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It is one thing to hold a claim. It is another to obtain a judgment. And as we all know, obtaining a judgment does not assure actual recovery on the claim. Once a plaintiff obtains a judgment, it can pursue execution proceedings to encumber, seize, and liquidate a defendant’s property to satisfy the judgment amount. Often the defendant’s conduct raises concerns that assets that would otherwise be available to satisfy the judgement will be transferred or hidden — often beyond the jurisdiction of a court — to frustrate collection of the judgment. That being said, the well-established general rule is a plaintiff cannot attach or seize the defendant’s assets prior to obtaining a judgment. So, are there exceptions to the general rule against prejudgment attachment that may allow a plaintiff to obtain injunctive relief against a defendant freezing the defendant’s assets prior to the outcome of the litigation? This issue was recently considered by Judge Craig T. Goldblatt of the U.S. Bankruptcy Court for the District of Delaware in Miller v. Mott (In re Team Systems International), Adv. No. 23-5004-CTG (Case No. 22-10066 (CTG)) (Jan. 31, 2023). In that case, after reviewing an unusual factual background replete with issues regarding document “redactions” and other irregularities, the court issued a preliminary injunction freezing the defendants’ assets pending the conclusion of the fraudulent transfer litigation.
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Appellate Courts Skeptical About Bankruptcy Court Sanctions
By Michael L. Cook
Recent appellate decisions reflect a distaste for appeals from bankruptcy court sanction orders. A split Fourth Circuit even refused to hear such an appeal. Other courts tend to limit sanctions or, alternatively, accept a bankruptcy judge’s findings under a stringent “abuse of discretion” standard.
Supreme Court’s Rejection of Purdue Pharma Settlement Redefines Releases In Chapter 11
By Angelo Castaldi
The U.S. Supreme Court has issued its most anticipated bankruptcy decision in recent memory. In a 5-4 decision entered June 27, the Supreme Court struck down the nonconsensual third-party releases. Writing for the Court, Justice Neil Gorsuch ruled that nothing in the Bankruptcy Code authorized the nonconsensual release or discharge of claims of opioid victims against the Sacklers, who were not debtors themselves.
Ninth Circuit: Debt In Asset Case Is Nondischargeable If Debtor Fails to Properly Schedule the Debt
By Lawrence J. Kotler and Geoffrey A. Heaton
In a recent published decision, the U.S. Court of Appeals for the Ninth Circuit addressed a previously unresolved question in that circuit: whether a debtor’s failure to properly schedule a debt in an “asset case” renders the debt nondischargeable.
Is the Rule Preventing Bankruptcy Judges from Appointing Special Masters Outdated?
By Mark B. Conlan and Noel L. Hillman
Rule 9031 of the Federal Rules of Bankruptcy Procedure prevents all bankruptcy judges, and, if broadly interpreted, any federal judge hearing bankruptcy cases and proceedings, from appointing special masters. The rule has not been amended since its adoption in 1983. It is outdated and should be repealed or amended to accord with the reality of today’s complex Chapter 11 cases.
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