Bankruptcy

The Third Circuit recently took a "pragmatic approach" when affirming lower court orders denying a stay of bankruptcy settlement distributions pending appeal. After holding that the district court's "stay denial order" was "final" for jurisdictional purposes, it also confirmed "the applicable standard of review" on motions for stays pending appeals.

Voluntary Turnover or Face Contempt Lessors who repossess property immediately prior to a lessee bankruptcy filing may be required to return such property or face sanctions by the bankruptcy court. Federal courts are currently split on the issue of whether the lessor must voluntary surrender property seized pre-petition or may hold such property until such time as the debtor seeks, and obtains, an order of turnover.

The U.S. Court of Appeals for the Fourth Circuit recently held that a debt incurred as a result of a willful and malicious injury may nevertheless be dischargeable notwithstanding the provisions of 11 U.S.C. Section 523(a)(6).

A Tension Between §§363(f) and 365(h) How do bankruptcy judges resolve the competing desires of buyers and tenants? Must buyers bid for property knowing that tenants might have the right to stay if their leases are rejected? Are tenants in jeopardy that they might have to move elsewhere to live or work?

The Office of U.S. Trustee is known among practitioners as the "watchdog" of the bankruptcy process. To fund the U.S. Trustee, Chapter 11 debtors must pay quarterly fees. Following a recent substantial increase to the U.S. Trustee fee schedule, the U.S. Bankruptcy Court for the Eastern District of Virginia found the amended fee schedule to be unconstitutional because it was being applied nonuniformly to Chapter 11 debtors around the country.

Lessors who repossess property immediately prior to a lessee bankruptcy filing may be required to return such property or face sanctions by the bankruptcy court. Federal courts are currently split on the issue of whether the lessor must voluntary surrender property seized pre-petition or may hold such property until the debtor obtains an order of turnover.

Mission Product Holdings, Inc. v. Tempnology, LLC The question is whether a debtor's rejection of its agreement granting a license "terminates rights of the licensee that would survive the licensor's breach under applicable nonbankruptcy law."

With increasing frequency, Chapter 7 trustees are looking to insolvent parents as well as colleges and universities to avoid and recover for estate creditors payments made by insolvent debtors for the benefit of the debtors' dependents. These cases are premised on the theory that the tuition payments being made by insolvent parents for the benefit of their children are avoidable as constructively fraudulent transfers because the parents do not receive reasonably equivalent value in exchange for the payment of such tuition. Courts are divided as to whether the payment of a child's tuition provides reasonably equivalent value to the insolvent parents.