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The U.S. Supreme Court released its latest orders list Friday, granting certiorari in four cases. And unlike the typical list of snoozers, this list contained a case of national importance: Toca v. Louisiana.

Toca is all about clarifying the Court's Miller v. Alabama decision -- the one from 2012 where the Court declared that mandatory minimum life sentences for juvenile offenders were cruel and unusual under the Eighth Amendment. Since then, federal and state courts and legislatures have split over whether that decision applied retroactively to past convictions (and therefore required resentencing).

Besides that massive case, the court granted three other petitions: two bankruptcy cases and a reexamination of patent royalty precedent.

Have you ever stayed up late at night, unable to sleep, wondering if maybe, just maybe, your inherited IRA assets might be exposed to creditors in bankruptcy? Don't worry, you are not alone.

Or perhaps, maybe, just maybe, you thought to yourself: Pomegranate juice? Coca Cola, dag nabbit, there ain't hardly any juice in this here drink at all! And instead of lying there, disillusioned over the lies of a corporate behemoth, you sought to strike back. Have you ever wondered if you could, perhaps using the Lanham Act?

Were you one of those people who loved logic games? I was.

As an LSAT teacher, I did every logic game ever released, including the weird non-standard games from the 1980s. Despite my affinity for logic games, however, today's batch of opinions was no fun at all: pluralities, partial concurrences and dissents, and one decision sure to titillate Court-watchers: a unanimous opinion dealing with the bankruptcy courts' ability to hear "core" and "non-core" matters as defined in Stern. (And no, there won't be a quiz on that last part.)

But it wasn't all mind-numbing news -- there were notable denials, interesting cross-ideological splits in the Court, and more. Here's the quick version of the day's news:

Earlier this week, we took a look at the Monsanto case, which had major implications for patent law and our nation’s farming industry. We also hinted at the outcome of the Court’s two other unanimous decisions for this week, one dealing with bankruptcy and defalcation, and the other dealing with a shady tow truck lot and the limits of federal law preemption.

Defalcation Defined

It is undisputed that Randy Bullock was not acting in bad faith when he violated his fiduciary duty as trustee to family life insurance trust. On three occasions, he borrowed funds from the trust, and each time, he paid the trust back — with interest. Nonetheless, his brothers sued and won a judgment against him. He sought to discharge that debt in bankruptcy. The code, however, prevents discharge of debts resulting from defalcation.


Credit Bids and Cramdown Provisions: Court Rules in RadLAX

Secured creditors had a big win in the Supreme Court this week. The Court ruled 8-0 Tuesday that debtors may not obtain confirmation of a Chapter 11 cramdown plan that provides for the sale of collateral free and clear of the bank's lien, but does not permit the bank to credit-bid at the sale.

In the opinion, Justice Antonin Scalia outlined the Bankruptcy Code's three alternative standards for determining if a Chapter 11 plan is "fair and equitable" to an objecting class of secured creditors. The alternatives are:

SCOTUS: Chapter 12 Tax Theory on Selling the Farm Buys the Farm

The Supreme Court ruled Monday that bankrupt farmers owe capital gains taxes from a bankruptcy sale, reports The Associated Press.

In a 5-4 opinion written by Justice Sonia Sotomayor, the Court held that the federal income tax liability resulting from a post-petition farm sale is not “incurred by the estate” under 503(b) of the Bankruptcy Code, and is neither collectible nor dischargeable in the Chapter 12 plan.

Ransom v. FIA Card Servs., N.A., No. 09-907

Car-Ownership Deduction Disallowed

In Ransom v. FIA Card Servs., N.A., No. 09-907, a petition for Chapter 13 bankruptcy relief, the Supreme Court affirmed the Ninth Circuit's affirmance of the Bankruptcy Appellate Panel's order denying the confirmation of the debtor's proposed plan, where a debtor who does not make loan or lease payments may not take the car-ownership deduction.

Schwab v. Reilly, No. 08-538, involved a Chapter 7 bankruptcy trustee's appeal from the Third Circuit's affirmance of the bankruptcy court's order denying the trustee permission to auction certain equipment so that the debtor could receive the money she claimed exempt and the estate could distribute the remaining value to creditors.  The Court reversed, holding that because debtor gave "the value of [her] claimed exemption[s]" on Schedule C dollar amounts within the range the Code allows for what it defines as the "property claimed as exempt," the trustee was not required to object to the exemptions in order to preserve the estate's right to retain any value in the equipment beyond the value of the exempt interest.

As the Court wrote:  "When a debtor files a Chapter 7 bankruptcy petition, all of the debtor's assets become property of the bankruptcy estate, see 11 U. S. C. 541, subject to the debtor's right to reclaim certain property as "exempt," 522(l). The Bankruptcy Code specifies the types of property debtors may exempt, 522(b), as well as the maximum value of the exemptions a debtor may claim in certain assets, 522(d). Property a debtor claims as exempt will be excluded from the bankruptcy estate "[u]nless a party in interest" objects. 522(l)."

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Disposable Income Calculation Issue in Bankruptcy Matters

Hamilton v. Lanning, No. 08-998, concerned an objection by a Chapter 13 bankruptcy trustee to confirmation of debtor's plan because the proposed payment amount was less than the full amount of the claims against debtor, and because she had not committed all of her "projected disposable income" to repaying creditors.  The Supreme Court affirmed the Tenth Circuit's affirmance of the bankruptcy court's rejection of the objection, holding that, when a bankruptcy court calculates a debtor's projected disposable income, the court may account for changes in the debtor's income or expenses that are known or virtually certain at the time of confirmation.

As the Court wrote: "Chapter 13 of the Bankruptcy Code provides bankruptcy protection to "individual[s] with regular income" whose debts fall within statutory limits. 11 U. S. C. 101(30), 109(e). Unlike debtors who file under Chapter 7 and must liquidate their nonexempt assets in order to pay creditors, see 704(a)(1), 726, Chapter 13 debtors are permitted to keep their property, but they must agree to a court approved plan under which they pay creditors out of their future income, see 1306(b), 1321, 1322(a)(1), 1328(a). A bankruptcy trustee oversees the filing and execution of a Chapter 13 debtor's plan. 1322(a)(1); see also 28 U. S. C. 586(a)(3)."

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United Student Aid Funds, Inc. v. Espinosa, No. 08-1134

United Student Aid Funds, Inc. v. Espinosa, No. 08-1134, involved an appeal from a bankruptcy court order in a Chapter 13 proceeding, enforcing the confirmation of a student loan debtor's plan and directing creditors to cease any collection efforts. 

The Supreme Court affirmed the Ninth Circuit's judgment reversing the district court's order in favor of student loan creditor, holding that 1) creditor's actual notice of the filing and contents of the debtor's plan more than satisfied its due process rights, and thus debtor's failure to make the required service did not entitle creditor to relief under Fed. R. Civ. P. 60(b)(4); 2) although the bankruptcy court's failure to find undue hardship in this case was a legal error, the confirmation order was enforceable and binding on creditor because it had actual notice of the error and failed to object or timely appeal; but 3) the Ninth Circuit erred in holding that bankruptcy courts must confirm a plan proposing the discharge of a student loan debt without an undue hardship determination in an adversary proceeding unless the creditor timely raises a specific objection.

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