Legislation

Practice Tip: Using Summary Judgment to Establish a Fraudulent Conveyance

A widely held assumption in bankruptcy cases and other litigation is that fraudulent intent cannot be established on a summary judgment motion but may only be found after a full trial on the merits. Judges in fraudulent conveyance cases are not accustomed to deciding intent, solvency or constructive fraudulent conveyances on summary judgment evidence and may simply assume that if a case is not settled, it will be tried.

When a Statutory Lien Becomes a Secret Lien

The U.S. Bankruptcy Court for the Eastern District of New York recently decided in In re R.F. Cunningham & Co. Inc., 355 B.R. 408 (Bankr. E.D.N.Y. 2006), in the context of a motion to lift the automatic stay, that a statutory lien under Ohio law was susceptible to being avoided as a secret lien under §544(a)(1) of the Bankruptcy Code. Champaign Landmark, an Ohio vendor, was owed approximately $150,000 for grain picked up by the New York debtor.

Legislative Efforts in the Aftermath of Hurricane Katrina

Reps. John Conyers (D-Mich.), Mel Watt (D-N.C.), Jerrold Nadler (D-N.Y.) and Sheila Jackson-Lee (D-Texas) introduced legislation (H.R. 3697) to protect the families and small businesses that were financially devastated by Hurricane Katrina from being penalized by the provisions contained in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which is scheduled to take effect on Oct. 17, 2005. This bill contains the following provisions:

Redemption Financing and Debtors’ Attorneys’ Fees

A chapter 7 debtor seeking to retain personal property secured by a lien has several options available, one of which is redeeming the property from the lien pursuant to §722 of the Bankruptcy Code. Although there remains a split of authority on the question, the prevailing view is that the appropriate measure of value for a contested redemption is the liquidation value of the property. This favorable valuation standard has made redemption motions increasingly popular.

H.R. 1768, The Multidistrict Litigation Restoration Act of 2004

This bill passed the House by a vote of 418 - 0 and is now pending in the Senate Judiciary Committee. The legislation is responsive to the decision of the U.S. Supreme Court in Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, which held that statutory authority did not exist for a transferee judge, conducting pretrial proceedings, to transfer a case to his or her own district for a trial. H.R.1768 would amend the statute to allow a judge with a transferred case to retain it for trial or to transfer it to another district.

The Status Of Bankruptcy Reform And Bankruptcy Judgeships

On March 19, 2003, the House passed the Bankruptcy Abuse Prevention and Consumer Act of 2003, (H.R. 975), the “Bankruptcy Reform Legislation” that included 27 new bankruptcy judgeships approved by the Judicial Conference of the United States several years ago. The bill was sent to the Senate, but no action was taken on it.

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