Supreme Court Rules That Structured Dismissals Must Follow Priority Scheme

Stephen W. Sather

Barron & Newburger, P.C.

Austin, TX

ssather@bn-lawyers.com

 

In a blow to creative lawyering, the Supreme Court ruled today that a structured dismissal which allocates value contrary to the priority scheme of the Bankruptcy Code may not be approved.   Czyzewski v. Jevic Holding Corp., No. 15-649 (U.S. 3/22/17).   You can find the opinion here.

CLLA Pursues Legislative Goals on Capital Hill

CLLA members blanketed Capital Hill on February 27, 2017 to pursue their legislative agenda with House and Senate staffers.   Members hailed from states across the country, including California, Georgia, Iowa, Massachusetts, Michigan, Ohio and Texas.   The league advanced proposals to reform the bankruptcy venue and preference law.   Links to the league's legislative positions can be found here and here.

On venue, the CLLA would like to eliminate state of incorporation venue and limit affiliate filing to cases where lower tier entities file with parent company instead of allowing the venue for one minor subsidiary to set venue for the entire group of companies.

  

The CLLA offered a package of three preference reforms:  requiring a meet and confer before filing suit, requiring that cases under $50,000 be filed in the defendant's forum and allowing payments under settlement agreements to fall within the ordinary course of business defense.   

Third Circuit Finds Homeowner's Mortgage Insurance Obligation Not Extended By Mortgage Modification

By Hon. Judith K. Fitzgerald (Ret.)

Tucker Arensberg, P.C.

Professor of Practice, University of Pittsburgh School of Law

      Mortgage insurance can be an expensive proposition for homeowners at the same time that it provides assurance to lenders.  Whether the term of paying insurance premiums can be extended as the result of a mortgage modification was the topic of the recent decision by the Court of Appeals for the Third Circuit in Ginnine Fried v. JP Morgan Chase & Co; JP Morgan Chase Bank NA, d/b/a Chase, --- F.3d ---- (3d Cir. 2017), 2017 WL 929752 (3d. Cir. Mar. 9, 2017).  The case involved a homeowner who sued JP Morgan Chase Bank (“Chase”) for unlawfully extending the requirement to purchase private mortgage insurance. In reaching its decision, the Court of Appeals examined the provisions of the Homeowners Protection Act (“Protection Act”), 12 U.S.C. § 4901 et seq., and concluded that the homeowner was correct.  Writing for the appellate court, Judge Ambro asked: “Does it [the Protection Act] permit a servicer to rely on an updated property value, estimated by a broker, to recalculate the length of a homeowner's mortgage insurance obligation following a modification or must the ending of that obligation remain tied to the initial purchase price of the home? We conclude the Protection Act requires the latter.” Ginnine Fried v. JP Morgan Chase & Co; JP Morgan Chase Bank NA, d/b/a/ Chase, No. 16-3069, 2017 WL 929752, at *1 (3d Cir. Mar. 9, 2017).

Court Rules "Informational" Letters Did Not Violate Discharge

By Stephen W. Sather

Barron & Newburger, P.C.

Austin, Texas

A recurring problem in bankruptcy is how lenders can provide information about a debt to a borrower without violating the discharge or the automatic stay.    In some cases the borrower may wish to continue making payments and would appreciate receiving payment notices.   In other cases, the lender may be required to send notices to the borrower in order to comply with state laws governing foreclosures.    In these cases, lenders must walk a fine line between conveying information and coercively seeking to collect a debt.   In re Roth, 2017 U.S. Dist. LEXIS 28710 (M.D. Fl. 2017) illustrates how to send a notice that does not violate the Bankruptcy Code.