All posts in Chapter 11

Notifying the State Court of the Automatic Stay

More stuff I didn’t know.  A person on the California Bankruptcy Specialists listserve complained that the Superior Court in Orange wanted him to pay a first appearance fee in order to file a Notice of Automatic Stay.  A tip of the hat to Frank X. Ruggier for his response, ”If you haven’t appeared, it is the other parties responsibility to file Notice of Stay.”

Rule 3.650(a) of the California Rules of Court requires the party who requested or caused a stay of the proceedings to notify the court of its existence, unless that party has not appeared or is not subject to the jurisdiction of the court, in which case the plaintiff in the pending action must immediately notify the court of the stay.  Therefore, if you or your assignee commenced a civil action to recover attorney’s fees and/or costs from the client, and the clients has not appeared in the action, it is the responsibility of you or your assignee to notify the court of the automatic stay.  Judicial Council Form CM-180 has been adopted for mandatory use in giving notice of a stay of proceedings, and a copy is attached for your use.

Penthouse Global Media Files Chapter 11

U.S. Bankruptcy Court Central District of California (San Fernando Valley) Bankruptcy Petition #: 1:18-bk-10098-MB

Assigned to: Martin R. Barash Chapter 11
Date filed:   01/11/2018


Debtor Penthouse Global Media, Inc. 8944 Mason Ave. Chatsworth, CA 91311 LOS ANGELES-CA Tax ID / EIN: 47-2601335 represented by Michael H Weiss Weiss & Spees 1925 Century Park E Ste 650 Los Angeles, CA 90064 424-245-3100 Fax : 424-245-3101 Email:

Supreme Court Rejects Petition in Sunnyslope

This morning buried in the 45 page listing of Supreme Court Orders is the Order denying cert in the 9th Circuit en banc Sunnyslope case.  The Order List is here.  I thought they might take it.  It is not terribly complicated and the case discusses trying to reconcile the Supreme Court decision in Associates Commercial Corp. v. Rash with the facts in Sunnyslope.  My posting on Sunnyslope is here.   Prof. Dan Schechter says the 9th Circuit was “shockingly wrong.”  

Vendor’s Right to Reclaim

Put this in the category of “stuff I didn’t know.”  I knew that vendors have a right to reclaim goods from an entity that files a bankruptcy petition.  I thought it was goods shipped within 20 days of the petition – typical sort of right.

There are two code sections that deal with this issue.

Section 503(b)(9):  A vendor has an administrative claim for “the value of any goods received by the debtor within 20 days before the date of commencement of a case under this title in which the goods have been sold to the debtor in the ordinary course of such debtor’s business.”  This is really nice.  Read more…

The Chapter 13 Rights and Responsibilities Agreement (RARA) Form Allows For What?!

When the Law Offices of M. Jonathan Hayes merged with Simon & Resnik in 2012 (has it really been 5 years!?) I began to work exclusively on petitions filed under my beloved chapter of the Bankruptcy Code, 11.  I recently began to again work on Chp. 13 cases, albeit on a fairly limited basis, and I am continually amazed at the differences between these two most popular reorganizing chapters of the code.

Take a look at the “no-look” fee form we use here in the Central District, the Rights and Responsibilities Agreement between Chapter 13 Debtors and their Attorneys (“RARA”) [court form F3015-1.7.RARA], specifically pages 5-6 (I have added emphasis):

The guidelines in this district for payment of costs incurred in performing the services described in bold face type in this agreement (“Included Costs”) and attorneys’ fees in chapter 13 cases without a detailed fee application provide for the following maximum Included Costs and fees for the services described in this agreement in bold face type (that is, the services described on pages 3 through 5 of this agreement)…

Other than the initial retainer, the attorney may not receive fees directly from the Debtor prior to confirmation. All other fees due through confirmation shall be paid through the plan unless otherwise ordered by the court. Read more…

Is Continuance of Hearing on MSJ a Violation of the Automatic Stay?

From the California Bankruptcy Specialists listserve:

Question:  Is it a violation to continue a hearing on a motion for summary judgment if a notice of stay is given to the Court before the hearing on the motion for summary judgment?

Answer from Wayne Silver, Santa Clara:

Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210 (9th Cir. 2002)
Under § 362(a), the prohibition against continuation of judicial actions requires that the action be automatically dismissed or stayed, and not merely that it not be pursued.

Toys R Us Files Chapter 11

U.S. Bankruptcy Court
Eastern District of Virginia (Richmond)
Bankruptcy Petition #: 17-34665-KLP

Assigned to: Keith L. Phillips
Chapter 11

Date filed:   09/19/2017
Deadline for filing claims (govt.):   03/19/2018


Toys R Us, Inc.
One Geoffrey Way
Wayne, NJ 07470
Tax ID / EIN: 22-3260693

represented by Peter J. Barrett
Kutak Rock L.L.P.
901 East Byrd Street
Suite 1000
Richmond, VA 23219-4071
Fax : 804-783-6192

Prof. Dan Schechter Comments on Sunnyslope – Says Decision is “Shockingly Wrong!”

Below are the comments of Prof. Dan Schechter (from my alma mater, Loyola Law) to the 9th Circuit’s en banc ruling in In re Sunnyslope Housing Ltd. Partnership, 818 F.3d 937 (9th Cir. 2017).  The due date for the petition for cert is now September 22, 2017.  The bank’s attorney is Craig Goldblatt from the Wilmer Hale firm in Washington DC.

My thoughts on why the 9th Circuit got Sunnyslope right are here, here and here.   The en banc decision is here.

Prof. Schechter commented on the Insolvency Law e-Bulletin:

AUTHOR’S COMMENT: This decision is shockingly wrong.  If the lender in this case seeks and obtains certiorari (a big “if”), I predict reversal by the Supreme Court. (As long as I am making rash predictions, I also predict a 6-3 decision, with Justice Breyer joining the majority.) Read more…

9th Cir En Banc Gets It Right in Sunnyslope

The 9th Circuit en banc panel has reversed the three judge panel in Sunnyslope thankfully.  The issue was how to value a building that had restrictive covenants that reduced the value of the property to the debtor.  The en banc panel said that the words in section 506(a) that the value is “determined in light of the purpose of the valuation and of the proposed disposition or use of such property,” have meaning.  The previous panel and the dissent to the en banc ruling tried to squeeze the Supreme Court ruling on valuation of a truck in Rash into the valuation of a building with affordable care covenants.

It took me a while to understand the Rash argument.  I had a hard time getting past what seemed to be the obvious and straight forward language of the code.   Read more…

Here comes the split re: trustee reach back for 10 years!

The circuit split starts!  Following up on my post below, this 10 year reach-back period for trustees is starting to garner some traction!  Judge Pappas, one of the nicest and astute judges I have met, recently issued an extremely thorough 76-page opinion siding with the Florida bankruptcy judge that allowed the trustee to step in the shoes of the IRS and reach back much farther than the 4-year limitation to avoid a fraudulent transfer.

I love it when courts cite nullum tempus occurrit regi meaning “no time runs against the king” (gives me goosebumps) which implies that the United States (i.e. IRS) is not bound by state statutes of limitation in enforcing its rights.

Read more…