General Default Judgment Didn’t Satisfy Requirements of Issue Preclusion, Circuit Says
If the complaint was properly plead, a general default judgment might invoke issue preclusion to bar discharge of a debt.
%1
Veronica Brill, Todd Witteles Slap Mike Postle with Involuntary Bankruptcy Petition
Mike Postle’s legal troubles continue. Just months after Veronica Brill and Todd Witteles won anti-SLAPP judgments against Postle in connection with his frivolous $330 million defamation lawsuit against them, the two have filed a joint involuntary bankruptcy petition against him, Cards Chat News reported. The petition, filed in the U.S. Bankruptcy Court for the Eastern District of Colorado, cites Postle as its target under federal chapter 7. In May and June, respectively, Witteles and Brill each won their claims that Postle’s lawsuit against them was an unlawful attempt to stifle their First Amendment right to free speech, and he was thus liable for their legal bills. Presiding judge Shama H. Mesiwala awarded Witteles $26,982 and Brill $27,745. Postle reportedly has not responded to requests for payment from Witteles’s attorney, Eric Bensamochan, nor from Brill’s counsel, Marc J. Randazza. Postle may already be on the hook for more than the $54,727 combined that he owes to Postle. He has also been sued by Wells Fargo Bank and Discover Bank for another $13,700 combined in what appears to be unpaid credit-card debt.
Puerto Rico Case and the Efficacy of Prof. Westbrook’s Definition of ‘Executoriness’
The bankruptcy community needs a better definition of what’s an executory contract, and Prof. Jay Westbrook has it.
It Is, in Fact, Expensive to Be Erika Jayne
Real Housewives of Beverly Hills cast member Erika Girardi, more commonly known as Erika Jayne, is the latest example of just how powerful (and expensive) an involuntary bankruptcy proceeding can be, The National Review reported. In December 2020, six petitioning creditors commenced involuntary chapter 7 proceedings under § 303 against Tom Girardi, the attorney who had represented Erin Brockovich against Pacific Gas and Electric Company in the 90s, and his law firm, Girardi & Keese. These involuntary petitions came amid allegations that Mr. Girardi had embezzled millions of dollars from his clients and business partners. Shortly after the involuntary petitions were filed, the U.S. Bankruptcy Court for the Central District of California entered orders for relief and appointed chapter 7 trustees in both cases. To date, neither Mr. Girardi nor his firm have made an appearance in the proceedings. Although Ms. Girardi filed for divorce just a month before the bankruptcies, that wasn’t enough to distance herself from embezzlement allegations or protect her from the reach of the chapter 7 trustee. In June, the trustee, through special litigation counsel, filed motions under Federal Rule of Bankruptcy Procedure 2004 seeking the production of documents and records from Ms. Girardi’s landlord, family law attorneys, and accountant. Recently, the trustee filed an adversary proceeding against Ms. Girardi and her business entities to avoid and recover $25 million in transfers. The trustee contends that Ms. Girardi conspired with her husband and his law firm to hide assets meant for victims of Mr. Girardi’s ongoing cases, concluding that Ms. Girardi “has used her glamor and notoriety to continue to aid and abet in sham transactions that have occurred with respect to large transfers of assets” from Girardi & Keese.
A Pandemic Surprise: Utah Bankruptcies Actually Fell During COVID-19
Economic devastation from the pandemic in Utah has not triggered an increase in personal or business bankruptcies, The Salt Lake Tribune reported. At least not so far. To the contrary: The Beehive State saw 7,641 personal bankruptcies filed last year under chapters 7 and 13, down 22.7 percent during a year of tumult and COVID-19 lockdowns compared to 9,878 in 2019, when the state’s economy was booming. Business bankruptcies were all but unchanged, with 20 filings under chapter 11 in Utah for all of 2020 compared to 23 in 2019, according to the bankruptcy court. The trend so far this year is down even more, with 2,946 personal and business bankruptcies filed from January through June in Utah, compared to 4,882 in the first six months of 2019 and 4,038 over the first half of 2020. Those numbers have been ticking up slightly in recent months but they’re still well below previous rates. Bankruptcy attorneys say billions of dollars in pandemic relief money from Congress — especially payroll loans to businesses and beefed-up unemployment benefits — appear to have helped thousands of Americans stave off financial collapse. Personal filings rose slightly in March 2020, but for more typical seasonal reasons unrelated to the pandemic. In addition to government assistance, many Utahns who struggled financially during the health crisis have been kept from the edge by limited moratoriums on evictions, debt collections and wage garnishments, including student loan debtors and those who fell behind on rent or utility bills. Some of those benefits are expiring — at least in Utah — and that may account for personal bankruptcies now rising.
Pandemic Recession Ended in April 2020, Shortest on Record
It hit like a derailed train and was hugely destructive, but it was short-lived, The Washington Post reported. The recession that broke out with the onset of the coronavirus pandemic lasted just two months, officially ending in April 2020. That makes it the shortest downturn on record, according to the committee of economists that determines when recessions begin and end. The U.S. economy reached a peak in February 2020, the National Bureau of Economic Research’s Business Cycle Dating Committee (NBER) said. The recession began the following month and ended in April. The NBER said the recession ended that month because that is when the economy reached its lowest point in terms of jobs and output. The end of the recession does not mean the economy was fully recovered. It only began to rebound in May 2020, the committee said. The recovery has continued in fits and starts for the past year and by some measures is nearly complete. The economy’s output of goods and services likely reached its pre-pandemic level in the April-June quarter, analysts estimate.
All Private Student Loans Are Not Excepted from Discharge, Second Circuit Holds
No circuit split: The Second Circuit agrees with the Fifth and Tenth Circuits that only a subset of private student loans is automatically nondischargeable.
Tribal Law Defined the Nature of a Tribe Member’s Property Interest in Gaming Revenue
Federal law allows tribes to determine whether a tribe member’s interest in distributions of gaming revenue will be estate property in bankruptcy, Judge Ridgway says.
Consensus Builds That Some Private Student Loans Can Be Wiped Out in Bankruptcy
An appeals court ruled that private student loans can be discharged through bankruptcy like other consumer debts, opening the door for more borrowers to obtain relief from educational debt, WSJ Pro Bankruptcy reported. Thursday’s ruling by the U.S. Court of Appeals for the Second Circuit sided with Hilal Homaidan, an Emerson College alumnus who sought to eliminate through bankruptcy the $12,567 in private student loans he took on to finance his education. Government-backed student loans are nearly impossible to erase in bankruptcy. To qualify, borrowers must show that continuing to repay would impose an “undue hardship,” a standard so high that few even attempt to meet it. Homaidan’s lender, Navient Solutions LLC, argued that his private loans should be treated the same way. But the Second Circuit said that certain types of private educational loans, especially those that don’t meet the tax code’s definition of a qualified student loan, can be canceled through the bankruptcy process without a showing of undue hardship. There is about $50 billion of outstanding student debt in this category, according to Homaidan’s lawyers. He filed for chapter 7 bankruptcy soon after graduating from Emerson in 2007 and received a discharge of his debt in bankruptcy court. But the discharge order was unclear on whether the Navient loans had been eliminated. Navient hired a collection firm to pester Mr. Homaidan into repaying, causing him to believe that he still owed money on the loans, according to the appellate ruling. He paid Navient in full in the belief that he had a legal obligation to do so, according to the ruling.
