to for breach of fi duciary duty. The Court noted that the Dictaphone Litigation Trust (the “DLT”). although there is an exception for acts or omis- The trustee of the DLT fi led an action seeking sions not made in good faith, the DLT’s complaint to recover damages against numerous parties fell well short of alleging such conduct. As a re- including (i) L&H’s investment banker, (ii) sult, the Court allowed the director defendants’ former directors of Dictaphone, and (iii) other motion to dismiss.

FALL 2008 5 Case Summaries, By Kathleen A. Rahbany Craig & Macauley, Boston

An assignee of a claim must provide failure to attach the documents renders the claim suffi cient evidence of assignment to unenforceable under state law…[U]nder Mas- overcome an objection to its status as a sachusetts law an assignee must prove through creditor. ‘suffi cient evidence’ that it owns the account in question…” As a consequence of B-Real’s failure B-Real, LLC v. Melillo (In re Melillo), 2008 Bankr. to provide suffi cient evidence of ownership of the claim, B-Real could not be considered a “creditor” LEXIS 1956 (B.A.P. 1st Cir. 2008). of the debtors, which is a prerequisite to executing The Bankruptcy Appellate Panel affi rmed the and fi ling a proof of claim. Accordingly, the B.A.P. bankruptcy court’s order sustaining the debtors’ affi rmed the bankruptcy court’s ruling sustaining objection to B-Real, LLC’s (“B-Real”) proof of the objection of the debtors to B-Real’s claim. claim because B-Real failed to establish that it is Res judicata bars litigation of an a creditor of the debtors. B-Real fi led a proof of argument that could have been raised in claim asserting that it was the successor-in-inter- prior litigation. est to the claim of Chase Cardmember Service (a creditor that was scheduled by the debtors). How- ever, no evidence of assignment was attached Milliren v. Milliren (In re Milliren), 387 B.R. 72 to B-Real’s proof of claim. The debtors objected (B.A.P. 1st Cir. 2008). to B-Real’s claim on the basis that it failed to The Bankruptcy Appellate Panel affi rmed the provide any “proof of assignment of authority.” bankruptcy court’s denial of the debtor’s Motion B-Real responded that it was “unable to produce for Finding of Automatic Stay Violation and for anything with regards to the assignment” because Enforcement of the Automatic Stay (the “Mo- the assignment was made as part of a bulk trans- tion”). On February 14, 2007, the bankruptcy fer. The bankruptcy court sustained the debtors’ court granted the debtor’s ex-wife’s motion for objection, stating: “I think it’s entirely reasonable, relief from the automatic stay, allowing her to if your guys want to play with assignments of pursue non-estate assets, which pursuit was claims, that you have a paper trail to back yourself ultimately brought before the probate court. up. Now if you were to come in with something The probate court held the debtor in contempt showing you’d assigned -- a bunch of claims had for failing to pay his ex-wife under a promissory been assigned to you and that listed this claim, note and committed the debtor to jail until he you’d be home free. Since you can’t do that, it’s made such payments. The debtor appealed the your fault, not their fault.” B-Real appealed to probate court’s order to the Massachusetts Ap- the B.A.P. arguing that a bankruptcy court may peals Court. The debtor also fi led the Motion in only disallow a claim if one of the enumerated the bankruptcy court, claiming that the probate reasons set forth in § 502(b) is applicable. The court’s order “violated the automatic stay because B.A.P. noted that the question was unresolved in it required [him] to liquidate estate assets or be the First Circuit and that other courts took either committed to jail.” However, the debtor failed to an “exclusive” or “nonexclusive” approach to the raise that argument before the probate court. The question. “Courts adopting the ‘nonexclusive ap- bankruptcy court denied the Motion, deferring proach’ hold that a claim can be disallowed for the matter to the probate court and explaining: “I failure to attach supporting documents to a proof think any relief that you need you’re going to have of claim as required by Rule 3001…Courts adopt- to get from, the Probate Court and not from me, ing the ‘nonexclusive approach’ hold that the list because I handed off to them when I signed that enumerated in § 502(b) is exclusive and that a order on February 14th.” The debtor appealed claim cannot be disallowed for any reason other the bankruptcy court’s ruling to the B.A.P. The than those so listed…Even under the exclusive B.A.P. affi rmed the bankruptcy court’s ruling and approach, however, a claim may be disallowed dismissed the appeal as “an impermissible attack for failure to attach supporting documents if the on the Probate Court order which is barred under

6 FALL 2008 the doctrine of res judicata or claim preclusion” because the debtor had an opportunity to make his argument before the probate court but failed Remember the to do so. Carpenter Fund and the Normandin Fund

As year end approaches, please consider contributing to the M. Ellen Carpenter Fund and the Charles P. Normandin Fund of the Boston Bar Foundation, two funds which honor former colleagues and provide valuable support for the efforts of the Bankruptcy Section and the Boston M. Ellen Carpenter Bar Association. Financial Literacy Established in memory of M. Ellen Carpenter, Program the ﬁ rst bankruptcy lawyer to serve as President of the BBA, the Carpenter Fund supports the public service programs of the BBA that focus on mentoring young people and creating opportunities Volunteer Training for their personal and professional enrichment, such as the summer jobs program for Boston high January 7, 2009, 4:00 pm school students run by the BBA.

The M. Ellen Financial Literacy Program, a joint The Charles P. Normandin Fund was established program of the Bankruptcy Court and the BBA, in honor of Charlie Normandin, an active member will hold a Volunteer Training on January 7, of the section, considered by many to be the 2009 from 4:00 pm to 5:00 pm at the BBA. The “dean” of the bankruptcy bar. The Normandin program uses volunteers to conduct classes on Fund supports the pro bono, public service and fi nancial matters (including budgeting, personal civic programs founded or supported by the fi nance, credit cards, and buying a car) in area section, for example providing valuable funding high school across Massachusetts. The fi nal class for the fi nancial literacy program and volunteer is a special session at the Bankruptcy Court on lawyer training. the consequences of credit misuse. A volunteer’s total time commitment (including training, prepa- ration and class time) is expected to be no more Contributions to either the Carpenter Fund or the than 6 hours. If you are interested in volunteer- Normandin Fund may be sent to the Fund c/o ing, please send your name and information to Boston Bar Foundation, P.O. Box 845680, Boston, Stephanie Lee, Special Projects Assistant, Boston MA 02284-5680. For more information on either Bar Association, email: [email protected], tel. Fund or the Boston Bar Foundation, please feel 617-778-1914. free to contact Rich Page, BBF Executive Director, tel. 617-778-1916, e-mail: [email protected].

FALL 2008 7 Section Leadership

The Bankruptcy Law Section Steering Committee consists of Section and Committee Co-Chairs and all Members- At-Large. For the 2008-2009 ﬁ scal year, the Section’s leadership is as follows:

Section Co-Chairs Victor Milione, Esq. Law and Public Policy Committee Nixon Peabody LLP Donald R. Lassman, Esq. 100 Summer Street Lee Harrington, Esq. Law Ofﬁ ce of Donald R. Lassman Boston, MA 02110 Nixon Peabody LLP P.O. Box 920385 (617) 742-4200 100 Summer Street Needham, MA 02492 [email protected] Boston, MA 02110 (781) 455-8400 (617) 345-6016 [email protected] Consumer Bankruptcy Committee [email protected]

Adrienne K. Walker, Esq. William McLeod, Esq. Diane Rallis, Esq. Mintz, Levin, Cohn, Ferris, Glovsky McLeod Law Ofﬁ ces, PC Holland & Knight LLP and Popeo P.C. 77 Franklin Street 10 St. James Avenue One Financial Center Second Floor 11th Floor Boston, MA 02111 Boston, MA 02110 Boston, MA 02116 (617) 542-6000 (617) 542-2956 (617) 305-2104 [email protected] wjm@mcleodlawofﬁ ces.com [email protected]

CLE Committee Sanjit Korde, Esq. Membership Committee Korde & Associates, P.C. Nina Parker, Esq. 321 Billerica Road Peter Acton, Esq. Parker & Associates Suite 210 McDermott Will & Emery 10 Converse Place Chelmsford, MA 01824 28 State Street Winchester, MA 01890 (978) 256-1500 Boston, MA 02109-1775 (781) 729-0005 [email protected] (617) 535-4412 [email protected] [email protected] Consumer Finance Work Group Jeanne Darcey, Esq. Jennifer Doran, Esq. Edwards Angell Palmer & Dodge LLP Adam Ruttenberg, Esq. Hinckley, Allen & Snyder LLP 111 Huntington Avenue Looney & Grossman LLP 28 State Street Boston, MA 02199 101 Arch Street Boston, MA 02109-1775 (617) 239-0168 Boston, MA 02110 (617) 345-9000 [email protected] (617) 951-2800 [email protected] [email protected] Commercial Finance Committee Newsletter & Information (Joint with the Business Law Financial Literacy Committee Services Committee Section) Janet Bostwick, Esq. John Morrier, Esq. Peter Palladino, Esq. Janet E. Bostwick, PC Mintz, Levin, Cohn, Ferris, Glovsky Choate Hall & Stewart LLP 295 Devonshire Street and Popeo P.C. Two International Place Boston, MA 02110 One Financial Center Boston, MA 02110 (617) 956-2670 Boston, MA 02111 (617) 227-5020 [email protected] (617) 542-6000 [email protected] [email protected] Hon. Joan N. Feeney U.S. Bankruptcy Court 10 Causeway Street Boston, MA 02222 (617) 565-6049 [email protected]

8 FALL 2008 Brendan Recupero, Esq. Natalie Sawyer, Esq. Paul W. Carey, Esq. Craig and Macauley Professional Hanify & King, P.C. Mirick, O’Connell, DeMallie & Corporation One Beacon Street Lougee LLP 600 Atlantic Avenue 21st Floor 100 Front Street Federal Reserve Plaza Boston, MA 02108 Worcester, MA 01608 Boston, MA 02210 (617) 423-0400 (508) 791-8500 (617) 367-9500 [email protected] [email protected] [email protected] MEMBERS-AT-LARGE Charles A. Dale III, Esq. Practice and Procedure K&L Gates Committee Mitchel Appelbaum, Esq. State Street Financial Center Wilmer Cutler Pickering Hale and One Lincoln Street Ethan Jeffery, Esq. Dorr LLP Boston, MA 02111 Hanify & King, P.C. 60 State Street (617) 261-3112 One Beacon Street Boston, MA 02109 [email protected] 21st Floor (617) 526-6713 Boston, MA 02108 [email protected] Christine E. Devine, Esq. (617) 423-0400 Mirick, O’Connell, DeMallie & [email protected] Joseph H. Baldiga, Esq. Lougee, LLP Mirick, O’Connell, DeMallie & 100 Front Street Jesse Redlener, Esq. Lougee LLP Worcester, MA 01608 Proskauer Rose LLP 100 Front Street (508) 791-8500 One International Place Worcester, MA 01608 [email protected] Boston, MA 02110 (508) 791-8500 (617) 526-9732 [email protected] Jennifer V. Doran, Esq. [email protected] Hinckley, Allen & Snyder LLP Thomas O. Bean, Esq. 28 State Street, 29th Floor Pro Bono Committee McDermott Will & Emery, LLP Boston, MA 02109-1775 28 State Street (617) 378-4128 Mark Rossi, Esq. Boston, MA 02109 [email protected] Rossi Law Offi ces (617) 535-4426 77 Franklin Street [email protected] Harry E. Ekblom, Jr., Esq. Second Floor Sullivan & Worcester LLP Boston, MA 02110 Mark N. Berman, Esq. One Post Offi ce Square (617) 803-0074 Nixon Peabody LLP Boston, MA 02109 mark.rossi@rossilawoffi ce.com 100 Summer Street (617) 338-2843 Boston, MA 02110 [email protected] Douglas Gooding, Esq. (617) 345-6037 Choate Hall & Stewart LLP [email protected] William J. Hanlon, Esq. Two International Place Seyfarth Shaw LLP Boston, MA 02110 Ann Brennan, Esq. World Trade Center East (617) 248-5277 Stephen E. Shamban Law Offi ces, P.C. Two Seaport Lane, Suite 300 [email protected] 220 Forbes Road, Suite 208 Boston, MA 02210-2028 P.O. Box 850973 (617) 946-4995 Young Lawyers Committee Braintree, MA 02185 [email protected] (781) 849-1136 Lauren Darcy, Esq. [email protected] Mintz, Levin, Cohn, Ferris, Glovsky Pamela A. Harbeson, Esq. and Popeo P.C. Looney & Grossman LLP One Financial Center 101 Arch Street Boston, MA 02111 Boston, MA 02110 (617) 348-4492 (617) 951-2800 [email protected] [email protected]

FALL 2008 9 Jennifer L. Hertz, Esq. Phoebe D. Morse, Esq. Andrew P. Strehle, Esq. 234 Causeway Street, #1005 United States Trustee’s Ofﬁ ce Brown Rudnick Berlack Israels LLP Boston, MA 02114 Room 1184 One Financial Center [email protected] Ten Causeway Street Boston, MA 02111 Boston, MA 02222 (617) 856-8569 Steven T. Hoort, Esq. (617) 788-0440 [email protected] Ropes & Gray LLP [email protected] One International Place Anne J. White, Esq. Boston, MA 02110-2624 Colleen A. Murphy, Esq. Klieman, Lyons, Schindler & Gross (617) 951-7470 Mintz, Levin, Cohn, Ferris, Glovsky 21 Custom House Street [email protected] and Popeo, P.C. Boston, MA 02110 One Financial Center (617) 443-1000 William W. Kannel, Esq. Boston, MA 02111 [email protected] Mintz, Levin, Cohn, Ferris, Glovsky (617) 348-1836 and Popeo, P.C. [email protected] One Financial Center Boston, MA 02111 Christopher J. Panos, Esq. (617) 542-6000 Craig and Macauley, P.C. [email protected] Federal Reserve Plaza 600 Atlantic Avenue Richard L. Levine, Esq. Boston, MA 02110 Nelson Kinder Mosseau & Saturley, PC (617) 367-9500 45 Milk Street, 7th Floor [email protected] Boston, MA 02109 (617) 778-7575 Michael J. Pappone, Esq. [email protected] Goodwin Procter LLP Exchange Place John G. Loughnane Boston, MA 02109 Eckert Seamans Cherin & Mellott, LLC (617) 570-1940 One International Place - 18th Floor [email protected] Boston, MA 02110 (617) 342-6885 Adam J. Ruttenberg, Esq. [email protected] Looney & Grossman LLP 101 Arch Street Christine D. Lynch, Esq. Boston, MA 02110 Goulston & Storrs (617) 235-8656 400 Atlantic Avenue [email protected] Boston, MA 02110-3333 (617) 482-1776 Bruce F. Smith, Esq. [email protected] Jager Smith, P.C. One Financial Center Christopher R. Mirick, Esq. Boston, MA 02111 Cadwalader, Wickersham & Taft (617) 951-0500 One World Financial Center [email protected] New York, NY 10281 (212) 504-6000 David G. Sobol, Esq. [email protected] Holland & Knight LLP 10 St. James Avenue Boston, MA 02116 (617) 305-2030 [email protected]

10 FALL 2008