5th Circuit Bankruptcy Law News - U.S. Fifth Circuit
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If you're going to couple business travel with a family trip, don't bill your client for your vacation expenses. That's the lesson from a recent Fifth Circuit ruling upholding the removal of a bankruptcy trustee who billed the estate for his family's extended stay in New Orleans during oral arguments. Steven Smith, the trustee in question, continually put his own interests ahead of the estate's, the court found.

What's more, because Smith was removed as trustee for cause, the Bankruptcy Code required Smith to be removed as trustee from all other bankruptcy proceedings.

Homestead exceptions are a nice public policy "plus" of bankruptcy law. They attempt to ensure that those filing for bankruptcy will have somewhere to go and lick their financial wounds after the case is finished.

But can the proceeds from selling your home be protected permanently from bankruptcy? The Fifth Circuit says no.

Fifth Circuit: Social Security Benefits Aren't Disposable Income

Social Security benefits are not disposable income that must be disclosed in a Chapter 13 petition, according to a Fifth Circuit Court of Appeals decision on Monday.

The New Orleans-based appellate court rejected a trustee's challenge to a Chapter 13 plan this week, finding that a debtor is not statutorily-required to include Social Security income (SSI) in his projected disposable income calculation.

Fifth Circuit Rules for Debt Collector in FDCPA Appeal

We rarely hear about debt collectors winning Fair Debt Collection Practices Act (FDCPA) cases at the appellate level. Perhaps that's because a debtor prevailing over the big, bad bank is a fitting end to a quixotic mission, whereas the debt collector winning is just ... boring.

But debt collectors love need lawyers, too. If you're one of the ones paying your bills with debt collector revenues, keep reading because the Fifth Circuit Court of Appeals actually ruled that a debt collection letter didn't violate the FDCPA this week.

Lien on Me? Not Without a Sworn Affidavit

Today’s cautionary tale from the Fifth Circuit Court of Appeals should remind lawyers of the most important lesson in the law: Words have meaning.

That means that if you’re going to file a lien on property in a bankruptcy proceeding, your affidavit better include the right language.

Easy enough, right?

In re: Kizzee-Jordan, No. 09-20777

Reversal of Confirmation of Chapter 13 Plan

In In re: Kizzee-Jordan, No. 09-20777, the court reversed the bankruptcy court's order confirming a Chapter 13 plan, holding that a third-party lender who pays a debtor's ad valorem taxes and receives a transfer of the local taxing authority's tax lien under Texas law holds a tax claim protected from modification by 11 U.S.C. section 511 of the Bankruptcy Code.


In re: SCOPAC, No. 09-40307

Bankruptcy Court Erred in Denying "Superpriority" Claim

In In re: SCOPAC, No. 09-40307, creditors' appeal from the district court's dismissal of their appeal for lack of subject matter jurisdiction, where that appeal alleged that the bankruptcy court erred in denying their "superpriority" administrative claim on the bankruptcy estate, the court vacated where the bankruptcy court undervalued the noteholders' priority administrative section 507(b) claim by $29.7 million, and the court erred in not crediting their interest with timber sales proceeds that were received during the bankruptcy, on which they had a lien and priority interest arising from the court's many cash collateral orders.


In re: Kleibrink, No. 07-11190

In In re: Kleibrink, No. 07-11190, a debtor's appeal from a district court's affirmance of a bankruptcy court's ruling that a creditor held an enforceable security interest in a property of his, despite his having received a discharge in an earlier bankruptcy proceeding, the court affirmed the order where the notice given to the creditor did not satisfy the due process standard for notice set forth in Mullane.

Discharge of Debts Denied Based on Fraud, and Criminal Matters

In Reed v. City of Arlington, No. 08-11098, a Chapter 7 bankruptcy case in which debtors omitted a pending $1 million-plus judgment from their sworn statements and bankruptcy filings, the discharge of the debtor's debts is reversed where, to protect the integrity of judicial processes, judicial estoppel barred the trustee from collecting the judgment.

In re: Northlake Dev. L.L.C., No. 09-60743

In re: Northlake Dev. L.L.C., No. 09-60743, a creditor's appeal from the district court's affirmance of the bankruptcy court's decision that certain deeds the creditor held were legal nullities, the court certified the following questions to the Supreme Court of Mississippi:  When a minority member of a Mississippi limited liability company prepares and executes, on behalf of the LLC, a deed to substantially all of the LLC's real estate, in favor of another LLC of which the same individual is the sole owner, without authority to do so under the first LLC's operating agreement, is the transfer of real property pursuant to the deed: (i) voidable, such that it is subject to the intervening rights of a subsequent bonafide purchaser for value and without notice, or (ii) void ab initio, i.e., a legal nullity?