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THE CONSUMER BANKRUPTCY LETTER |
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In This Issue:
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January 24 2005
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TAX DISCHARGE IN BOSTON!
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From BankruptcyBooks.com
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FEATURED SITE #4: MYFICO.COM
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HEADS-UP ON RECENT CASES
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CHAPTER 11 FEE STUDY ANNOUNCED
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A WHOLE LOT OF ONLINE INTEREST AND AMORTIZATION CALCULATORS IN ONE PLACE
When I'm calculating a chapter 13 plan I frequently need to know how much interest to include in the overall payment for a secured or partially secured debt. So, I can enter the current fair market value of the collateral (for example, a car), the number of months of the plan, and the interest rate. But I also need to add the total amount of interest as a lump sum figure. This is where a fast way to calculate the total interest to be paid comes in handy.
There are several Online sources for interest and loan amortization calculators. We think the most complete variety of calculators for various purposes is the page at MYFIC.COM.
This page has 51 calculators! And, they don't cost anything!
These run the gamut from the interest calculator described above (on the page, it is listed under “Loan Calculators” and is the first one on that list, to mortgage, auto loan, debt and credit cards, savings, personal finance, investment, and retirement calculators.
NOTE: One thing MYFICO.com does not have is a calculator to determine the interest and penalties on a delinquent tax liability. An application to do this calculation is available from TimeValue.com for a reasonable price.
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PROFESSIONAL COMPENSATION IN CHAPTER 11 STUDY
Seton Hall University School of Law Professor Stephen J. Lubben Awarded American Bankruptcy Institute Grant to Study Chapter 11 Cases
December 20, 2004, Alexandria, Va. — The American Bankruptcy Institute (ABI) announced today that it had awarded a $346,000 grant to Stephen J. Lubben, Associate Professor of Law at Seton Hall University School of Law, to study professional fees in chapter 11 business bankruptcy cases. The study will provide the most comprehensive, independent look at professional fees in chapter 11 cases to date. Preliminary work on the study will begin next summer and the final report will be completed by the fall of 2007.
The study is expected to include approximately 1,100 chapter 11 cases, vastly exceeding the sample size of any prior study on this topic. Up to 40 chapter 11 cases will be selected from 33 districts, three districts from each numbered federal circuit, and the study will follow these cases for a period of two years. Professional fees and expense data will be collected from retention and compensation applications. A variety of data on the debtors and their cases will also be collected. This secondary information will be considered in connection with the professional fee and expense data to consider the factors that influence the degree of professional fees incurred in a chapter 11 case.
“There is probably no more important issue to the bankruptcy community than bringing rationality and consistency to professional fees,” said ABI’s President Michael P. Richman. “This is a highly misunderstood aspect of the bankruptcy system, generating negative media attention that puts the entire profession in a bad light. Litigation over professional-fee issues creates its own cost in the system, draining many hours of time more productively devoted to the hard issues of restructuring and liquidating,” he added.
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PLAN BARRED PUNITIVE DAMAGES CLAIM AGAINST DEBTORS
The bankruptcy court did not err in confirming a plan prohibiting punitive damages against the debtor and debtor's parent. The debtor settled potential claims against the parent with the approval of the bankruptcy court. Moreover, claimants asserting a right to punitive damages adduced no facts or circumstances that supported such a right. A "freakish" pre-peition punitive damage verdict for other claimants was an aberration. Thus, there was no denial of a right to trial as alleged by claimants.
The bankruptcy court did not err in requiring disclosure of the debtor's customer list. The list (which was sought by claimants' attorney to solicit more clients) had been sold as an asset during the bankruptcy and had value because it was confidential. Lawyers have a right under the first amendment to solicit clients; they do not have a right to a subsidy in this endeavor. Counsel could have bid for the list like any other asset, or they could have rented the list from its buyer. Lawyers pay for paper, books, office space, and other inputs into their profession; they must pay for mailing lists too.
In re A.G. Financial Service Center, Inc. (7th Cir. 2005)
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WHAT IS A CORPORATE “INSIDER” FOR PREFERENTIAL TRANSFER PURPOSES?
The bankruptcy court erred in holding that an insider of an insider (a corporation wholly owned by a statutory insider) was an insider.
A trustee can avoid a transfer of an interest in a debtor's property if the transfer meets certain requirements, including that the transfer occurred within the requisite pre-bankruptcy period. § 547(b). Because the transfer at issue in this case, the filing of the UCC-1 to perfect MAPPS's security interest in debtor's property, occurred more than 90 days but less than one year before bankruptcy, it is avoidable under § 547 only if MAPPS was an insider. § 547(b)(4)(B).
State law controls whether it is appropriate for the bankruptcy court to pierce the corporate veil. In re Pajaro Dunes Rental Agency, Inc., 174 B.R. 557, 582 (Bankr. N.D. Cal. 1994).
In order to pierce the corporate veil, the court must apply the correct legal standard. That requires considering both the unity of interest between the shareholder and the corporation and whether an inequitable result will follow from recognizing the corporate form. Although the bankruptcy court considered the unity of interest prong and found that it was met, it failed to consider what inequity would follow if the corporate form were recognized.
Piercing the corporate veil requires more than a unity of interests; it also requires some inequity arising out of the use of the corporate form. The court did not make any finding that there was any such inequity in this case, nor does the trustee point to any evidence that would support such a finding. Therefore, the court erred.
In re Enterprise Acquisition Partners, Inc. (9th Cir. BAP 2005)
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ATTY FEES NOT ALLOWABLE IN ABSENCE OF STATUTE OR SETTLEMENT TERMS PROVIDING FOR SAME
Where a settlement agreement between a Chapter 7 trustee and a third party sued by the trustee did not have an attorneys fees provision, and State law contained no entitlement to attorneys fees to the prevailing party in contract litigation, the counterparty to the agreement was not entitled to payment of his legal fees incurred in connection with successful litigation against the trustee regarding the interpretation of the settlement agreement.
In re Weinschneider (7th Cir. 2005)
source: bkInfo.com
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PUBLISHED BY KING BANKRUPTCY MEDIA FOR BANKRUPTCY PROFESSIONALS 7080 Donlon Way Suite 222 Dublin California 94568 (925) 829-6460. Morgan D. King, Editor.
© King Bankruptcy Media 2004 CONTACT US AT editor@bankruptcymedia.com
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