Supreme Court Grants Cert in Ninth Circuit Case on Jurisdiction by Consent

ABI Bankruptcy Brief | June 25 2013

June 25, 2013

NEWS AND ANALYSIS

SUPREME COURT GRANTS CERT IN NINTH CIRCUIT CASE ON JURISDICTION BY CONSENT

The Supreme Court yesterday granted certiorari in Executive Benefits Ins. Agency v. Arkison (In re Bellingham Insurance Agency) about the scope of the bankruptcy court's powers in the wake of the Court's ruling in Stern v. Marshall. In a Ninth Circuit case that drew attention after Stern was decided, a fraudulent transfer defendant argued the bankruptcy court lacked jurisdiction to enter judgment against it. The Ninth Circuit agreed that the bankruptcy court could not enter a final judgment in a fraudulent transfer action but held that the defendant had consented to the bankruptcy court's jurisdiction through its litigation conduct. The Supreme Court will decide whether parties can consent to bankruptcy court jurisdiction. They will also have to rule on a statutory issue about a gap Stern created in the jurisdictional framework. A potential outcome is that bankruptcy courts will lose the power to hear any fraudulent transfer actions. To read the petition for a writ of certiorari, please click here.

LATE AUTO LOAN PAYMENTS EDGED HIGHER IN 1Q 2013

Banks are increasingly extending auto loan financing to borrowers with less-than-sterling credit, a trend that's contributing to a higher rate of missed loan payments, the Associated Press reported today. The rate of U.S. auto-loan payments late by 60 days or more rose to 0.88 percent in the first three months of the year, credit reporting agency TransUnion said today. That's up from 0.82 percent in the first quarter last year, but down from 1 percent in the last three months of 2012, the firm said. Among subprime borrowers, or those whom lenders deem to be higher credit risks because of their track record of managing debt, the delinquency rate jumped to 5.5 percent in the first quarter from 5.09 percent a year earlier. Read more.

ANALYSIS: HIGH-END HOME LOANS STAGE A COMEBACK

Despite a recent sharp rise in mortgage rates, "jumbo" loans are becoming easier to get, according to a Wall Street Journal analysis on Saturday. Lenders originated $54 billion in such mortgages in the first quarter of 2013, according to Inside Mortgage Finance, an industry newsletter, up from $47 billion during the same period a year earlier. Higher loan volume isn't the only sign of a turnaround. The difference in the rate for a government-backed "conforming" mortgage and a jumbo loan is the narrowest it has been since 2007. Many jumbo lenders also have increased the amount of a home's value they will finance, and some are becoming more flexible in evaluating borrowers with strong credit. Read more. (Subscription required.)

COMMENTARY: HOW SAM ZELL IS SINKING TRIBUNE A SECOND TIME AROUND

Sam Zell is gone from the Tribune Co., but his toxic financial legacy lives on, according to a commentary in Friday's Washington Post. Not only did his debt-fueled purchase of one of the nation’s biggest media companies help precipitate its bankruptcy, costing creditors billions of dollars and wiping out thousands of jobs, but he also left a nasty tax mess behind for Tribune, which exited chapter 11 proceedings on Dec. 31. The Internal Revenue Service has challenged the tax-avoiding way that Zell had Tribune unload Newsday, a Long Island, N.Y., newspaper, and it seems almost certain to challenge the way that Tribune unloaded the Chicago Cubs. By the time the final papers are shuffled, the IRS and local tax authorities will likely seek considerably more than half a billion dollars in taxes, penalties and interest from Tribune from the sales of the Cubs and Newsday. Read more.

LATEST ABI PODCAST EXAMINES SUPREME COURT'S DECISION ON THE MEANING OF “DEFALCATION”

ABI's latest podcast features ABI Resident Scholar Scott Pryor speaking with Prof. Keith Sharfman of St. John's University School of Law and attorney Tom Byrne of Sutherland Asbill & Brennan LLP (Atlanta) on the issues surrounding the Supreme Court's unanimous decision in Bullock v. BankChampaign, N.A. In its decision on May 13, the Court held that a defalcation by a trustee requires a finding of gross negligence or some knowledge that what he or she is doing is improper. Byrne was the counsel of record for Randy Bullock, and Scharfman joined fellow professors on an amici curiae brief in support of BankChampaign. Click here to listen to the podcast.

NEW ABI LIVE WEBINAR ON JULY 15 WILL FOCUS ON THE § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES

Utilizing a case study, ABI's panel of experts will explore issues surrounding a lender’s decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel will also walk attendees through the necessary mathematical analyses used to analyze these issues. The webinar will take place on July 15 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE NORTHEAST BANKRUPTCY CONFERENCE ON JULY 12

The next stop for the ABI Golf Tour is the famed Newport National course in Newport, R.I., in conjunction with the Northeast Bankruptcy Conference on July 12. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! There's no charge to register or participate in the Tour.

ABI IN-DEPTH

NEW ABI "BANKRUPTCY IN DEPTH" ON-DEMAND CLE PROGRAM LOOKS AT PRINCIPLES OF PROPERTY OF THE ESTATE: DEMYSTIFYING EQUITABLE INTERESTS

In this 90-minute seminar, Profs. Andrew Kull of Boston University School of Law and Scott Pryor of Regent University School of Law provide an in-depth analysis of a legal principle that has become, in their words, "a long-lost area of the law": § 541 of the Bankruptcy Code. Seeking to demystify what is meant by "property of the estate" and, in particular, the distinction between legal or equitable interests of the debtor in property, Kull and Pryor describe the legal entanglements that ensue when legal title belongs to one person but the equitable title belongs to someone else. The cost of the seminar, which includes written materials and qualifies for 1.5 hours of CLE, is $95. To order or to learn more, click here.

ASSOCIATES: ABI'S NUTS & BOLTS ONLINE PROGRAMS HELP YOU HONE YOUR SKILLS WHILE SAVING ON CLE!

Associates looking to sharpen their bankruptcy knowledge should take advantage of ABI's special offer of combining general, business or consumer Nuts & Bolts online programs. Each program features an outstanding faculty of judges and practitioners explaining the fundamentals of bankruptcy, offering procedures and strategies tailored for both consumer and business attorneys. Click here to get the CLE you need at a great low price!

NEW CASE SUMMARY ON VOLO: SUAREZ V. BARRET (IN RE SUAREZ; 9TH CIR.)

Summarized by James Portman Webster of the James Portman Webster Law Office PLC

The Ninth Circuit affirmed the Bankruptcy Appellate Panel and bankruptcy court's ruling that a state court contempt ruling can be used as evidence that a debt results from a willful and malicious injury and is, therefore, nondischargeable under 11 U.S.C. § 523(a)(6).

There are more than 900 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: FURTHER ANALYSIS OF IN RE BELLINGHAM INSURANCE AGENCY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post takes a closer look at the questions raised by the Supreme Court yesterday when it granted certiorari in Executive Benefits Insurance Agency v. Arkison (In re Bellingham Insurance Agency).

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Law firms should provide support for law student-staffed bankruptcy clinics for consumer debtors.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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