Category Archives: Litigation

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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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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Law v. Siegel – SCOTUS Limits the Application of 11 U.S.C. § 105

An important issue that is often addressed in Chapter 7 bankruptcy cases is whether the debtor asserts a “homestead” exemption to attempt to protect their home equity from becoming property of the bankruptcy estate. Recently, an intriguing decision was handed down by the United States Supreme Court. The important message gleaned from the court was that 11 U.S.C. § 105 cannot be invoked while disregarding other express provisions of the Bankruptcy Code.

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A CALL FOR YELP! ONLINE RATINGS SITE CATCHES BANKRUPTCY FIRM IN THE ACT

Have you ever wondered if online ratings websites have bogus reviews? Cynics are now saying “I told you so” when it comes to Yelp, where attorneys at a bankruptcy firm in San Diego are being accused of creating accounts on the site and posting fake, positive reviews about their firm. The McMillan Law Group seems to have been caught posing as satisfied clients, as Yelp has cross-referenced those “clients” with the firm’s bankruptcy filings. Further, according to a report, many of the reviews were created by the same IP address, that of the Law Group. You may be wondering how […]

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IRVING PICARD, MADOFF TRUSTEE, IS AT IT AGAIN

Did you miss him? Irving Picard, the Trustee liquidating Bernard L. Madoff Investment Securities LLC, was back in the news recently. U.S. Bankruptcy Judge Burton Lifland of the Southern District of New York concluded that “time-based” damages to victims of the massive Ponzi scheme should not be awarded. The ruling means that Madoff victims who still stand to recover from the liquidation will not have their distributions adjusted for interest or inflation. In anticipation of the decision, Picard held approximately $1.36 billion in reserve that can now be distributed more quickly, albeit at his desired “discount.” Although Picard has already […]

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