Abundant Splits in Consumer and Reorganization Law 31st Annual Bankruptcy at the Beach Alabama State Bar Association Destin, Florida June 8-9, 2018 Bill Rochelle • Editor-at-Large American Bankruptcy Institute [email protected] • 703. 894.5909 © 2018 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 Reverses Jevic, Bars Structured Dismissals that Violate Priority Rules .............. 6 Supreme Court Allows Debt Collectors to File Time-Barred Proofs of Claim ............................. 9 A Debt Purchaser Is Not a ‘Debt Collector’ Regulated by the FDCPA, Supreme Court Holds .. 12 Did the Supreme Court Hint that Bankruptcy Venue Is Too Broad? .......................................... 14 This Term........................................................................................................................................ 18 Supreme Court Narrowly Interprets the Safe Harbor, Overrules the Majority of Circuits .......... 19 Supreme Court Says Insider Status Is Reviewed for Clear Error Under Existing Test ............... 23 Supreme Court Holds Argument in Lamar, Archer & Cofrin on Dischargeability ..................... 27 Reorganization ...................................................................................................................... 31 Dismissal ......................................................................................................................................... 32 The Validity of a ‘Golden Share’ to Bar a Filing Goes to the Fifth Circuit ................................ 33 Executory Contracts & Leases ...................................................................................................... 36 Circuit Split Deepens on Rejection of Trademark Licenses ........................................................ 37 Flip Clauses in Swaps Held Enforceable by District Judge in New York ................................... 40 Sales ................................................................................................................................................. 43 Third Circuit Explains When Sale Orders Are Not Automatically Moot .................................... 44 Ninth Circuit Joins Minority in Allowing Sales Free & Clear of Leases .................................... 46 Estate Property ............................................................................................................................... 48 California Supreme Court Kills the Jewel Doctrine on a Certified Question .............................. 49 Jurisdiction & Power ..................................................................................................................... 52 Seventh Circuit Requires Stern Consent from Unserved Defendants in Non-Core Suits............ 53 Automatic Stay Doesn’t Apply to Enforcement of Maritime Liens, Ninth Circuit Says ............ 56 Bankruptcy Court Finds Constitutional Power to Grant Releases in Confirmation Orders ........ 59 Makewhole Premiums ................................................................................................................... 63 Third Circuit Splits with New York by Allowing Makewhole Premiums in Chapter 11 ............ 64 Second Circuit Splits with Third on Makewholes Occasioned by Bankruptcy ........................... 67 Plans & Confirmation .................................................................................................................... 73 Ninth Circuit Holds that One Accepting Class in Joint Plan Is Sufficient .................................. 74 Non-Bankrupt Nonprofit Entities Are Not Subject to Substantive Consolidation ...................... 78 Non-Voting Creditors’ Consent to Third Party Releases Can’t Be Inferred ............................... 80 To Establish Record Dates, the Plan Applies, Not Securities Regulations .................................. 83 District Court Endorses Opt-Out to Confirm Substantive Consolidation Plans .......................... 85 Committees ..................................................................................................................................... 87 Delaware Judge Narrows Jevic to Prohibit Only End-of-Case Priority Skipping ....................... 88 First Circuit Widens a Circuit Split on a Committee’s Intervention Rights ................................ 90 Split Sixth Circuit Bars Litigation Trustees from Suing on D&O Policies ................................. 92 Existence of a Committee Precludes Tolling the Statute for Adverse Domination ..................... 95 Stays & Injunctions ........................................................................................................................ 97 Tenth Circuit Direct Appeal to Decide Whether the Automatic Stay Is Really Automatic ........ 98 Compensation ............................................................................................................................... 100 American Bankruptcy Institute • 66 Canal Center Plaza, Suite 600 • Alexandria, VA 22314 1 www.abi.org Retention Agreements Allowing Defense Fees Ok in New Mexico, but Not in Delaware ....... 101 ASARCO Read to Bar Fee-Defense Costs Even with a Fee-Shifting Agreement ...................... 103 Fraudulent Transfers ................................................................................................................... 105 Ninth Circuit Splits with Seventh on Sovereign Immunity and Derivative Suits by a Trustee . 106 In a Circuit Split, Ninth Circuit Tags Innocent Sellers with Fraudulent Transfer Liability ...... 109 Circuits Split on Objective vs. Subjective Value for Fraudulent Transfer Consideration ......... 112 Third Circuit Narrowly Interprets Delaware Fraudulent Transfer Law ..................................... 114 Delaware District Judge Seemingly Splits with Second Circuit on the Safe Harbor................. 117 Fraudulent Transfer Claims Aren’t Capped by Creditors’ Losses ............................................. 120 Preferences & Claims .................................................................................................................. 123 Eighth Circuit Broadly Draws the Line to Identify ‘Unknown’ Claims that Are Discharged ... 124 Perishable Commodities Act ....................................................................................................... 126 En Banc, Ninth Circuit Holds: Only ‘True Sales’ of Receivables Comply with PACA ........... 127 Consumer Bankruptcy ....................................................................................................... 130 Fair Debt Collection Practices Act ............................................................................................. 131 Eighth Circuit Broadly Interprets the FDCPA to Protect Consumers ....................................... 132 Courts Can’t Sanction Debt Collectors for Filing Stale Claims after Midland Funding ........... 135 Discharge/Dischargeability.......................................................................................................... 137 Violation of Discharge Is Now Difficult to Prove in the Ninth Circuit ..................................... 138 Co-Conspirator’s Intent Is Enough for Nondischargeability, Fifth Circuit Holds ..................... 141 No Contempt on Discharge Violation of Nondischargeable Debt, Circuit Says ....................... 143 Arbitration .................................................................................................................................... 145 Second Circuit Bars Arbitration in a Class Action for Violating the Discharge Injunction ...... 146 Wages & Dismissal ....................................................................................................................... 151 Ninth Circuit Creates Split on Appellate Standard for ‘Consumer Debt’ Determination.......... 152 On the Means Test, a Single Debtor Can Take Deductions for Two Cars ................................ 155 Section 1326(a)(2) Overrides a Levy Under State Law ............................................................. 157 Chicago Judge Erases Chapter 13 Debt Limits on Student Loans ............................................. 159 No Statutory Fees for Standing Chapter 13 Trustees if Dismissal Precedes Confirmation ....... 161 Plans & Confirmation .................................................................................................................. 163 Eleventh Circuit Requires No Objection to Overturn a Final Confirmation Order ................... 164 Seventh Circuit Allows Anticipated Tax Refunds to Be Offset by Expenses in Chapter 13..... 169 Colorado Judge Differs with Two Circuits on Chapter 13 Payments Beyond Five Years ........ 172 Ninth Circuit Demands Amended Schedules to Avoid Judicial Estoppel ................................. 174 En Banc, Eleventh Circuit Narrows Applicability of Judicial Estoppel in Bankruptcy ............ 176 Compensation ............................................................................................................................... 180 Fifth Circuit Holds that Chapter 7 Trustees Presumptively Get Statutory Commissions