All items from Michigan Bankruptcy Blog

Avoidance Actions Are Not Property of Estate That the Trustee Can Sell Pursuant to § 363(b)

The Bankruptcy Court of the Western District of Michigan recently denied a Trustee’s Motion to Sell Avoidance Actions pursuant to 11 U.S.C. 363(b).1 The Trustee’s Motion sought authority to sell potential causes of actions under Chapter 5 of the Bankruptcy Code, as the estate had limited resources to pursue the actions. The Court noted that the Sixth Circuit has not decided the issue of whether a Bankruptcy Trustee has authority to sell avoidance actions.
The real issue before the Court was whether an avoidance action is “property of the estate” given a Trustee has authority to sell property of the estate pursuant to § 363(b). The Court rejected the Trustee’s argument that avoidance actions are included within property of the estate. Read More ›
Tags: Western District of Michigan



From Michigan Bankruptcy Blog
Posted 2 weeks 11 hours ago

New Claims Transfer Fee Takes Effect May 1, 2013

Effective May 1, 2013, the Bankruptcy Courts for the Western and Eastern Districts of Michigan will begin charging a new fee of $25 for each claim transferred. The purpose of the fee, as stated by the Judicial Conference Committee, relates to the number of claims transferred and the impact they have on the workload of the Bankruptcy Courts, including Court time and resources.
The fee will be assessed upon the filing of the claim transfer, regardless of who files the claim transfer. The $25 fee will be charged for each individual claim transfer, and it will also apply to partial claims transfers.

Tags: Eastern District of Michigan, Western District of Michigan



From Michigan Bankruptcy Blog
Posted 5 weeks 5 days ago

Fame as an asset: Will Casey Anthony’s Chapter 7 bankruptcy case preclude future book and movie deals?

In re Casey Marie Anthony, Bankr. M.D. Fla., Case No. 8:13-bk-00922-KRM
Although this blog typically focuses on Michigan bankruptcy cases, last week’s Chapter 7 filing by Casey Anthony raises interesting questions about the impact of bankruptcy on public figures.
Casey Anthony held the national spotlight for nearly three years after being charged with murdering her two-year-old daughter, Caylee.  Anthony initially alleged that Caylee was kidnapped by her nanny, then claimed that Caylee accidentally drowned in the family pool.  After a jury found her not guilty on all charges except some misdemeanors, Anthony faced a barrage of lawsuits, including claims for defamation and for reimbursement by private investigators who searched for Caylee in the months before her remains were found.
Those lawsuits ground to a halt when Anthony filed a voluntary Chapter 7 petition in the Middle District of Florida on January 25, 2013.  In her bankruptcy papers, Anthony lists few assets (comprised mostly of household goods) but discloses unsecured debts of nearly $800,000, plus numerous debts of unknown amounts.  The debts include the pending lawsuits against her and $500,000 in legal fees owed to her criminal defense attorney. Read More ›
Tags: Chapter 7



From Michigan Bankruptcy Blog
Posted 15 weeks 5 days ago

Foster Swift Represents Prevailing Party: Chapter 13 Debtors May Not Exclude Voluntary Post-Petition Retirement Contributions From Disposable Income

In a recent Opinion, Judge Opperman from the Eastern District of Michigan Bankruptcy Court held that a Chapter 13 debtor cannot exclude voluntary post-petition retirement contributions from disposable income.  This Opinion is significant for debtors, trustees, and creditors as it systematically changes the way the Eastern District of Michigan will treat post-petition voluntary retirement contributions in a Chapter 13. Read More ›
Tags: Chapter 13, Eastern District of Michigan



From Michigan Bankruptcy Blog
Posted 26 weeks 1 day ago

Sixth Circuit Holds That Right to Article III “Judicial Power” is Not a Waivable Right

In a recent opinion, the Sixth Circuit has provided clarification of Stern v. Marshall's1 holding by analyzing Article III “judicial power,” the pubic rights doctrine, and the bankruptcy court's authority.
In Waldman, the Western District of Kentucky Bankruptcy Court entered a judgment against the principal creditor after finding that the creditor had defrauded the debtor and had acquired nearly all of the debtor’s assets by means of fraud.  The Bankruptcy Court entered a judgment discharging the debts the debtor owed the creditor and awarded the debtor a judgment of more than $3 million in compensatory and punitive damages.  The creditor appealed the Bankruptcy Court’s entry of a final judgment based upon three challenges:  (1) the debtor’s state law fraud claims are beyond the jurisdiction of the federal court; (2) the judgment entered was beyond the statutory authority of the bankruptcy court; and (3) the judgment was beyond the bankruptcy court’s power pursuant to Article III of the Constitution. Read More ›
Tags: 6th Circuit Court of Appeals, U.S. Supreme Court



From Michigan Bankruptcy Blog
Posted 28 weeks 6 days ago

Only trustee, not debtor, can bring lawsuit on pre-petition cause of action

Auday v. Wet Seal Retail, Inc., Case No. 12-5057 (6th Cir., Oct. 25, 2012) (recommended for full-text publication). 
As most bankruptcy practitioners know, a debtor’s pre-petition cause of action – whether for personal injury, breach of contract, or other claim – is property of the bankruptcy estate.  Now, the Sixth Circuit has clarified that only the trustee can file suit in connection with a Chapter 7 debtor’s pre-petition cause of action, unless the action is abandoned. Read More ›
Tags: 6th Circuit Court of Appeals, Chapter 7



From Michigan Bankruptcy Blog
Posted 29 weeks 2 days ago

Bankruptcy practice reminder: Complaints require “well-pleaded factual allegations,” not just legal conclusions

Moyer v Koster et al (In re Przybysz), Adv. Pro. Case No. 12-80174 (Hon. Scott W. Dales, Sept. 25, 2012).
A recent decision from the Bankruptcy Court of the Western District of Michigan serves as a lesson and reminder to attorneys that complaints must do more than recite legal conclusions – they also must allege sufficient facts to put defendants on notice of the claims and of possible defenses. Read More ›
Tags: Chapter 7, Western District of Michigan



From Michigan Bankruptcy Blog
Posted 30 weeks 1 day ago

6th Circuit: Michigan Bankruptcy-Specific Exemption Statute is Constitutional

The Sixth Circuit Court of Appeals recently held that Michigan's bankruptcy-specific exemption statute is constitutional under the Bankruptcy Clause and Supremacy Clause of the United States Constitution.
Historically, Michigan has allowed bankruptcy debtors to use the federal exemptions under 11 U.S.C. § 522(d), the general state exemptions under M.C.L. § 600.6023, or the state exemptions pursuant to M.C.L. § 600.5451 that are specific to debtors in bankruptcy (prior to it being declared unconstitutional).
Michigan is one of a few states that has a bankruptcy-specific exemption statute available to bankruptcy debtors only.  In the Western District of Michigan, the constitutionality of the bankruptcy-specific scheme was called into doubt by the Hon. James D. Gregg in In re Pontius, 421 B.R. 814 (Bankr. W.D. Mich. 2009) and the Hon. Jeffrey R. Hughes in In re Wallace, 347 B.R. 626 (Bankr. W.D. Mich. 2006).  Contrarily, the Hon. Scott W. Dales, held that the bankruptcy-scheme was constitutional in In re Schafer, 428 B.R. 720 (Bankr. W.D. Mich. 2010), pursuant to Sixth Circuit precedent and Congress' delegation of power to the states pursuant to 11 U.S.C. § 522(b) to create bankruptcy exemptions. Read More ›
Tags: 6th Circuit Court of Appeals



From Michigan Bankruptcy Blog
Posted 38 weeks 5 days ago

Automatic Stay Does Not Bar Injunctive Relief Relative to Debtors' Commission of a Tort

The Sixth Circuit Court of Appeals recently affirmed a decision of the United States District Court for the Southern District of Ohio based upon the District Court's holding that the automatic stay does not prevent the issuance of injunctive relief. Read More ›
Tags: 6th Circuit Court of Appeals



From Michigan Bankruptcy Blog
Posted 39 weeks 2 days ago

Bankruptcy Court for the Western District of Michigan Adopts New Local Rules

The local rules for the Bankruptcy Court for the Western District of Michigan have been amended, effective August 1, 2012.  The new rules can be found here in their entirety.
A redline version of the rules, showing the amendments, can be found here.
Among other changes, practitioners should review the following amendments: Read More ›
Tags: Western District of Michigan



From Michigan Bankruptcy Blog
Posted 40 weeks 2 days ago