Bankruptcy Year In Review 2016

Bankruptcy Year In Review San Diego County Bar Association Presented by Dennis Wickham March  14, 2017


Husky International Electronics, Inc. v. Ritz 136 S.Ct. 1581 (2015) Discharge exception for actual fraud does not require a false representation and includes fraudulent conveyance schemes.


Puerto Rico v. Franklin California-Tax Free Trust 136 S. Ct. 1938 (2015) The Commonwealth of Puerto Rico is not a “state” that may be a debtor or authorize its municipalities to be a debtor under section 109. It is a “state” for purpose of Chapter 9’s preemption of its own bankruptcy law.


In re Barker (Spokane Law Enforcement Credit Union v Barker) 839 F.3d 2016 (9th Cir. 2016) Failure to timely file proof of claim in Chapter 13 case fatal to allowance of the claim under statutory or equitable grounds.


In re Berkeley Delaware Court, LLC 834 F.3d 1036 (9th Cir. 2016) Bankruptcy court has discretion to apply section 363 procedures to a sale of claims under a settlement, which renders moot the appeal of an unstayed order.

In re Del Biaggio 834 F.3d 1003 (9th Cir. 2016) Claims subordinated under section 510(b) in individual case where creditors were defrauded into investing in one of the debtor’s affiliates.

Bos v. Board of Trustees 795 F.3d 1006 (9th Cir. 2016) Prevailing debtor in 523 action is not entitled to attorney’s fees under CA CC §1717 nor ERISA because the creditor’s claims arise under the Bankruptcy Code.

In Re Castaic Partners, II, LLC 823 F.3d 966 (9th Cir. 2016) After order dismissing case was final, appeal of unstayed order granting stay relief is constitutionally moot.

In re EPD Investment, LLC (Kirkland v Rund) 821 F.3d 1146 (9th Cir. 2016) Bankruptcy court has discretion to deny a motion to compel arbitration of Stern core claims.

In re Green (Gladstone v. U.S. Bancorp) 811 F.3d 1133 (9th Cir. 2016) Trustee may seek to avoid transfers of life insurance policies with no cash value as fraudulent conveyances.

In re Heller Ehrman, LLP  (Heller Ehrman Liquidating Trust v. Davis Wright et al) 830 F.3d 964 (9th Cir. 2016) Ninth Circuit certifies to Cal Supreme Court whether dissolved law firm has any property rights in unfinished hourly rate fee cases.

In re Kupfer ___ F.3d _____ (9th Cir. 2016) Statutory cap on lessors does not extend to attorney’s fees on claims which the lessor could assert even if the lease were not terminated.

In re Molasky (Bustos v Molasky) 843 F.3d 1179 (9th Cir. 2016) Intervenor asserting and granted same rights as original plaintiff may continue 523 action after dismissal of plaintiff for failure to prosecute.

In re Neff (Denoe v Neff) 824 F.3d 1181 (9th Cir. 2016) Section 727(a)(2) (transfers fraudulent within one year) is not subject to equitable tolling.

In re New Investments, Inc. 840 F.3d 1137 (9th Cir. 2016) Entz-White is no longer good law.  Secured creditor entitled to default interest notwithstanding a cure under a Chapter 11 plan.

In re Ozenne 841 F.3d 810 (9th Cir. 2016) Timely appeal, not writ of mandamus, required to challenge order denying motion to reopen case or for sanctions for alleged stay violation.

In re Perl 811 F.3d 1120 (9th Cir. 2016) Lessor does not violate automatic stay in continuing to evict debtor as unlawful detainer judgment and writ of possession granted lessor title and all rights of possession.

In re Rivera (Rivera v Orange County Probation Dep’t) 832 F.3d 1103 (9th Cir 2016) Reversing 9th Cir.BAP.   Parent’s debt to county from juvenile child’s detention is not a domestic support obligation.

In re Smith (Smith v. U.S.) 828 F.3d 1094 (9th Cir. 2016) Taxes not discharged as belated tax return is not a “return” for purpose of section 523(a)(1)(B)(i).

In re Scheer (Scheer v Cal State Bar) 819 F3d. 1206 (9th Cir. 2016) State bar order requiring payment of arbitration award to client before reinstatement did not render debt non-dischargeable under 523(a)(7).

In re Tracht Gut, LLC (Tracht Gut, LLC vs Los Angeles County etc.) 836 F.3d 1146 (9th Cir. 2016) Regularly conducted county tax sale conclusively established reasonably equivalent value.

In re Village at Lakeridge, LLC 814 F.3d 993 (9th Cir. 2016) In confirming a plan, the court may consider the vote of a creditor who purchased claim from a statutory insider.

In re Yellowstone Mountain Club (Blixseth v Brown) 841 F.3d 1090 (9th Cir. 2016) Bankruptcy court approval required before lawsuit in district or state court against OCC members for acts performed in their official capacity (but not for pre-petition acts).

In re Zachary 811 F.3d 1191 (9th Cir. 2016) The absolute priority rule applies in individual Chapter 11 cases.


In re Adinolfi 543 B.R. 612 (9th Cir. BAP 2106) Payments Ch 13 debtor received from state under Adoption Assistant Program were excluded from projected disposable income as “benefits received under the Social Security Act.”


In re Beltway One Development Group, LLC 547 B.R. 819 (9th Cir. BAP 2106) Even where plan does not cure defaults, default interest must reasonably compensate secured creditor for losses from default.

In re Clark 548 B.R. 246 (9th Cir. BAP 2106) Substantive consolidation of debtor, self-settled trust, and operating LLC in Chapter 7 case.

In re Kabiling (Desert Pine Villas Homeowners Assoc v Kabiling) 551 B.R. 440 (9th Cir. BAP 2106) Quiet title action as to abandoned property violated discharge injunction.


Tapia v Davol, Inc. 562 B.R. 765  (S.D.Cal 2016) Diversity case transferred to Bankr. Court for CD of California, where plaintiff had filed a Chapter 7 case since claim is property of the estate and witnesses are located there.


In re Catton 555 B.R. 713 (Bankr. S.D.Cal 2016) Ch 11 Debtor is not entitled to credit for default interest paid under a §363 sale when remaining obligation is cured under a plan.



In re RW Meridian LLC 663 B.R. 807 (Bankr. S.D.Cal 2016) Tracht Gut inapplicable where case filed before county tax auction is completed.  Sale violated automatic stay.

April 24th, 2017  |  Categories:
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