Benchnotes Apr 2002
Surcharge Claims for Administrative Claimants
In In re Suntastic USA Inc., 269 B.R. 846 (Bankr. D. Ariz. 2001), Bankruptcy Judge Charles G. Case II addressed circumstances under which a chapter 7 trustee could be arguably compelled to pursue surcharge claims on behalf of specific administrative claimants. Relying on In re JKJ Chevrolet Inc., 26 F.3d 481 (4th Cir. 1994), the court noted that the trustee owes a fiduciary duty to the creditors of the estate. Judge Case concluded that the test of whether a trustee may refuse to pursue a §506(c) claim after request by administrative claimant is whether doing so may conceivably benefit the estate, without regard to whether the action will benefit the requesting claimant. Examples of such circumstances could include situations where a payment of a legitimate surcharge claim from the secured creditor's collateral would increase the pool of unencumbered assets remaining to pay other administrative or perhaps even unsecured creditors that do not have a legitimate basis on which to seek a surcharge. In such event, the net result would be an increase in the pro rata distribution available to other creditors—clearly a benefit to the estate. However, under these facts, there were no unencumbered funds, and the only basis for payment of the administrative claimants is whether they can individually establish entitlement to a surcharge. Whether they do or do not has no impact on the estate as a whole or on other creditors. Thus, the court held that it is not part of the trustee's mandatory exercise of a fiduciary obligation to take action, the end result of which can only benefit an individual creditor or claimant.
Right of Recoupment Not "Claim"
In In re Abco Industries Inc., 270 B.R. 58 (Bankr. N.D. Tex. 2001), Bankruptcy Judge Robert C. McGuire addressed and distinguished setoff vs. recoupment in the context where the claimant had actually filed a proof of claim, which was eventually disallowed. Although the defensive use of setoff (or recoupment) is not necessarily precluded by the failure to file a proof of claim, the court held that setoff is not to be permitted if the claim that is sought to be used as a setoff is actually disallowed. However, as the equitable right of recoupment is not addressed in the Code or subject to the restrictions found in §553 relating to setoff, "it is not a right specifically part of a claims allowance or disallowance process." Thus, the court held that a right to assert recoupment was not lost when a claim is disallowed and is not precluded from being raised as a defense. In addition, the court noted that the right of recoupment is not a "claim" in bankruptcy because it does not give rise to a right to actual payment, it merely reduces a debt and thus is a defense and not a renewed claim.
Miscellaneous
- In re Lamarre, 269 B.R. 266 (Bankr. D. Mass. 2001) ("unmatured interest" is not to be equated with interest that is contingent, disputed or unliquidated");
- In re Golden Books Family Entertainment Inc., 269 B.R. 300 (Bankr. D. Del. 2001) (non-exclusive licensing agreement could not be assumed and assigned by the trustee of the debtor/licensor without the licensor's consent);
- In re Golden Books Family Entertainment Inc., 269 B.R. 311 (Bankr. D. Del. 2001) (under federal copyright law, exclusive licensees have the right to freely assign their rights without the need for first obtaining licensor's consent);
- In re Dunning, 269 B.R. 357 (Bankr. N.D. Ohio 2001) (order awarding punitive damages for violation of the automatic stay for post-petition setoff);
- In re Grau, 267 B.R. 896 (Bankr. S.D. Fla. 2001) (court can approve a settlement agreement relating to a claim of exemptions over the objection of a creditor who has filed a separate exception to exemptions, and such a settlement would bind such objecting creditor);
- In re Miranda, 269 B.R. 737 (Bankr. S.D. Tex. 2001) (the bankruptcy court has no authority to extend the deadline for filing a proof of claim in a chapter 13 even if there are no objections);
- In re J.E. Adams Industries Ltd., 269 B.R. 808 (N.D. Iowa 2001) (post-petition notification letters relating to payment dates and cancellation of insurance policy for non-payment is not a violation of the automatic stay);
- In re Nuclear Imaging Systems Inc., 270 B.R. 365 (Bankr. E.D. Pa. 2001) (consensual carveout for the benefit of debtor's counsel did not create "property of the estate" subject to claims of the chapter 7 trustee, but was property of the creditor that, but for its consent, would have been distributed to the creditor); and
- In re Weinstein, 272 F.3d 39 (1st Cir. 2001) (post-petition interest on post-petition tax debt was entitled to first priority as administrative expense of chapter 7 estate).