On Feb. 11, 2014, the U.S. Bankruptcy Court for the Middle District of Alabama awarded a debtor actual damages, punitive damages (five times the amount of actual damages) and attorneys’ fees for a creditor’s willful violation of the automatic stay.[1] As directed, the debtor filed his application for attorneys’ fees, and the offending creditor objected to the application. The court analyzed the propriety of an attorneys’ fee award where there was a willful violation of the automatic stay.
[1]When we last reported on In re Loop 76,[2] the case was on appeal with the Ninth Circuit Bankruptcy Appellate Panel (BAP). In a lengthy decision that one could argue expanded the bankruptcy court’s ruling on classification, the BAP has since affirmed the bankruptcy court’s decision permitting separate classification of unsecured deficiency claims.[3]
Editor's Note - The Unsecured Trade Creditor's Committee recently hosted a committee call dealing with these same cases. To listen to the recording of this call, click here.
The facts are simple. A debtor files for chapter 13 and proposes a plan, which is confirmed. The debtor makes payments pursuant to the terms of the plan but is unable to continue funding the plan a considerable time later. The case is converted to chapter 7, and on the date of conversion, the chapter 13 trustee is holding funds that were earmarked for creditors but have not been paid out.
Editor’s Note: This article was originally published by Law360 on April 24, 2014.
One of the highest-profile aspects of the City of Detroit’s chapter 9 case[1] has been the intense discussion of the fate of the Detroit Institute of Arts (DIA), which is almost unique among U.S. art museums in that its building and collection are owned by the city itself rather than by a charitable nonprofit entity. City ownership is what has put the DIA’s collection “in play,” as the city’s creditors are looking to the DIA’s rich collection as a potential source of repayment of the city’s debts.
In In re Tribune Co., 2014 WL 2797042 (D. Del. June 18, 2014), the U.S. District Court for the District of Delaware upheld Tribune Company’s plan of reorganization, dismissing a series of appeals as equitably moot. The court’s decision is of particular interest because it comes on the heels of a significant decision by the U.S.
Many potential buyers of assets out of bankruptcy assume that making a deposit gives them an option to walk away from the deal and lose nothing more than the amount they put down. In a recent case in the Southern District of New York, that assumption proved to be unwarranted — and costly to the reneging buyer, who ended up liable for damages equal to the difference between the price it had agreed to pay and the assets’ value as of the time of the purchaser’s breach.
When dealing with customers in financial distress, the time-tested advice of “always take the money” are words to live by if you are a vendor with an open account payable. It is widely understood that such payments may be “clawed back” as preferences under § 547 of the Bankruptcy Code if the customer declares bankruptcy within 90 days of payment.
Two years after the U.S. Court of Appeals for the Eleventh Circuit issued its decision in Senior Transeastern Lenders v. Official Committee of Unsecured Creditors (In re TOUSA Inc.), 680 F.3d 1298 (11th Cir. 2012), lenders may still unwittingly be at risk when making revolving loans to multiple borrowers that utilize a central cash-management system.
Editor’s Note: The following article, “Loehmann’s Department Store: A Case Study Questioning the § 365(d)(4) Liquidation Narrative Following BAPCPA,” won the prize for third place in the Sixth Annual ABI Bankruptcy Law Student Writing Competition. The author, Brian Phillips, is a student at University of North Carolina School of Law, Chapel Hill, N.C.
