Category Archives: Bankruptcy

Recent Amendments to the Federal Rules of Bankruptcy Procedure, Effective December 1, 2016

Recent bankruptcy rule amendments, effective December 1, 2016, address the continuing impact of the Stern v. Marshall case on bankruptcy proceedings. In Stern v. Marshall, 564 U.S. 462 (2011), the United States Supreme Court held that a bankruptcy court, as a non-Article III court (i.e. courts without full judicial independence) lacked constitutional authority under Article III of the United States Constitution to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim, even though Congress purported to grant such statutory authority under 28 U.S.C. § 157(b)2(C).

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ADR/Mediation in Bankruptcy Cases

On October 7, 2015, I had the privilege of co-sponsoring a “Brown Bag” lunch meeting at the Nassau County Bar Association on mediation in bankruptcy cases. In conjunction with the ADR Committee, the Bankruptcy Committee that I chair worked with the Honorable Alan S. Trust and the Honorable Louis A. Scarcella, sitting bankruptcy judges in the Eastern District of New York, and practitioners Leslie A. Berkoff, Esq. and Andrew M. Thaler, Esq. to lead the discussion. Topics discussed included procedures for assigning cases to mediation, the role of the mediator, the purpose of meditation and the potential benefits of mediation.

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Supreme Court Hears Oral Argument on “Lien-Stripping” in Chapter 7 Cases

In 1992, the United States Supreme Court came down with a decision in Dewsnup v. Timm that has caused a stir in the Chapter 7 bankruptcy world ever since. The Court held that, under section 506(d) of the Bankruptcy Code, a Chapter 7 debtor could not “strip down” a lien to the current value of the collateral, thereby getting rid of a junior mortgage lien, when the senior debt owed exceeds the value of the collateral. In part, the Supreme Court went against lien-stripping because the Bankruptcy Act (the predecessor to the Code) provided that liens pass through bankruptcy unaffected […]

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New York’s Highest Court Rules on Rent-Stabilized Leases in Bankruptcy

Mary Santiago-Monteverde lived in her apartment, which was rent-stabilized, for over forty years. When her husband died, she was unable to pay her credit card debts and filed for Chapter 7 bankruptcy. She initially listed her apartment lease on Schedule G of her petition as a standard unexpired lease. Shortly thereafter, the owner of the apartment approached the Chapter 7 Trustee and offered to purchase the debtor’s interest in the lease. When the Trustee advised the debtor that he planned to accept the offer, she amended her filing to list the value of her lease on Schedule B as personal property exempt from […]

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Supreme Court Clarifies “Stern Claims” in Key Decision on Bankruptcy Court Power

Bellingham Insurance Agency (“Bellingham”) ceased operations in 2006 and subsequently transferred assets and operations to a successor, Executive Benefit Insurance Agency, Inc. (“Executive”). Bellingham filed under Chapter 7 in the Western District of Washington later in 2006 . In 2008, the Bellingham trustee, Peter Arkison (the “Trustee”), filed an adversary proceeding against Executive and other insiders of Bellingham seeking the avoidance of fraudulent transfers, a declaratory judgment that Executive is a successor in interest to Bellingham and substantive consolidation of certain defendant entities. The Bankruptcy Court subsequently granted the Trustee’s motion for summary judgment. The District Court for the District of […]

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