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2008 NORTON BANKRUPTCY LAW SEMINAR MATERIALS

Appellate Court Decisions Related
To Bankruptcy Cases

By William Norton, III

S 362(k)(1), the debtor bears the burden of establishing by a preponderance of the evidence that the creditor knew of the automatic stay and intended the actions that constituted the violation; no specific intent is required. A creditor's good faith belief that it had a right to the property is irrelevant. Retailer's refusal to return the vehicle was a willful violation of the automatic stay. Despite the demeanor of debtor's counsel, retailer had a responsibility to investigate further if it seemed debtor's counsel was making false representations. Retailer was a sophisticated party represented by counsel and familiar with repossession and bankruptcy procedure. Retailer knew debtor's name and address and could easily have determined whether debtor had filed a bankruptcy petition. Bankruptcy court properly avoided retailer's lien, which retailer attempted to perfect post-petition without obtaining relief from the stay.)

24. 363(f) Sale of Assets -- Free and Clear

Al Perry Enterprises, Inc. v. Appalachian Fuels, LLC, 503 F.3d 538 (6th Cir. Sept. 27, 2007) (Debtor's sale of assets and assumption and assignment of executory contracts "free and clear of any and all liens, claims, interests and encumbrances" except those specifically listed did not obligate assignee of executory contract to pay commissions under assumed contract when those commissions were not listed. Debtor had pre-petition coal supply contract with another party, and debtor paid commissions to plaintiff sales agent based on sales of coal under the contract. After a dispute arose concerning the commissions, a pre-petition judgment was entered in favor of the sales agent that the debtor was required to continue paying the commissions. In the bankruptcy case, the coal supply contract was assumed and assigned, and the order provided that sale of assets and assumption and assignment of contracts was free and clear of any claim of creditors against the debtor. Plaintiff had notice of and an opportunity to object to this order but failed to do so. As a result, the assignee took the coal supply contract free of the plaintiff's claim for commissions.)

25. 363(k) Sale of Assets -- Credit Bid

Cohen v. KB Mezzanine Fund II, LP (In re Submicron Sys. Corp.), 432 F.3d 448 (3d Cir. Jan. 6, 2006) (At a S 363 sale, S 363(k) allows a secured creditor to credit bid up to the full face value of its claim, even when the collateral securing the claim has no economic value.)

26. 363(m) Sale of Assets -- Good Faith Purchaser

Parker v. Goodman (In re Parker), 499 F.3d 616 (6th Cir. Aug. 28, 2007) (Bankruptcy court properly enjoined Chapter 7 debtor from pursuing a state

 

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