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ABI Journal

June 07, 2021

In ‘Related To’ Jurisdiction, District Court Applies the Bankruptcy Rules, Circuit Says

If the district court is adjudicating a suit with “related to” jurisdiction under 28 U.S.C. § 1334(b), the district court applies the Bankruptcy Rules, not the Federal Rules, the First Circuit says.

1st Circuit

June 04, 2021

Arbitration Clause Results in Temporary Stay of ‘Core’ Proceedings in Bankruptcy Court

Decision by Bankruptcy Judge Michelle Harner demonstrates the flaw in the Fourth Circuit’s rule requiring parallel proceedings in bankruptcy court and in arbitration when disputes are both core and non-core.

4th Circuit, Maryland

June 01, 2021

Debt from a Defunct Business Can Help to Qualify for Subchapter V

Part-time self-employment, coupled with debt from a defunct business, qualified the debtor for reorganization under Subchapter V of chapter 11.

4th Circuit, North Carolina, North Carolina Middle District

May 28, 2021

Third Circuit Finds Broad Waiver of Sovereign Immunity for Suits Augmenting the Estate

Circuit Judge Ambro generously interprets Katz to mean that ratification of the Constitution waived state sovereign immunity broadly for suits to augment a bankrupt estate.

3rd Circuit

May 27, 2021

Circuits Are Now Split on the Constitutionality of the 2018 Increase in U.S. Trustee Fees

The Second Circuit split with the Fourth and Fifth Circuits by holding that the increase in fees for the U.S. Trustee system was unconstitutional because it was not imposed simultaneously in the two states with bankruptcy administrators.

2nd Circuit

May 26, 2021

Curing Defaults Isn’t Always Required Before Selling a Contract, Third Circuit Says

The ‘Countryman’ definition of an executory contract allows a debtor sell a contract without curing a default if the non-debtor counterparty has no further material, unperformed obligations.

3rd Circuit

May 20, 2021

U.S. Suit Dismissed After German Defendant Files Insolvency in Germany

Filing a chapter 15 petition wasn’t required for a U.S. district court to dismiss a civil action against a German company undergoing insolvency in Germany.

2nd Circuit, New York, New York Southern District

May 19, 2021

West Virginia Judge Allows Conversion to Subchapter V After Deadlines Passed

When drafting a statute, Congress cannot ‘think of every single esoteric possibility,’ Judge Mignault says.

4th Circuit, West Virginia, West Virginia Southern District

May 18, 2021

Courts Split on Whether Suits in Bankruptcy Court Can Violate the Automatic Stay

A minority of courts hold that a suit in bankruptcy court can violate the automatic stay if based on a claim that could have been brought before bankruptcy and did not arise under the Bankruptcy Code.

10th Circuit, New Mexico

May 14, 2021

NRA’s Bankruptcy Dismissed as Being Filed for an Improper Purpose

Filing bankruptcy to gain a ‘litigation advantage’ in the N.Y. Attorney General’s dissolution action meant the chapter 11 petition was not filed in good faith and must be dismissed, Judge Harlan Hale rules.

5th Circuit, Texas, Texas Northern District