Ninth Circuit Extends “Barton” Doctrine to Bar Suit Against Creditors’ Committee Members Without Authorization from the Bankruptcy Court

In Blixseth v. Brown (In re Yellowstone Mountain Club), 841 F.3d 1090 (9th Cir 2016), the Ninth Circuit extended the Supreme Court’s holding in Barton v. Barbour, 104 U.S. 126 (1881), requiring a plaintiff to first obtain the bankruptcy court’s permission before suing a court appointed officer in another court, to apply to suits against the members… Continue reading Ninth Circuit Extends “Barton” Doctrine to Bar Suit Against Creditors’ Committee Members Without Authorization from the Bankruptcy Court

9th CIRCUIT HOLDS ABSOLUTE PRIORITY RULE APPLIES IN INDIVIDUAL DEBTOR CHAPTER 11 CASES

In a major development affecting individual chapter 11 bankruptcy debtors, the 9th Circuit Court of Appeals has overruled earlier case law and ruled that the “absolute priority rule” under 11 U.S.C. § 1129(b)(2)(B)(ii) continues to apply to individual debtors following the 2005 BAPCPA amendments to the Bankruptcy Code.  See David K. Zachary v. California Bank… Continue reading 9th CIRCUIT HOLDS ABSOLUTE PRIORITY RULE APPLIES IN INDIVIDUAL DEBTOR CHAPTER 11 CASES

Ninth Circuit Rules that Deprizio Waivers Are Still Relevant, at Least to a Guarantor

On May 6, 2015, in Stahl v. Simon (In re Adamson Apparel, Inc.), 2015 US App. LEXIS 7508, the Ninth Circuit Court of Appeals became the first circuit level court to hold that an insider guarantor’s waiver of its indemnity, exoneration, contribution, and indemnity rights absolves the insider guarantor from potential preference liability for payments made to a… Continue reading Ninth Circuit Rules that Deprizio Waivers Are Still Relevant, at Least to a Guarantor

Directors Hit With $2.3 Million Judgment for Failing to Replace Incompetent Managers

Last week, the Third Circuit Court of Appeals upheld a $2.3 million jury verdict in favor of a Creditors’ Committee, finding that the directors of a failed Pittsburgh nursing home had breached their fiduciary duties to the corporation’s creditors by failing to remove the home’s administrator and chief financial officer when their mismanagement became apparent.  Official… Continue reading Directors Hit With $2.3 Million Judgment for Failing to Replace Incompetent Managers

FRBP 7004(e) Amended to Require Service of a Summons Within Seven Days of Issuance

Effective December 1, 2014, Federal Rule of Bankruptcy Procedure 7004(e) was amended to require service of a summons in an adversary proceeding within seven days of its issuance.  This cuts in half the previously allowed 14-day time period.  Defendants still have 30 days from issuance of the summons to respond to the complaint. Prior to the change, defendants often had less… Continue reading FRBP 7004(e) Amended to Require Service of a Summons Within Seven Days of Issuance

Newspaper Notice to Unknown Creditors: Still the Only Process that is Due

When our firm filed the first Catholic diocese bankruptcy case in 2004, the debtor provided notice of the claim process to holders of potential future claims by publishing advertisements in various newspapers around the country.  For decades, bankruptcy debtors and other parties facing potential future tort claim liability have relied primarily on newspapers to provide “publication” notice to claimants… Continue reading Newspaper Notice to Unknown Creditors: Still the Only Process that is Due