Ninth Circuit Holds that Selling Peace Does Not Require Business Judgment

In Spark Factor Design, Inc., et al. v. Hjelmeset (In re Open Medicine Institute, Inc.), No. 22-60017 (9th Cir. Oct. 30, 2023), the Ninth Circuit Court of Appeals recently found that a bankruptcy court has discretion of whether to apply the standards under section 363(b) of the Bankruptcy Code in cases where a debtor’s sale of […]

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Mississippi Court Joins Majority of Courts Finding that Setoff Rights Survive Plan Confirmation

Setoff is a right that allows a creditor to offset a prepetition debt owed to a debtor with its prepetition claim against the debtor.  See In re Luongo, 259 F.3d 323, 334 (5th Cir. 2001).  This remedy is aimed at preventing the inequitable and inefficient result that occurs when a creditor is forced to pay […]

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Ninth Circuit BAP Denies Retroactive Approval of Postpetition Financing

Section 364(a) of the Bankruptcy Code allows a debtor to incur unsecured debt, like trade debt, in the ordinary course of business.  Section 364(b) of the Code provides, however, that when a debtor plans to incur unsecured debt, like a loan, outside the ordinary course, the debt must be pre-approved by the bankruptcy court after […]

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SCOTUS Restricts Inherent Bankruptcy Authority

In Law v. Siegel, 571 U.S. ___ (2014) (slip opinion), the Supreme Court of the United States invalidated a bankruptcy court’s use of its inherent authority to tax (surcharge) a debtor’s exempt property with legal expenses incurred by a chapter 7 trustee during a bankruptcy case.  In doing so, the Supreme Court reminded us that a […]

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Ninth Circuit Limits Bankruptcy Jurisdiction in Fraudulent Conveyance Cases

The Ninth Circuit Court of Appeals recently held that a bankruptcy judge does not have jurisdictional authority to enter a final judgment in a fraudulent conveyance action against a non-claimant to a bankruptcy estate.  See Executive Benefits Insurance Agency v. Arkison (In re Bellingham Insurance Agency, Inc.), No. 11-35162 (9th Cir. Dec. 4, 2012).   Such […]

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