All items from Bankruptcy Law Community Blogs

Supreme Court Sets Defalcation Bar at Gross Recklessness under Section 523(a)(4)

In the only bankruptcy case pending before it this term,
a unanimous Supreme Court has ruled that the archaic term
"defalcation" used in 11 U.S.C. Sec. 523(a)(4) requires 
knowledge of, or gross recklessness in respect to, the
improper nature of the relevant fiduciary behavior
complained of. Bullock v. BankChampaign, No.
11-1518 (5/13/13), Slip Op., p.1, which can be found here. While
the case represents a setback for the creditor in the specific case, the
judicial hairsplitting engaged in by the Court ensures that trial courts will
continue



From Bankruptcy Law Community Blogs
Posted 6 days 4 hours ago

The Ninth Circuit Holds that Bankruptcy Courts Have Authority to Recharacterize Debt as Equity

On April 30, 2013, the United States Court of Appeals for
the Ninth Circuit held that the bankruptcy court has authority to
recharacterize as equity, rather than debt, advances of funds made purportedly
as a loan to the recipient prior to its bankruptcy. In re Fitness Holdings
International, Inc., --- F.3d ----, 2013
U.S. App. LEXIS 8729 (9th Cir. 2013) [an enhanced version of this opinion is available to lexis.com
subscribers]. The Ninth Circuit, in reversing the district court,
held that the fact



From Bankruptcy Law Community Blogs
Posted 6 days 23 hours ago

U.S. Supreme Court Remands Bankruptcy Defalcation Case, Says Higher Standard Needed

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on
May 13 unanimously vacated and remanded a case involving a bank's claim that a
debtor who had acted as trustee for his father's insurance trust was guilty of
defalcation for making loans to himself during the time he had control of the
trust, ruling that the 11th Circuit U.S. Court of Appeals needed to review the
case to determine if it should apply the higher standard of "defalcation"
outlined by the high court (Randy Curtis Bullock v. BankChampaign, No.
11-1518, Chapter 7, U.S. Sup.)
(lexis.com
subscribers may



From Bankruptcy Law Community Blogs
Posted 1 week 1 day ago

State Taxes and Bankruptcy – Does the Court Have Jurisdiction?


by Fred
Witt, Co-author, Sheinfeld, Witt & Hyman, Collier on Bankruptcy Taxation
(LexisNexis).   
and
David Elrod, Shareholder, Elrod, PLLC, Dallas, Texas
The
views expressed are those of the authors alone.
Introduction
In addition to possible disputes over federal taxes owed
to the IRS, debtors in a title 11 case must also consider disputes with state
and local jurisdictions over state and local taxes. The Bankruptcy Code vests
bankruptcy courts with broad jurisdiction to determine the amount or legality
of any tax.[1]
However, two recent cases have declined jurisdiction



From Bankruptcy Law Community Blogs
Posted 1 week 1 day ago

Insurance Coverage for Ponzi Scheme Losses?

It sounds like a good idea: Insure against losses from investing
in a Ponzi scheme. Insurance policies, including homeowner's policies, can
provide coverage from losses from fraud, embezzlement or forgery. But does it
work to provide compensation for losses in a Ponzi scheme?
Last year, the Second Circuit affirmed a district court's
dismissal of a Madoff customer's complaint against a homeowners policy, but not
for the reasons you might expect. Horowitz
v. American International Group, Inc., 498 Fed. App'x 51 (2d Cir. 2012) [



From Bankruptcy Law Community Blogs
Posted 1 week 6 days ago

Video: Kathy Bazoian Phelps Interviewed on the Not So Legal Show

Kathy Bazoian Phelps, partner at Diamond
McCarthy LLP, Ponzi
scheme blogger, and coauthor of the Ponzi Book, was recently interviewed by attorney
Stephanie Cohen of The
Not So Legal Show. You can watch the interview below:
(Please visit the site to view this media)
For
more information about LexisNexis products and solutions connect with us
through our corporate site.



From Bankruptcy Law Community Blogs
Posted 2 weeks 7 hours ago

April 2013 Ponzi Scheme Roundup

April was a remarkably busy month for Ponzi scheme news,
especially in India. Here is a summary of stories that were reported this
month. Be sure to read the international news, because Ponzi schemes are not
just limited to the U.S. Please feel free to post comments about these or other
Ponzi schemes that I may have missed. And please remember that I am just
relaying what's in the news, not writing or verifying it.
Gary
Thomas Armitage, 62, was sentenced to 10 years in connection
with a plea agreement regarding a $250 million real estate and investment Ponzi
scheme that defrauded about 2,000 investors. Armitage's co-defendant, James Stanley Koenig



From Bankruptcy Law Community Blogs
Posted 2 weeks 4 days ago

"Girls Gone Wild" Chapter 11 Case - [Insert Joke Here]

GGW LLC and its affiliates ("GGW"), which produce and
distribute the soft core pornography videos known as "Girls Gone Wild", recently
filed for relief under chapter 11 of the Bankruptcy Code. The filing
follows years of legal troubles for the company's founder, Joe Francis,
including criminal charges of racketeering and tax evasion, and civil
litigation against Steve Wynn's Mirage Resorts



From Bankruptcy Law Community Blogs
Posted 2 weeks 5 days ago

Duane Morris Alert: Second Circuit Establishes Relevant Time Period for "Center of Main Interests" Determination Under Chapter 15 of the Bankruptcy Code

The Second Circuit's decision is significant in
international insolvency cases because wind-down activities conducted in
advance of a foreign insolvency proceeding can impact the center of main
interests analysis.
In Morning Mist Holdings Limited v. Krys (In re Fairfield
Sentry Limited), 2013 U.S. App. LEXIS 7608, Case No. 11-4376, (2d Cir.
April 16, 2013) [



From Bankruptcy Law Community Blogs
Posted 3 weeks 1 day ago

Supreme Court Will Not Hear Equitable Mootness Doctrine Appeal By Debenture Trust

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on
April 29 denied a petition for certiorari in which a debenture trust
company argued that the Second Circuit U.S. Court of Appeals inappropriately
applied the doctrine of equitable mootness in affirming a bankruptcy court's
decision that overruled its objections to the reorganization plan of Charter
Communications Inc. (Law Debenture Trust Co. v. Charter Communications Inc.,
No. 12-847, Chapter 11, U.S. Sup.) (lexis.com subscribers may



From Bankruptcy Law Community Blogs
Posted 3 weeks 1 day ago