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Bankruptcy – Preliminary Injunction – Non-Debtor Jurisdiction – Corporate Reorganization – Asbestos
Former Georgia-Pacific LLC’s (Old GP’s) business included manufacturing asbestos-containing products. When Old GP restructured into debtor-Bestwall LLC (Old GP’s asbestos-related business interests) and non-debtor Georgia-Pacific LLC (New GP) (Old GP’s non-asbestos-related business interests), Old GP did not do so in order to manufacture jurisdiction in the bankruptcy court. Without the re[...]
Bankruptcy – Chapter 13 Plan – High Mortgage Payment – Disposable Income – First Impression
Even though the respondent-debtors’ mortgage payment is higher than the amount listed in the “National and Local Standards” for their area, since a mortgage is a secured debt, the entire amount of the debtors’ mortgage payment may be deducted from their gross income in order to determine the amount of disposable income they have left […]
Bankruptcy – Asbestos – Insurance & Trust Fund – Insurer’s Standing
The bankruptcy-debtor formerly produced asbestos-containing products. Its commercial general liability insurer seeks relief from the debtor’s bankruptcy plan because, under the plan, claims under the insurer’s policy do not get the same anti-fraud screening protection that uninsured claims will get before being paid from the debtor’s trust fund. However, if the debtor had not filed […[...]
Bankruptcy – Standard for Chapter 11 contempt is clarified
Where the Supreme Court previously addressed the proper standard for holding a creditor in civil contempt for attempting to collect a debt that a Chapter 7 discharge order has immunized from collection, that rule also applied in a Chapter 11 case. The analysis was not limited to violations of Chapter 7 discharge orders and did […]
Bankruptcy – Trustee fails to recover debtor’s IRS tax penalty rejected
Where the trustee sued the United States to void a debtor’s tax penalty obligations to the IRS, and to recover the debtor’s prior payments to the IRS, his claims were dismissed. A “noncompensatory tax penalty that is statutorily required and properly imposed” is not “within the ambit of the ‘exchanges’ targeted in the fraudulent-transfer laws.” […]
Bankruptcy — Automatic Stay – Real Property – Property Owners’ Association Dues
While the Smoky Mountain Country Club Property Owner’s Association (the POA) was under bankruptcy protection with an automatic stay in full effect, the plaintiff-property owners filed a complaint against the developers of the country club, seeking a ruling that would exempt plaintiffs from paying clubhouse dues to the POA. The bankruptcy court’s automatic stay prohibits […]
Bankruptcy – Bankruptcy fees amendment is constitutional
Although a 2017 amendment to the bankruptcy fees provisions may render it more expensive for some debtors in Virginia—as opposed to North Carolina or Alabama—to go through Chapter 11 proceedings, because the difference is a byproduct of Virginia’s use of the trustee program, it is not unconstitutional. Background These consolidated appeals present two constitutional issues […]
Bankruptcy – Treasury can claim debtor’s tax overpayment
Although the bankruptcy code allows a debtor to claim certain personal property as exempt, the Treasury Department has a superior right to claim a tax overpayment, in order to offset monies owed to another federal agency. Background To finance the purchase of a mobile home in 2008, Larry and Jessica Wood borrowed $39,739.44. A little […]
Bankruptcy – IRS’s offset right trumps debtor’s right to receive tax overpayment
The case of first impression held that despite a bankruptcy code section providing that exempt property cannot be used to satisfy a debtor’s prepetition debts, the tax code makes clear the government’s right to set-off a tax overpayment against a taxpayer’s preexisting tax liabilities extends to an overpayment due to a debtor. Background This case […]
Bankruptcy – 1997 decision on homestead bifurcation overruled
The 4th Circuit, sitting en banc, holds that a Chapter 13 plan may bifurcate a claim based on an undersecured homestead mortgage into secured and unsecured components and cram down the unsecured component, overruling a 1997 decision that had been widely criticized. Background In this bankruptcy case, we are asked to overrule a 22-year-old decision […]
Bankruptcy – Post-petition payments can’t be sought for child support
The Bankruptcy Code is clear that when a Chapter 13 plan is not confirmed, the trustee must return post-petition payments to the debtor. As a result, the child support division could not levy on funds held by the trustee because they must be returned to the debtor. Background In July 2016, Barry Webb filed a […]
Bankruptcy – Local bankruptcy court rule held invalid
The Eastern District of Virginia’s Local Bankruptcy Rule 3070-1(C), which allows for dismissal without hearing, conflicts with the requirements of 11 U.S.C. § 1307. Background In January 2017, the Eastern District’s bankruptcy trustee certified under Local Bankruptcy Rule 3070-1(C) that Debtor-Appellant Sarah No had failed to commence timely payments under her bankruptcy plan as required [...]
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