Monthly Archives: August 2011

In re Blixseth, No. 10-00088, 2011 WL 3274042 (Bankr. D. Mont. Aug. 1, 2011)

In Samson v. Blixseth, the Bankruptcy Court for the District of Montana determined sua sponte that it did not have constitutional authority to hear a core adversary proceeding to set aside certain transfers as fraudulent conveyances. The adversary proceeding in Blixseth involved a dispute between the bankruptcy trustee and the former spouse of the debtor over property conveyed to the debtor under a marital settlement agreement. The trustee sought to set aside the agreement, recover the allegedly fraudulent and preferential transfers of property, and equitably subordinate the claims of the debtor’s former spouse. Continue reading

Bankruptcy Bullets – Longacre Master Fund, Ltd. v. ATS Automation Tooling Systems Inc., 2011 LEXIS 80173 (S.D.N.Y. July 20, 2011)

On July 20, 2011, District Judge Robert W. Sweet held that liability under section 502(d) of the Bankruptcy (permitting temporary disallowance of claims) could only be transferred through a pure assignment, not through a sale. The issue arose in the Delphi bankruptcy case, with respect to claims sold by Automation Tool System to Longacre Master Fund. Continue reading

In re Salander O’Reilly Galleries 453 B.R. 106, (S.D.N.Y. Jul. 18, 2011)

The debtor in Salander was a Manhattan art gallery that had obtained financing from a bank, allegedly secured by a blanket lien on all of the debtor’s assets. Approximately a year and a half before the commencement of the bankruptcy case, Kraken Investment, Ltd. and the debtor entered into a consignment agreement which provided for Kraken’s consignment of a Sandro Botticelli painting titled “Madonna and Child” to the debtor. Kraken had commenced a prepetition lawsuit in New York Supreme Court to recover the painting which was stayed by the bankruptcy filing. During the case, Kraken asserted a claim for the Botticelli pursuant to a court-approved art claims protocol, a liquidation trust was then formed pursuant to a confirmed plan of liquidation, and the bank assigned its interest in the Botticelli to the trust. Continue reading

Bankruptcy Bullets – Official Comm. of Unsecured Creditors of Quebecor World (USA) Inc. v. Am. United Life Ins. Co. (In re Quebecor World (USA) Inc.), Adv. Proc. No. 08-01417 (Bankr. S.D.N.Y)

On July 27, 2011, in an adversary proceeding brought by the Creditors’ Committee against certain of the Debtor’s noteholders, Bankruptcy Judge James M. Peck held that a $376 million prepetition redemption payment made by the Debtor to noteholders did not constitute an avoidable preference. Instead, the payment was a safe-harbored “settlement payment” under section 546(e) of the Bankruptcy Code. Continue reading

Sanders v. Muhs (In re Muhs), No. 10-01008, 2011 WL 3421546 (Bankr. S.D. Tex, Aug. 2, 2011)

In Sanders v. Muhs (In re Muhs),[ii] the United States Bankruptcy Court for the Southern District of Texas held that a debtor’s right to discharge its debt and the amount of debt that is excepted from discharge are necessarily public rights that may be adjudicated by bankruptcy courts. In light of Stern v. Marshall, the Muhs court considered, sua sponte, its authority to hear an adversary proceeding which alleged that the debtors’ debt was non-dischargeable because the debtor intentionally made false representations that the creditor relied upon in providing a loan. Continue reading

Bankruptcy Bullets – In re XMH Corp., 2011 U.S.App. LEXIS 15372 (7th Cir. Jul. 26, 2011)

On July 26, 2011 the U.S. Court of Appeals for the Seventh Circuit affirmed a ruling by the U.S. District Court for the Northern District of Illinois allowing an affiliate of the debtor – Simply Blue – to assign an executory contract over the objection of its counterparty – Western Glove Works – because the contract was not a trademark license. Continue reading

Bankruptcy Bullets – In re The City of Central Falls, Rhode Island, No. 11-13105 (Bankr. D.R.I. Aug. 1, 2011)

On August 1, 2011, the city of Central Falls, Rhode Island filed a voluntary petition for relief under chapter 9 of the Bankruptcy Code. The commencement of the bankruptcy case will bring to the forefront a Rhode Island law passed in July 2011 that attempts to place general obligation bondholders ahead of other creditors in the bankruptcy priority scheme by deeming all general obligation bonds to be backed by city tax revenue, ex post facto. Continue reading