By: Robert J. Guidotti

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

 

Recently, in Dumont v. Ford Motor Credit Company (In re Dumont),[1] the Ninth Circuit reversed the rule established in McClellan Fed. Credit Union v. Parker (In re Parker)[2] by holding that the implied right of ride-through is no longer available to chapter 7 debtors who do not attempt to reaffirm debts on secured personal property. In this case, the debtor-plaintiff, Dumont, entered into a secured loan agreement with the creditor-defendant, Ford, for the purchase of a personal automobile. Three years after entering into the agreement, Dumont filed a petition for chapter 7 relief.[3]

 

By: Christopher J. Palmese

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

 

The Federal Resource Conservation and Recovery Act (the “RCRA”) allows the government and private citizens to force parties responsible for the “handling, storage, treatment, transportation or disposal of any solid waste or hazardous waste” to take appropriate action to prevent the potential dangers posed by materials that may “present an imminent and substantial endangerment to health or the environment”.[1] In 2008, the district court for the Southern District of Illinois awarded the Environmental Protection Agency an injunction under section 6973 of the RCRA that ordered Apex Oil Corp. Inc. (“Apex”) to mitigate groundwater contamination at a site where Apex’s corporate predecessor had caused millions of gallons of oil to be trapped underground.

 

By: Brendan Gage

St. John's Law Student

American Bankruptcy Institute Law Review Staff

 

Courts are increasingly divided over whether so-called “hybrid” claims – those involving both goods and services transactions – can qualify as an administrative expense under section 503(b)(9) and, if so, to what extent. Claims characterized as administrative expenses are paid off first whereas claims that fail to meet section 503(b)(9)’s requirements will be deemed unsecured claims which are paid at a lower priority level and rarely in full.[1] A product of BAPCA, section 503(b)(9)[2] creates a specific type of administrative expense 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.”[3] Yet despite this seemingly straightforward language, courts battle over whether goods transactions within hybrid claims can be allocated as individual section 503(b)(9) expenses or whether hybrid claims should be considered indivisible and analyzed wholesale for qualification under section 503(b)(9).[4]

 

By: Krystiana L. Gembressi

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

 

Recently, in In re Dunning Brothers Co.,[1] the United States Bankruptcy Court for the Eastern District of California affirmed the longstanding tenet that unscheduled assets remain property of the bankruptcy estate indefinitely. The court held that a bankruptcy case that was closed more than seventy years ago could be reopened following the later discovery of certain unscheduled assets.

 

By: Lauren E. Stulmaker

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

In a decision with important implications for public sector bankruptcies, the United States Bankruptcy Court for the Eastern District of California held that the rejection of collective bargaining agreements (“CBAs”) in chapter 9 cases is governed by § 365, rather than the enhanced standards of § 1113. [1]   However, rather than the relaxed business judgment standard normally applicable to contract rejections under § 365, the court applied the three part test established by the Supreme Court in NLRB v. Bildisco & Bildisco, before letting the City of Vallejo out of its collective bargaining agreements (“CBAs”).[2] The court in In re City of Vallejo, addressed the issue of whether chapter 9 of the Bankruptcy Code would allow a municipal debtor to reject the CBAs in place for its public sector unions.[3] After the City filed for bankruptcy under chapter 9 and sought to escape the CBAs at issue, the municipal employees sought protection under California’s state labor laws. Because the federal labor laws only govern private sector employment, the city employees attempted to rely on the state labor laws yet the court held that the state laws were entirely preempted by the Bankruptcy Code.[4]