Recently in Bankruptcy Law Category

The U.S. Supreme Court weighed in last week on a bankruptcy issue that had come up in a 2010 Third Circuit Court of Appeals Chapter 11 ruling, and the justices didn’t see eye to eye with the Third Circuit.

The Supreme Court ruled, in a unanimous decision, that when setting out a Chapter 11 reorganization plan, debtors may not sell their property free and clear of liens without providing lienholders the opportunity to credit bid.

If you follow our numerous appellate court blogs, you’ll know that immigration appeals and deportation appeals aren’t easy to win.

A Jamaican citizen, Nigel Singh, however, had found success when the Third Circuit Court of Appeals overturned his deportation order. The Board of Immigration Appeals had ordered Singh’s deportation after he had been found guilty of bankruptcy perjury. But the Third Circuit Court of Appeals found that the government failed to meet its burden before the BIA.

The Third Circuit Court of Appeals addressed the issue of Medicaid this week in a lawsuit discussing a federal law preventing Pennsylvania from placing liens against the properties of living Medicaid beneficiaries, writes the Pittsburg Tribune Review.

The Court of Appeals ruled that the law doesn`t prevent the state from collecting medical costs from the money beneficiaries receive from lawsuits.

In the current economic climate, there have been many debt collection scams. Furthermore, the line between fair debt collection practices and unlawful ones has been blurred and many law firms and debt collection agencies find themselves running afoul of the Fair Debt Collection Practices Act.

That's what happened in this Third Circuit Court of Appeals case.

The Kay Law Firm learned the hard way that fast cash isn't always the best kind of cash. The Kay Law Firm is a debt collection law firm within the Third Circuit. The law firm sent a letter to a debtor on January 11, 2009. The letter was sent to collect a debt on a Washington Mutual home equity loan.

Sullivan v. DB Inv. Inc., 08-2784, concerned a challenge to the district court's certification of two putative classes and an order overruling objections to the settlement fund of $295 million in plaintiffs' suit under sections 1 and 2 of the Sherman Act, and under the antitrust, consumer protection and unjust enrichment laws of all fifty states, against the De Beers corporation for fixing prices in the wholesale market for gem-quality diamonds.  In vacating the decision and remanding the matter, the court held that the district court abused its discretion in certifying the settlement classes under Rule  23(b)(3) both because the indirect purchaser class as currently defined is overbroad and because the district court's certification order did not sufficiently identify those claims and issues subject to the class treatment.  The court also held that the district court abused its discretion in certifying the settlement class under Rule 23(b)(2).

In re Visteon Corp., 10-1944, concerned a union's challenge to the district court's order affirming a bankruptcy court's order permitting defendant-employer to terminate provision of retiree health and life insurance benefits without complying with 11 U.S.C. section 1114.  In reversing the judgment, the court held that the rule of statutory construction allowing a court to ignore the plain language of a statute when literal interpretation results in absurdity is entirely inapplicable, and here, a literal interpretation of section 1114 reveals a remedial and equitable statutory scheme that, consistent with Congress' concerns when enacting the RBBPA, attempts to prevent the human dimension of terminating retiree benefits from being obscured by the business of bankruptcy.

Ferren C. v. Sch. Dist. of Philadelphia, 09-1587, concerned a challenge to the district court's various orders against the defendant in plaintiff's suit challenging the administrative decisions of a hearing officer and appeals panel, that the school district was not required to provide plaintiff with an IEP during the three-year compensatory period.  In affirming the district court's judgment ordering the school district, for the duration of plaintiff's three years of compensatory education, to annually reevaluate plaintiff, provide her with annual IEPs, and serve as her Local Education Agency, the court held that the district court had equitable power under the IDEA to grant relief of this nature and the relief furthers the purposes of the IDEA.

Related Resourcces:

• Full text of Sullivan v. DB Inv. Inc
• Full text of In re Visteon Corp
• Full text of Ferren C. v. Sch. Dist. of Philadelphia

Dwumaah v. Attorney General, 09-4140, concerned a petition for review, by a citizen of Ghana, of a final order of removal by the BIA.  In denying the petition, the court held that substantial evidence supports the finding that DHS met its burden of proving that the petitioner falsely claimed citizenship on at least two occasions in connection with federal student loan applications.

In re Goody's Family Clothing Inc., No. 09-2168, concerned a challenge to the district court's affirmance of the Bankruptcy Court's decision to award "stub rent" as an administrative expense to three of the debtors' landlords in Chapter 11 Bankruptcy proceedings.  In affirming the decision  for essentially the same reasons given by the district court, the court held that section 365(d)(3) does not supplant section 503(b) and the landlords are entitled to "stub rent" as an administrative expense.

Related Resources:

• Full text of Dwumaah v. Attorney General
• Full text of In re Goody's Family Clothing Inc

Espinosa-Cortez v. US Attorney General, No. 08-4170, concerned a Colombian national's petition for review a BIA's affirmance of the IJ's denial of his application for asylum and related relief, on the ground that he had not shown that he would be persecuted on account of actual or imputed political beliefs if he were removed to Colombia.  In granting the petition, the court held that the BIA's conclusion that the Fuerzas Armadas Revolucionarias de Colombia's (FARC) threats were not centrally motivated by a political opinion the guerrillas imputed to petitioner is not supported by substantial evidence in the record.   

In In re: Grossman's Inc., No.09-1563, In Chapter 11 proceedings, the Third Circuit faced a challenge to the district court's affirmance of the Bankruptcy Court's holding that the plaintiffs' tort claims, arising from exposure to asbestos contained in home improvement products sold by the debtor, were not "claims" under 11 U.S.C. section 101(5).

In reversing the decision of the district court, the court first held that the Frenville accrual test is overruled as it imposes too narrow an interpretation of a "claim" under the Bankruptcy.  Next, the court held tha a "claim" arises when an individual is exposed pre-petition to a product or other conduct giving rise to an injury, which underlies a "right to payment" under the Bankruptcy Code, and here, plaintiffs' claims arose sometime in 1977, the date the plaintiff alleged that debtor's product exposed her to asbestos.  Thus on remand, the court stated that whether a particular claim has been discharged by a plan of reorganization depends on factors applicable to the particular case and is best determined by the appropriate bankruptcy court or the district court.  

Related Resources:

• Full text of Espinosa-Cortez v. US Attorney General
• Full text of In re: Grossman's Inc.

In In re: Exide Technologies, No. 081872, the Third Circuit faced a challenge to the district court's affirmance of the Bankruptcy Court's grant of the debtor's motion to reject an agreement to sell substantially all of its industrial battery business, on the ground that the agreement was an executory contract, subject to rejection under 11 U.S.C. section 365(a), and that rejection terminated the debtor's obligations under it. 

As stated in the decision: "The Bankruptcy Court here failed to properly measure whether either party had substantially performed.  Our inspection of the record, however, reveals that the inferences are clear that EnerSys has substantially performed.  Applying Hadden's balancing test, EnerSys's performance rendered outweighs its performance remaining and the extent to which the parties have benefitted is substantial.  Specifically, EnerSys has substantially performed by paying the full $135 million purchase price and operating under the Agreement for over ten years."

Thus, in vacating the judgment and remanding the matter, the court held that the agreement is not an executory contract because it does not contain at least one ongoing material obligation for the other party, and because the agreement is not an executory contract, the debtor cannot reject it.   

Related Resource:

• Full text of In re: Exide Technologies