Zachary v California Bank & Trust

Ninth Circuit Adopts Narrow Exception to Absolute Priority Rule The U.S. Court of Appeals for the Ninth Circuit recently held that the Bankruptcy Abuse and Consumer Protection Act (BAPCPA) did not repeal the absolute priority rule as applied to individual Chapter 11 debtors. BAPCPA created an exception to the rule for individual debtors, but the…

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Claims Bar Date Applies to Secured Creditors

The U.S. Court of Appeals for the Seventh Circuit recently held that the 90-day claims bar deadline in Federal Rule of Bankruptcy Procedure 3002(c) applies to the claims of all creditors, including those of secured creditors, who want to participate in a debtor’s Chapter 13 bankruptcy. The debtor filed a Chapter 13 bankruptcy case, and…

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Ongoing Association Fees Dischargeable

Chapter 13 debtors’ plan that did not provide for the payment of ongoing condominium assessments could be confirmed over the objection of the homeowners association. The obligation to pay future assessments arises prepetition and, therefore, the obligation, although contingent and not yet matured, is a dischargeable “debt” within the meaning of Bankruptcy Code Sec. 1328(a)….

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Valueless Mortgage Avoidable in Chapter 13

The U.S. Court of Appeals for the Eight Circuit affirmed a U.S. District Court ruling which upheld a bankruptcy court’s confirmation of Chapter 13 debtors’ plan that proposed to void a wholly unsecured lien on their personal residence. According to the lower courts, the anti-modification provision in Bankruptcy Code Sec. 1322(b)(2), which generally prohibits the…

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Undistributed Plan Funds Paid to Creditors upon Conversion to Chapter 7

Post-petition plan payments being held by a Chapter 13 trustee for eventual distribution to creditors under a confirmed repayment plan rightfully were distributed to creditors pursuant to the plan after the debtor converted the case to Chapter 7. According to the U.S. Court of Appeals for the Fifth Circuit, policy considerations and equity favor paying…

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