Recently in Bankruptcy Law Category

The Eleventh Circuit Court of Appeals jumped on the Kirk Wright Ponzi scheme adjudication bandwagon this week, finding that a bankruptcy trustee could not avoid and recover transfers for value that had been made to investors in the scheme.

Kirk Wright formed the International Management Associates, LLC, and several related entities (the Debtors) purportedly to manage and operate them as hedge funds, each of which was structured either as a limited liability company or a limited partnership.

In reality, Wright used the Debtors to operate a Ponzi scheme.

In re: Celotex Corp., No. 09-12000, involved adversary proceedings in bankruptcy court concerning creditors' property damage claims against debtor.  The court affirmed the dismissal of the action on the ground that the express provisions of the bankruptcy plan documents and the fundamental purpose of the trust did not establish that creditors were entitled to judgment-rate interest.

In US v. Snipes, No. 08-12402, the Eleventh Circuit affirmed actor Wesley Snipes' convictions, after a jury trial, on three counts of willful failure to file individual federal income tax returns, on the grounds that 1) because the general extension of the motions deadline by the district court could not have waived 18 U.S.C. section 3237(b)'s clear twenty-day deadline, the district court's denial of the five-month late elective transfer motion was not an abuse of discretion; 2) there was no abuse of discretion in refusing to grant a novel pretrial, post-grand jury hearing to challenge the claimed venue found in a facially sufficient indictment; and 3) defendant's sentence did not create an unlawful disparity because the district court noted that misdemeanants who, like defendant, had willfully failed to file their personal income tax returns, had engaged in similar behavior to the felons who had received similar sentences.

In In re: Tennyson, No. 09-14628, the Eleventh Circuit reversed the district court's affirmance of the bankruptcy court's confirmation of debtor's Chapter 13 plan, holding that an above median income debtor, with negative disposable income, may not obtain confirmation of a Chapter 13 bankruptcy plan to last for less than five years when the debtor's unsecured creditors have not been paid in full.

Related Resources

• Full Text of US v. Snipes, No. 08-12402
• Full Text of In re: Tennyson, No. 09-14628

In re: Mouzon Enters., Inc., No. 09-13330, involved a creditor's appeal from the bankruptcy court's order holding that the motion filed by debtor seeking to vacate the Consent Order was not barred under Rule 9024.  The court of appeals reversed on the ground that the bankruptcy court erred in holding that an order resolving a claim that has been objected to, but not litigated, constitutes an order "entered without a contest" for the purposes of Fed. R. Bankr. P. 9024.

In US v. Thompson, No. 08-13658, the court of appeals affirmed defendants' robbery convictions and sentences, on the grounds that 1) at the time the government rested its case-in-chief, there was sufficient evidence to support defendant's convictions on the firearms violations; and 2) because one defendant had previously committed an armed robbery with the other, a reasonable jury could conclude that defendant knew his codefendant would use a firearm in subsequent robberies.

Related Resources

• Full Text of In re: Mouzon Enters., Inc., No. 09-13330
• Full Text of US v. Thompson, No. 08-13658

Old West Annuity & Life Ins. Co. v. Apollo Grp., No. 09-10994, concerned the government's appeal from the district court's allocation of surplus proceeds from the sale of real property in a foreclosure action.  The court of appeals affirmed, on the grounds that 1) the district court correctly concluded that Florida law supplied the pertinent alter ego test; 2) even if the government was correct that the district court should have transferred the surplus proceeds to the trustee to distribute according to the Bankruptcy Code or that the district court itself should have applied the Bankruptcy Code's priorities, a creditor would be entitled to the disputed proceeds actually awarded to it by the district court; and 3) even assuming that the trustee of the estate at issue had a hypothetical lien that took priority over the two secured creditors' liens, the secured creditors' liens could not be avoided by the trustee.

Penley v. Eslinger, No. 09-13092, involved a civil rights action alleging excessive force by police.  The court of appeals affirmed summary judgment for defendant-officers, on the ground that the decedent's act of bringing a firearm to school, threatening the lives of others, and refusing to comply with officers' commands to drop the weapon were undoubtedly serious crimes, and thus the officer who shot the decedent reasonably believed he was in danger.

Related Resources

• Full Text of Old West Annuity & Life Ins. Co. v. Apollo Grp., No. 09-10994
• Full Text of Penley v. Eslinger, No. 09-13092

In an employment discrimination action brought by plaintiff during the pendency of her Chapter 13 proceedings, summary judgment for defendant on the ground of judicial estoppel is affirmed where plaintiff failed to disclose her employment discrimination suit to the bankruptcy court, and thus took inconsistent positions under oath with the intent of misleading the court.

Read Robinson v. Tyson Foods, Inc., No. 08-14991

Appellate Information

Filed February 5, 2010

Judges

Opinion by Judge Fay

In the debtor's appeal from the bankruptcy court's order that her Keogh plan was the property of her bankruptcy estate, the order is reversed where the debtor's Keogh plan did not have to be maintained under ERISA for the debtor to claim an exemption under 11 U.S.C. section 222.21(2)(a)(1).

Read In re: Baker, No. 09-13144

Appellate Information

Filed December 22, 2009

Judges

Per Curiam

In debtor's appeal from a bankruptcy court's order sustaining creditor's objection to the discharge of debtor's debts, the order is affirmed where: 1) debtor acquired and concealed an equitable interest in his wife's businesses; and 2) the doctrine of continuing concealment provides for situations like this, in which a debtor kept his assets out of a creditor's reach during the look-back period by means of a sham ownership arrangement established more than one year before the bankruptcy petition was filed.

Read In re: Coady, No. 09-11854

Appellate Information

Filed December 3, 2009

Judges

Per Curiam

In an action against Plaintiff's creditors claiming that they conspired to wrongfully enforce a turn over order issued by a Bankruptcy Court in proceedings relating to Plaintiff's bankruptcy petition, the dismissal of the complaint is affirmed where Plaintiff failed to obtain leave of the Bankruptcy Court before filing his complaint.

Read Lawrence v. Goldberg, No. 08-11034

Appellate Information

Filed July 10, 2009

Judges

Opinion by Judge Dubina

In an appeal from the Bankruptcy Court's order voiding a payment made by the Debtor to Plaintiff as a preferential transfer, the order is affirmed where the payments, which were made from the Debtor's other credit card accounts for debt consolidation purposes, constituted "transfer[s] of an interest of the debtor in property" under 11 U.S.C. section 547(b).

Read the full decision in Bank of America, N.A. v. Mukamai, No. 08-15958.

Appellate Information:

Appeal from the United States District Court for the Southern District of Florida
D.C. Docket Nos. 08-21730-CV-ASG, 07-01532 BKC-LM
Opinion filed on June 18, 2009

Judges:

Before MARCUS and PRYOR, Circuit Judges, and SCHLESINGER, District Judge. Honorable Harvey E. Schlesinger, United States District Judge for the Middle District of Florida, sitting by designation.

Opinion by SCHLESINGER, District Judge.