Congress’s decision to use the passive voice has cost at least one debtor the discharge of a significant debt. The U.S. Supreme Court in Bartenwerfer v. Buckley ended a long journey through the Ninth Circuit for a debtor whose husband committed fraud and when she sought to discharge the debt that resulted from a judgment for that fraudulent action.[1] Instead of analyzing whether the debtor was culpable in the fraud, the Supreme Court instead held that the debt — not the debtor — was the subject of 11 U.S.C.
Consumer and business bankruptcy attorneys alike have been conditioned to feel fear or awe, depending on the circumstances, at hearing the name Clifford White for almost 20 years. When White announced in 2022 that he would retire, consumer practitioners had been looking forward to the announcement of the new director, mostly to identify the focus that the U.S. Trustee Program would take.
Sometimes it is better for the trustee not to object to an “arguably” inapplicable claim of exemption. That’s one of the takeaways from the Sixth Circuit’s recent decision in Biondo v. Gold, Lange, Majoros & Smalarz P.C. (In re Biondo) [1].
Richard York was the former CFO of MEMS USA. York filed for chapter 13 bankruptcy relief. The IRS filed a proof of claim in York’s chapter 13 bankruptcy case, asserting that he was liable for trust fund recovery penalties assessed against him under 26 U.S.C. § 6672 for failing to pay over to the IRS payroll taxes for MEMS’ employees, Justia reported. York filed an adversary complaint challenging his liability to the IRS. York and the United States filed cross motions for summary judgment which were both denied. York, consequently, ended up stipulating to a judgment in the United States’ favor, but then appealed the denial of his motion for summary judgment. The United States prevailed on appeal before the District Court, which affirmed the bankruptcy court’s order denying York’s motion for summary judgment. York then appealed the decision to the Ninth Circuit. The Circuit ruled in the Government’s favor in a 47-page published opinion finding that York was both responsible for paying the employment taxes to the IRS and willfully failed to do so.
Lawyers for the Sandy Hook families who won historic defamation damages against the Infowars conspiracy theorist Alex Jones told a federal bankruptcy judge in Houston on Tuesday that Mr. Jones should not be allowed to use his chapter 11 filing to evade $1 billion-plus verdicts made against him, the New York Times reported. The families asked that Judge Christopher Lopez order Mr. Jones to pay them the full damage awards, with no possibility of a trial or a forced settlement over a lesser amount — in legal terminology, to make Mr. Jones’s debts to the families “non-dischargeable” through bankruptcy. If the judge rules in the families’ favor, Mr. Jones would likely be working the rest of his life to pay the debt. Mr. Jones spent years spreading lies that the 2012 shooting that killed 20 first graders and six educators at Sandy Hook Elementary School in Newtown, Conn., was a hoax aimed at gun control. Families of 10 victims sued him for defamation, and in trials in Texas and Connecticut were awarded about $1.4 billion in damages. As the cases went to trial, Infowars declared bankruptcy, and Mr. Jones declared personal bankruptcy late last year. The families have been fighting him in bankruptcy court ever since.
Private student loan borrowers who filed for bankruptcy are finally getting some relief from student loan provider, Navient Corp., to the tune of $198 million, YahooFinance.com reported. Navient settled a lawsuit with borrowers who alleged the company illegally collected on private student loans by falsely telling borrowers that their loans were not discharged in bankruptcy. The settlement includes $182 million in debt relief and $16 million cash compensation for impacted borrowers along with help to improve their credit scores as a result of the illegal collections. The settlement affects borrowers who had private student loans with Navient that were discharged in bankruptcy. Eligible borrowers identified by Navient will receive notices and debt relief will be automatic.
