Zoom Program
Total Page:16
File Type:pdf, Size:1020Kb
SUFFOLK ACADEMY OF LAW The Educational Arm of the Suffolk County Bar Association 560 Wheeler Road, Hauppauge, NY 11788 (631) 234-5588 ZOOM PROGRAM THIS YEAR’S MOST SIGNIFICANT BANKRUPTCY DECISIONS FACULTY Hon. Alan Trust Hon. Robert Grossman Hon. Louis Scarcella Bill Rochelle Shari Barak, Esq. Mickee Hennessy, Esq. September 23, 2020 Suffolk County Bar Association, New York Like us on: “The opinions, beliefs and viewpoints expressed herein are those of the authors and do not necessarily reflect the official policy, position or opinion of the Suffolk County Bar Association, Suffolk Academy of Law, their i Board of Directors or any of their members” Agenda Suffolk & Nassau County Bankruptcy Bar Associations EDNY Chapter, Federal Bar Association Garden City, New York September 23, 2020 Supreme Court Last Term 1. Supreme Court Bans Nunc Pro Tunc Orders .................................................................... 12 Despite the high court’s ban on nunc pro tunc orders, may bankruptcy courts make their orders retroactive? Roman Catholic Archdiocese of San Juan v. Acevedo Feliciano, 140 S. Ct. 696, 206 L. Ed. 2d 1 (2020) (Sup. Ct. Feb. 24, 2020). 2. May a Bankruptcy Court Annul the Automatic Stay after Acevedo? ............................. 134 Bankruptcy Judge Grossman explores the extent to which the Supreme Court’s Acevedo decision bars courts from granting relief retroactively. In re Telles, 20-70325, 2020 BL 162644, 2020 Bankr Lexis 1167, 2020 WL 2121254 (Bankr. E.D.N.Y. April 30, 2020). and Lower Courts Now Disagree on Modifying the Stay Retroactively After Acevedo ....... 131 Did the Supreme Court’s Acevedo opinion preclude annulling the stay? The Ninth Circuit BAP says ‘no.’ Merriman v. Fattorini (In re Merriman), 616 B.R. 381 (B.A.P. 9th Cir. July 13, 2020). 3. Supreme Court Rules: ‘Unreservedly’ Denying a Lift-Stay Motion Is Appealable…..…..6 Building on Bullard, the Supreme Court rules unanimously that a lift-stay motion is a “procedural unit” that’s appealable if the bankruptcy court “conclusively” denies the motion. Ritzen Group Inc. v. Jackson Masonry LLC, 140 S. Ct. 582, 205 L. Ed. 2d 419 (Sup. Ct. Jan. 14, 2020). 1 4. Supreme Court Uses a Bankruptcy Case to Limit the Use of Federal Common Law ........ 9 High court rules that federal courts may make federal common law only to protect ‘uniquely’ federal interests. Rodriguez v. Federal Deposit Insurance Corp., 140 S. Ct. 713, 206 L. Ed. 2d 62 (Sup. Ct. Feb. 25, 2020). This Term in the Supreme Court 5. Supreme Court Grants ‘Cert’ to Decide Whether Inaction Violates the Automatic Stay 28 Virginia case highlights the damage that will be done to debtor protections if affirmative action is required for a stay violation. City of Chicago v. Fulton, 19-357 (Sup. Ct.); and In re Nimitz, 19-12741, 2019 BL 480974 (Bankr. E.D. Va., Dec. 16, 2019). ‘Cert’ Denied This Time Around 6. The Automatic Termination of the Automatic Stay: Not Ready for Prime Time .... 41, 313 The Supreme Court declined to decide whether the automatic stay terminates automatically after a repeat filing as to all property or only property of the debtor. Rose v. Select Portfolio Servicing Inc., 19-1035 (Sup. Ct.); and Rose v. Select Portfolio Servicing Inc., 945 F.3d 226 (5th Cir. Dec. 10, 2019). Small Business Reorganization Act 7. Currently Conducting Business Isn’t Required to Qualify for the SBRA ...................... 169 Dealing with the debt left over from a defunct business is enough to qualify as a small business debtor under the new subchapter V of chapter 11, Judge Burris rules. In re Wright, 20-01035, 2020 BL 172550, 2020 Bankr Lexis 1240, 2020 WL 2193240 (Bankr. D.S.C. April 27, 2020). 2 8. Subchapter V Trustee Barred from Routine Retention of Counsel ................................ 158 Bankruptcy Judge David Warren warns small business trustees that they won’t be compensated if they are “overzealous” or undertake “unnecessary or duplicative services.” In re Penland Heating & Air Conditioning Inc., 20-01795, 2020 BL 217309, 2020 Bankr Lexis 1550 (Bankr. E.D.N.C. June 11, 2020). 9. SBRA Permits Restructuring Personal Guarantees of Corporate Debt .......................... 160 Hundreds of cases have already been filed under the SBRA since subchapter V of chapter 11 became effective in February. In re Blanchard, 19-12440, 2020 BL 267391, 2020 Bankr Lexis 1909, 2020 WL 4032411 (Bankr. E.D. La. July 16, 2020). 10. First Opinion on the SBRA Permits Conversion of an Existing Chapter 11 Case ......... 162 Bankruptcy Judge Scott Clarkson of Santa Ana, Calif., issued the first reported decision on the new small business reorganization law that became effective on February 19. In re Progressive Solutions Inc., 18-14277, 2020 BL 63794, 2020 Bankr Lexis 467, 2020 WL 975464 (Bankr. C.D. Cal. Feb. 21, 2020). Chapter 11 Reorganization 11. Third Circuit Finds Constitutional Power to Grant Releases in Confirmation Orders ... 118 Third Circuit emphasizes the limitation of nonconsensual, third-party releases to ‘exceptional’ cases. Opt-Out Lenders v. Millennium Lab Holdings II LLC (In re Millennium Lab Holdings II LLC), 945 F.3d 126 (3d Cir. Dec. 19, 2019). and No ‘Core’ Jurisdiction on Nondebtors Injunctions, N.Y. District Judge Says ............. 103 New York district judge differs with the Third Circuit on a bankruptcy court’s constitutional power to issue nondebtor, third-party releases. Dunaway v. Purdue Pharmaceuticals LP (In re Purdue Pharmaceuticals LP), 19- 10941, 2020 BL 302632, 2020 Us Dist Lexis 143799 (S.D.N.Y. Aug. 11, 2020). 3 12. Stay Violation Order Is Final Even Before Attorneys’ Fees Are Awarded, Circuit Says 95 First Circuit rules that an order finding a stay violation must be appealed before the bankruptcy court grants an award of attorneys’ fees. PC Puerto Rico LLC v. Empresas Martinez Valentin Corp. (In re Empresas Martinez Valentin Corp.), 948 F.3d 448 (1st Cir. Jan. 28, 2020). Student Loans 13. Courts Interpret Brunner Too Harshly, Bankruptcy Judge Cecelia Morris Says ......... 1196 A debtor with a law degree but only $37,500 in gross annual income was permitted to discharge more than $220,000 in student loans. Rosenberg v. N.Y. State Higher Education Services Corp. (In re Rosenberg), 610 B.R. 454 (Bankr. S.D.N.Y. Jan. 7, 2020). Consumer 14. Courts Deeply Split on Social Security Benefits in the Chapter 13 ‘Abuse’ Test .......... 238 Michigan judges disagree about the court’s ability to consider Social Security benefits in deciding whether a chapter plan was proposed in good faith. In re Meehean, 611 B.R. 574 (Bankr. E.D. Mich. Jan. 27, 2020). 15. Claims in Bona Fide Dispute Are Included in Deciding Eligibility for Chapter 13…... 242 If a creditor objects to chapter 13 eligibility in good faith, the court may look behind the debtor’s schedules to decide whether the debt exceeds the cap. Fountain v. Deutsche Bank National Trust Co. (In re Fountain), 612 B.R. 743 (B.A.P. 9th Cir. March 10, 2020). 16. HAVEN Act Can Reduce Payments Under a Confirmed Chapter 13 Plan .................... 255 Judge Shefferly writes a complicated opinion on the retroactivity of the HAVEN Act to cases filed prior to enactment. In re Gresham, 616 B.R. 505 (E.D. Mich. March 10, 2020). 4 17. Reversing BAP, Ninth Circuit Allows Chapter 13 Plans with Estimated Durations...... 258 The Ninth Circuit allows chapter 13 debtors on their own to accelerate payments to creditors and secure their discharges more quickly without modifying their plans. In re Sisk, 962 F.3d 1133 (9th Cir. June 22, 2020). 18. Eleventh Circuit: Chapter 13 Plan Alone Can’t Assume a Lease or Contract ................ 264 In the first court of appeals decision on the topic, the Eleventh Circuit holds that the chapter 13 trustee alone has power to assume a lease or contract. Microf LLC v. Cumbess (In re Cumbess), 960 F.3d 1325 (11th Cir. June 3, 2020). 19. To Impair an Exemption, Judicial Lien Must Attach to Already Owned Property ........ 290 A judicial lien may be avoided under Section 522(f) only if the lien attached after the debtor acquired the property. Patrusky v. Jungle Treats Inc. (In re Patrusky), 797 Fed. Appx. 653 (2d Cir. Feb. 25, 2020). 5 Abundant Splits and Other Significant Bankruptcy Decisions Suffolk & Nassau County Bankruptcy Bar Associations EDNY Chapter, Federal Bar Association Garden City, New York September 23, 2020 Bill Rochelle • Editor-at-Large American Bankruptcy Institute [email protected] • 703. 894.5909 © 2020 66 Canal Center Plaza, Suite 600 • Alexandria, VA 22014 • www.abi.org American Bankruptcy Institute • 66 Canal Center Plaza, Suite 600 • Alexandria, VA 22314 1 www.abi.org Table of Contents Supreme Court ........................................................................................................................ 4 Decided Last Term ........................................................................................................................... 5 Supreme Court Rules that ‘Unreservedly’ Denying a Lift-Stay Motion Is Appealable ................ 6 Supreme Court Uses a Bankruptcy Case to Limit the Use of Federal Common Law ................... 9 Supreme Court Bans Nunc Pro Tunc Orders ............................................................................... 12 Supreme Court Finds No Appointment Clause Violation in Puerto Rico’s Oversight Board ..... 15 Supreme Court Might Allow FDCPA Suits More than a Year After Occurrence ....................... 20 Supreme Court Explains Sovereign Immunity in Bankruptcy Cases .......................................... 23 Case To Be Argued in the October Term