Justia U.S. 2nd Circuit Court of Appeals Opinion Summaries

United appealed the district court's order denying United's motion to dismiss an antitrust complaint brought against it by DHL. At issue was whether DHL had sufficient notice of the availability of the claim against a Chapter 11 debtor to satisfy due process requirements and render the claim discharged. The court concluded that the district court applied an incorrect standard in accepting as true DHL's allegation that it was not aware of, or with due diligence could not have become aware of, sufficient facts to plead an antitrust claim that would survive a motion to dismiss in the context of a bankruptcy proceeding. Therefore, the court remanded for further development of the facts concerning (a) what DHL knew or reasonably should have known in time to present an antitrust claim in the bankruptcy proceeding, or to file a late proof of claim or move to amend the reorganization plan and (b) what United knew or reasonably should have known concerning DHL's claim. View "DPWN Holdings (USA), Inc. v. United Airlines, Inc." on Justia Law

Starr, AIG's former principal shareholder, filed suit against the FRBNY for breach of fiduciary duty in its rescue of AIG during the fall 2008 financial crisis. The district court dismissed Starr's claims and Starr appealed. The suit challenged the extraordinary measures taken by FRBNY to rescue AIG from bankruptcy at the height of the direst financial crisis in modern times. In light of the direct conflict these measures created between the private duties imposed by Delaware fiduciary duty law and the public duties imposed by FRBNY's governing statutes and regulations, the court held that, in this suit, state fiduciary duty law was preempted by federal common law. Accordingly, the court affirmed the judgment of the district court. View "Starr Int'l Co. v. Federal Reserve Bank of New York" on Justia Law

These consolidated appeals arose out of a permanent injunction entered by the Bankruptcy Court and affirmed by the district court, enjoining state law tort actions asserted by appellants, two of Madoff's defrauded investors, against the estate of one of Madoff's alleged co-conspirators and related defendants (Picower defendants). The court concluded that appellants' complaints impermissibly attempted to "plead around" the Bankruptcy Court's injunction barring all claims "derivative" of those asserted by the Trustee. The court also concluded that the Bankruptcy Court operated within the confines of Article III, as recently interpreted by the Supreme Court in Stern v. Marshall. Accordingly, the court held that the Bankruptcy Court did not exceed the bounds of its authority under the Bankruptcy Code or run afoul of Article III. View "In Re: Bernard Madoff" on Justia Law

After debtor filed for bankruptcy under Chapter 7 of the Bankruptcy Code, 11 U.S.C. 701 et seq., the trustee brought proceedings against defendant and others, alleging that these defendants had received fraudulent transfers from debtor prior to debtor's Chapter 7 filing. The court concluded that the district court did not err in declining to dismiss the complaint as untimely, as the bankruptcy court's order constituted a de facto Rule 7021 severance; nor did it err in applying state law to the award of prejudgment interest; in the absence of further explanation, the court remanded for the district court to either exercise its discretion or to explain that it was aware of and in fact exercised its discretion; the district court should articulate its reasons for any grant of interest; and the remainder of defendant's arguments have been considered in the summary order filed along with this opinion. View "In re: Douglas Palermo" on Justia Law

Drawbridge appealed from the bankruptcy court's order granting recognition of a foreign main proceeding. 11 U.S.C. 109(a) provides: "Notwithstanding any other provision of this section, only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor under this title." The court vacated and remanded, finding that section 109(a) applies to the debtor in a foreign main proceeding under Chapter 15 of the Bankruptcy Code. View "In re: Katherine Elizabeth Bar" on Justia Law

This case arose when partners of the law firm Thelen LLP, a registered limited liability partnership governed by California law, voted to dissolve the firm. At issue was whether, for purposes of administering the firm's related bankruptcy, New York law treats a dissolved law firm's pending hourly fee matters as its property. The court certified controlling questions of law to the New York Court of Appeals, concluding that the court could not definitely answer the issue without the guidance of the state court. View "In Re: Thelen LLP" on Justia Law

U.S. Bank appealed the bankruptcy court's order authorizing AMR and American (collectively, "Debtors") to obtain postpetition financing; authorizing Debtors to repay certain prepetition notes held by U.S. Bank and secured by aircraft; and denying U.S. Bank's request to lift an automatic stay. The court concluded that: (1) under the language of the Indentures, American's voluntary petition for bankruptcy triggered a default and automatically accelerated the debt, the satisfaction of which required no make-whole payment; (2) ipso facto clauses in a nonexecutory contract were not unenforceable under 11 U.S.C. 365(e) or any other Bankruptcy Court provision identified by U.S. Bank; Debtors complied with its 11 U.S.C. 1110(a) elections to perform its obligations under the Indentures and cure any nonexempt defaults by making regularly schedule principal and interest payments; it was not required to cure its Section 4.01(g) default; and (4) the bankruptcy court did not abuse its discretion in denying U.S. Bank's motion to lift the automatic stay. Accordingly, the court affirmed the judgment of the district court. View "In re: AMR Corp." on Justia Law

The IRS challenged the district court's judgment upholding the bankruptcy court's decision to grant the objection of the reorganized Worldcom debtors to the IRS's proof of claim for taxes owed and the debtors' refund motion for the taxes WorldCom had already paid. At issue was whether WorldCom must pay federal excise taxes on the purchase of a telecommunications service that connected people using dial-up modems to the Internet. The court held that WorldCom purchased a "local telephone service" when it paid for the telecommunications service and that WorldCom must therefore pay federal communication excise taxes on those transactions. Accordingly, the court reversed and remanded for further proceedings. View "In Re: WorldCom, Inc." on Justia Law

Appellants sought to avoid and recover certain payments made by debtor, QWUSA, to appellees, noteholders, in exchange for private placement notes that had been issued by one of debtor's affiliates. On appeal, appellants challenged the district court's affirmance of the bankruptcy court's grant of appellees' motion for summary judgment. The bankruptcy court held that the payments were exempt from avoidance because they were both "settlement payments" and "transfers made... in connection with a securities contract," under 11 U.S.C. 546(e). The court affirmed the district court's judgment, concluding that the payments fell within the safe harbor for "transfers made... in connection with a securities contract." View "In re: Quebecor World (USA), Inc." on Justia Law

SEFCU, a lender, appealed from the district court's reversal of an order of the bankruptcy court and remanding the case to the bankruptcy court for further proceedings. The district court concluded that SEFCU violated the automatic stay provision of the Bankruptcy Code, 11 U.S.C. 362, when, after lawfully repossessing a vehicle belonging to debtor, it failed to deliver the vehicle to him notwithstanding its knowledge of debtor's pending petition under Chapter 13 of the Bankruptcy Code. The court concluded that SEFCU "exercised control" over "property" of debtor's bankruptcy estate in contravention of section 362 when it failed to relinquish the vehicle promptly after it learned that a Chapter 13 petition was filed. Consequently, under section 362(k), SEFCU was liable for debtor's actual damages resulting from the wrongful retention, costs, and attorneys' fees. Accordingly, the court affirmed the judgment. View "Weber v. SEFCU" on Justia Law