All posts in Chapter 7

UST After Attorney in Riverside in Chapter 7 Cases for Disgorgement

A thank you and tip of the hat to Keith Higginbotham, always looking out for us.

Dear Colleagues!

I came across an interesting UST adversary complaint filed yesterday that alleges improper Ch7 business practices as it relates to “bifurcating Ch7 atty fees between prepetition and post petition” and then “assigning the debt to a collection agency called BK Billing, Inc., to service the debt”.

   The complaint alleges violations of 9th Circuit law as it relates to a novel Ch7 fee arrangement.  My intent is to alert you to a company called BK Billing, LLC.
   Check out:  6:17-ap-01271-MJ  Docket #1

Keith A. Higginbotham
Note from MJH:  The docket states  ”Complaint For Disgorgement Of Fees, Civil Penalties, Sanctions, And Declaratory, Injunctive, And Other Relief Nature Read more…

More on Sundquist: Are Fees Based on Contingency Fee Agreement here Reasonable?

No according to Judge Klein (in 40 pages).

Sundquist v. Bank of America (In re Sundquist) — B.R. — (Bkrtcy, E. D. Cal. Nov, 2017) Klein, J.

Issue:   Is it appropriate to “expunge” an attorney’s lien on the facts here?

Holding:   Yes.  The court here “canceled” the fee agreement between counsel and the debtor on the basis, in part, that fees exceeding $70,000 here were unreasonable.

Judge Christopher Klein

This is a 40 page diatribe excoriating the efforts of debtor’s counsel on behalf of the debtor.  It lays out very nicely however the rules of determining what fees are “reasonable” and how that determination intersects with state law.    Read more…

Can a Corporation file Chapter 7 Without Approval of the Shareholders?

The genesis of this is a post on the cdcbaa list serve.  The answer? – No.

I’m interested in this issue because it will make a great final exam for my Biz Org class next year.  My students can recite in their sleep, “the board of directors makes all consequential decision,” and, the shareholders do little except appoint the board and vote on other “fundamental changes to the corporate structure.”  Liquidating all of the assets of the corp seems to me to be a “fundamental change in the corporate structure.”

Cal Corps Code section 1001 says:

(a) A corporation may sell, lease, convey, exchange, transfer, or otherwise dispose of all or substantially all of its assets when the principal terms are approved by the board, and, unless the transaction is in the usual and regular course of its business, approved by the outstanding shares ( Section 152 ), either before or after approval by the board and before or after the transaction.

The chapter 7 is certainly an “otherwise dispose of” the assets of the corp outside of the ordinary course of business.

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.

Judge Scott Clarkson Affirmed by 9th Circuit – When is a Home Mortgage not a Consumer debt?

Aspen Skiing Company v. Cherrett (In re Cherrett), — F.3d —, (9th Cir. Oct, 2017)

Issue:   Is a loan taken out to buy a place to live necessarily a consumer debt for section 707(b) purposes?

Holding:   No.   It depends on the debtor’s intent when the loan is incurred.

Appeal from BAP, Kirscher, Dunn, Taylor

Bap appeal from order of Judge Scott Clarkson

Judge Morgan Christen, dissent Jacqueline H. Nguyen Read more…

Should ‘No Money Down’ Chapter 7s Be Allowed?

I am quoted by Danny Gill in his Bloomberg Bankruptcy Law Reporter article.  He quotes me saying that I agree that there should be some way to permit bankruptcy attorneys to be paid post-petition for filing a chapter 7 petition and representing the debtor throughout.   The article is here.

“I talk to people all the time who don’t have the money to file a Chapter 7,” M. Jonathan Hayes told Bloomberg Law Oct. 16.  Hayes is a member of Simon Resnik & Hayes in Sherman Oaks, Calif., and has practiced consumer bankruptcy law for 37 years in the Central District of California. Read more…

Should Attorneys Fees in Chapter 7 be Non-Dischargeable – Your Chance to Chime in

This is a post from atty Danny Gill on Facebook.
LOOKING FOR COMMENTS. It has been suggested to the ABI Commission on Consumer Bankruptcy that Congress make attorneys fees for filing a Chapter 7 non-dischargeable, to allow lawyers to be paid over time for filing a 7.  I’m looking for comments on the issue, either for or against that fix or suggesting other ways more very poor people can have access to Chapter 7 with no (or only a little) money down.  If you’re interested write me at Thanks.

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…

Trustee Allowed to Reach Back 10 Years to Avoid a Fraudulent Transfer

Mr. Faucher’s post below re: 10 year clock on IRS debt reminded me of a case wherein a trustee was allowed to reach back 10 years (yes, 10!) to avoid a fraudulent transfer.  How far back is 10 years?  Obama was a junior senator.   A link to my original article published in the Law Journal Newsletter can be found by clicking here. Enjoy!

Nice Tentative from Judge Houle on Converting Case from Chapter 7 to Chapter 13 Postdischarge

On February 28, 2013, Michael & Maricar Santos (“Debtors”) filed a Chapter 7 voluntary petition.  On June 17, 2013, Debtors received a standard discharge.  The Chapter 7 case, however, remained open.

On October 4, 2016, Debtors filed a motion to convert case from Chapter 7 to 13.  On October 12, 2016, Trustee filed his opposition.  On November 2, 2016, Debtors filed a reply.  A hearing on the matter was held on November 9, 2016.  The hearing was continued to allow for additional briefing on the issue whether, and in what circumstances, a Chapter 7 case could be converted to a Chapter 13 post-discharge.  Debtor filed their response on November 18, 2016.  Trustee filed their response on November 29, 2016. Read more…