The principals of PLP support the Creditor’s Rights Section of the Commercial Law League of America’s (CLLA) efforts to reform preference litigation, and agree with CLLA’s efforts to reform preference legislation, and CLLA’s position that preference reform is necessary to even the playing field between creditors and trustees. Continue reading →
Creditors Rights Attorneys Must Recognize Clarified Stay Termination Requirements for Chapter 7 Cases
There is a common misconception among both creditors and creditors rights attorneys that once property is abandoned by the Chapter 7 Trustee in a bankruptcy, the protection of the automatic bankruptcy stay no longer applies. This would free a secured creditor with an interest in the abandoned property to enforce its rights in the property. However, the Ninth Circuit made clear in Gasprom, Inc. v. Fateh (In Re Gasprom), 500 B.R. 598 (2013), that the Trustee’s abandonment of property alone is not sufficient to terminate the full protection of the automatic bankruptcy stay under 11 U.S.C. § 362. Creditors must wait until the stay is formally terminated by the court or by the closing of the bankruptcy case. A foreclosure attorney must ensure that an automatic stay is terminated, or that the bankruptcy case is closed, before issuing guidance that the client may proceed with foreclosure. Continue reading →
The Failure To Pay The Promised Dividend To Unsecured Creditors Was Ruled Grounds For Dismissal Of A Chapter 13 Case, Even If The Debtor Makes All Monthly Plan Payments.
In the recent opinion issued in Schlegel v. Billingslea (In Re Schlegel), 14 C.D.O.S. 3166 (March 31, 2015), the United States Bankruptcy Appellate Panel of the Ninth Circuit addressed for the first time whether a Chapter 13 case with a confirmed plan may be dismissed for the debtors’ failure to pay the approved percentage dividend to unsecured nonpriority creditors during the applicable commitment period, even though the debtors otherwise made all monthly payments due under the confirmed plan. Continue reading →
A Stipulation to Extend the Deadline to File an Adversary Proceeding in a Chapter 7 Case Needs a Court Order to be Enforceable.
Creditors should be wary of relying on an agreement of Debtor’s counsel to extend the deadline to file a complaint objecting to discharge under Bankruptcy Code Section 727. In In Re Alazzeh, 14 C.D.O.S. 5157, May 9, 2014, the Ninth Circuit Bankruptcy Appellate Panel held that notwithstanding a stipulation between counsel to extend the deadline documented and confirmed by email, the 60-day deadline in Bankruptcy Rule 4004 (a) was not extended because the parties did not obtain a Court Order approving the extension. The Bankruptcy Court cited Bankruptcy Rule 9006(b), which governs requests for extensions of time, stating that the parties had not complied with the requirements of filing a motion prior to the expiration of the deadline. Additionally, the Bankruptcy Court made a point of stating that the extension is not automatically granted just because a motion has been filed, and that the Court has the discretion to determine if cause exists. As a result of this ruling, creditors and debtors must jump through an additional hoop when trying to work out a potential objection to discharge and may not rely on informal extension agreements, even if confirmed in writing. In this case, the debtor obtained summary judgment while the creditor probably felt like she was sand-bagged.
Note:Sandbagging has a special meaning in legal contexts. Black’s Law Dictionary defines it as a “trial lawyer’s remaining cagily silent when a possible error occurs at trial, with the hope of preserving an issue for appeal if the court does not correct the problem. This tactic does not usually preserve the issue for appeal because objections must be promptly made to alert the trial judge of the possible error.”