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The Bankruptcy Court has the inherent power to impose civil contempt as a sanction for a violation of the discharge injunction. 11 U.S.C. §105. Even though these inherent powers derive from civil contempt, courts have fashioned their own standards for violators of the discharge injunction. The majority of circuits applied an objective standard akin to strict liability to discharge injunction violations. But the Ninth Circuit concluded that a “creditor’s good faith belief” that the discharge order “does not apply to the creditor’s claim precludes a finding of contempt, even if the creditor’s belief is unreasonable.” This circuit split resulted in the Supreme Court’s recent opinion in Taggart v. Lorenzen, 139 S. Ct. 1795, 1799 (2019), which rejected both bankruptcy court approaches. Instead, the Supreme Court decided that “[a] court may hold a creditor in civil contempt for violating a discharge order if there is no fair ground of doubt as to whether the order barred the creditor’s conduct.” Id. at 1799. Although this standard appears to be new, it is more than a century old and “brings the old soil” from civil contempt with it.
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By Michael L. Cook
When courts have made important exceptions in the past year, they have either added a gloss on the Judicial Code, corrected lawyers’ errors, filled in statutory gaps, or clarified the relevant statutory language.
By Jay Steinman and Karina Leiter
The steps outlined in this article offer a strategic guide for lenders, empowering them to navigate the complexities of loan workouts and enforcement actions with resilience and foresight.
By Francis J. Lawall and Brenden S. Dahrouge
The Third Circuit recently held in 'In re FTX Trading' that the plain text of Section 1104(c)(2) mandates the appointment of an examiner under the specified conditions set forth. As a result, the FTX decision will carry significant implications for large and medium-sized bankruptcy cases.
By Lawrence J. Kotler and Ryan Spengler
The Central District of California court held that a bankruptcy court’s administration of cannabis-related state court claims against a debtor’s estate is not a violation of the Controlled Substances Act.