By: John P. Esposito

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

 

Recently, in a case of first impression, the Sixth Circuit was presented with the opportunity to address the interaction of the “mootness” provision of section 363(m)[1] and the power of a trustee under section 363(h) to sell “both the estate’s interest . . . and the interest of any co-owner in [estate] property.”[2] In In re Nashville Senior Living, LLC,[3] the Sixth Circuit held that a non-debtor co-owners’ failure to obtain a stay of the bankruptcy court’s order approving the sale of both the debtors’ interest and the interests of the co-owners in jointly-owned property rendered an appeal to undo the sale as moot.[4] The court rejected, as “an aberration in well-settled bankruptcy jurisprudence,”[5] the contrary reasoning of the Ninth Circuit in Clear Channel Outdoor, Inc. v. Knupfer (In re PW, LLC)[6], which held that mootness could not apply to the “free and clear” aspect of a sale authorized under section 363(f). In essence, the Sixth Circuit interpreted section 363’s mootness provision expansively to cover sales under subsection (h),[7] despite the fact that 363(m) explicitly applies only to sales under sections 363(b)[8] or (c).[9]

By: Marissa Gross

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

 

Recently, in Midwest Holding # 7, LLC v. Anderson (In re Tanner Family, LLC),[1] the Eleventh Circuit held that a debt on a lease agreement is incurred at the time of signing and not when the rental payments become due. Under section 547(b) of the Code, a bankruptcy trustee can avoid “any transfer of an interest of the debtor in property” provided the transfer meets five elements.[2] Since one of those elements requires that the payment sought to be avoided must be “for or on account of an antecedent debt owed by the debtor before such transfer was made,” determining when a debt is incurred is essential to the analysis.[3]

 

By: Reshma Shah

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

 

In In re Century City Doctors Hospital, LLC (“Century City”), the Bankruptcy Court for the Central District of California held that the chapter 7 trustee who assumed control of the debtor’s business operations solely to liquidate assets was not required to abide by the Worker Adjustment and Retraining Notification (“WARN”) Act.[1] In Century City, a hospital with over one hundred employees, filed for chapter 7 relief and, within two hours of the hospital’s filing, the trustee assigned to wind down the hospital’s operations conducted a mass lay off of employees.[2] After the admitted patients had been transferred into appropriate health care facilities,[3] the remaining staff was also terminated.[4] None of the hospital’s employees received notice prior to being laid off.

 

By: Jenny J. Huang

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

 

In bankruptcy, “one of the most controversial and frequently litigated of the avoidance powers” is the debtor or trustee’s ability to recover preferential transfers under 11 U.S.C. § 547(b).[1] The twin purposes of section 547(b) are to “prevent[] individual creditors from dismembering the assets of the debtor in a manner that negatively impacts other creditors, and [to allow] all creditors to obtain a more equitable distribution of the assets of the debtor.”[2] Recently, in Parks v. FIA Card Services (In re Marshall), the Tenth Circuit addressed how courts should adhere to these twin purposes in a landscape where nearly instantaneous electronic transfers pose a new problem for the court’s analysis.[3] 

 

By: Lauren Kiss

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

 

Federal and state authority sometimes conflict with each other. This was illustrated in Stanley v. Trinchard (In re Hale), in which the Fifth Circuit held that 11 U.S.C. § 108(a), which grants a bankruptcy trustee a time extension to commence suit on behalf of the debtor, superseded Louisiana’s peremption period for legal malpractice claims.[1] In April 2002, Hale’s bankruptcy trustee filed suit in federal court in Louisiana against Trinchard, alleging that Trinchard had committed malpractice in its mishandling of the settlement negotiations. Trinchard argued the claim was time barred under Louisiana law.[2]  In 1991, Gerald Burge (“Burge”) filed a civil rights action against the St. Tammany Parish Sheriff, the former Sheriff’s Deputy Hale (“Hale”), and their insurer, Northwestern National Insurance Company of Milwaukee, Wisconsin (“NNIC”).  In May 1995, NNIC appointed Trinchard, Trinchard, & Trinchard LLC (“Trinchard”) to represent the sheriff and Hale.  In November 2000, a settlement was reached between Trinchard, NNIC’s counsel, and Burge’s counsel, which fully released NNIC from liability, but only partially released the sheriff and Hale from liability. In January 2001, Hale consented to the settlement.  In May 2001, judgment was entered against the sheriff and Hale in the amount of $4,075,000 on Burge’s remaining claims. In October 2001, Burge brought suit against Hale to collect the entire judgment in Mississippi and Hale was forced into bankruptcy on October 15, 2001.