Justia U.S. 4th Circuit Court of Appeals Opinion Summaries

The trustee of Firstpay's bankruptcy estate sought a judgment against the United States for an amount of payroll tax payments the firm made on behalf of its employer-clients to the IRS. At issue on appeal was whether the trustee may reclaim as property of Firstpay the approximately $28 million transferred by the firm to the IRS during the 90 days preceding the filing of the bankruptcy petition. The court agreed with the bankruptcy court and the district court that, as a matter of law, Firstpay lacked an equitable interest in the funds paid over to the IRS. Accordingly, the court affirmed the judgment. View "Wolff v. United States" on Justia Law

CSS, the debtor, filed a Chapter 11 bankruptcy petition in 2012. Acting as general contractor or as a first tier subcontractor, CSS placed orders with Subcontractors, the creditor. The court held that construction subcontractors entitled to a lien on funds under North Carolina law had an interest in property when the debtor contractor filed for bankruptcy, by which time the subcontractors had not yet served notice of, and thereby perfected, their liens. Because there is no dispute that the other criteria of the applicable bankruptcy stay exception have been met, the court held that the bankruptcy court and district court correctly allowed Subcontractors to serve notice of, and thereby perfect, their liens post-petition.View "Construction Supervision Svcs v. Branch Banking & Trust" on Justia Law

The trustee in this case requested a trustee's fee of $17,254.61. At issue was whether, in light of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), 11 U.S.C. 330, a bankruptcy court is required, absent extraordinary circumstances, to compensate Chapter 7 trustees on a commission basis. Also at issue was whether the court should remand the case to the bankruptcy court with instructions to apply the correct legal standard after an evidentiary hearing. The court held that, absent extraordinary circumstances, Chapter 7 trustees must be paid on a commission basis, as required by section 330(a)(7). The court reversed the district court's decision affirming the bankruptcy court's non-commission-based fee award and remanded with instructions to vacate the trustee's fee award and remanded the matter to the bankruptcy court so that it could determine the proper commission-based fee.View "In Re: H. Jason Gold" on Justia Law

Debtor transferred her interest in real property to AGC, a corporation wholly owned by her husband. Seven months later, debtor declared bankruptcy and the bankruptcy court concluded that the conveyance was constructively fraudulent. The bankruptcy court found AGC did not prove by clear and convincing evidence that it paid for the property or intended to pay for it on the date of the property's purchase. The bankruptcy court also found that, at the time of the purchase, the parties intended that AGC would serve as the property's tenant, not the property's owner. AGC also did not prove that it intended to own the property on the date of acquisition. Therefore, the bankruptcy court found no justification for a resulting trust. The district court found no fault in the bankruptcy court's findings of fact, but nonetheless reversed. The court reversed the district court insofar as it found a resulting trust to sever debtor's legal and equitable interests in the property. Accordingly, the court vacated the judgment of the district court and remanded for further proceedings.View "Anderson v. Architectural Glass Construction" on Justia Law

Debtors filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code. At issue was whether above-median-income debtors with negative disposable income were obligated to maintain Chapter 13 bankruptcy plans that last for five years when their unsecured creditors have not been paid in full. The court held that a plain reading of the Bankruptcy Code, and Section 1325 in particular, mandates that an above-median-income debtor maintain a bankruptcy plan for five years unless all unsecured creditor claims are paid in full and irrespective of projected disposable income. Debtors, as above-median-income debtors, were obligated to maintain a five-year plan. The bankruptcy court therefore did not err in deeming the early termination language in debtors' proposed plan void as a matter of law and in extending the duration of debtors' proposed plan. The court affirmed the bankruptcy court's order but remanded in order for debtors to have an opportunity to present evidence regarding the feasibility of their monthly payments. View "Pliler v. Browning" on Justia Law

The Chapter 11 Litigation Trustee for the estate of Railworks sought to avoid and recover premium payments that Railworks transferred to CPG, which later transferred them to TIG. Railworks made the transfers within ninety days before Railworks filed for bankruptcy protection. The bankruptcy court granted summary judgment in favor of CPG, thus preventing the trustee from avoiding and recovering the premium payment transfers to CPG. The court held that the bankruptcy court's grant of CPG's summary motion was proper. While CPG had physical control over the transfers it received, it did not have the legal right to use them as it pleased. Instead, the General Agency Agreement mandated that CPG, the agent, hold the funds in trust for TIG, the principal. Consequently, the court reversed the district court's decision and remanded with instructions to reinstate the bankruptcy court's judgment. View "Railworks Corp. v. Construction Program Group" on Justia Law

The district court affirmed the bankruptcy court's ruling that the non-debtor release provision in NHF's Chapter 11 reorganization plan was unenforceable. The court concluded that NHF has failed to demonstrate that it faces exceptional circumstances justifying the enforcement of the Release Provision in its Reorganization Plan. NHF failed to make the necessary showing to support the risk of donor litigation, nor has it carried its broader burden of justifying the non-debtor release of its Reorganization Plan. View "National Heritage Foundation v. Behrmann" on Justia Law

The trustee filed an action to avoid and recover certain payments made by FMI to First Tennessee. The trustee alleged that the payments were fraudulent transfers under 11 U.S.C. 548, and were part of a fraudulent scheme. The court concluded that the bankruptcy court and the district court correctly applied the objective good-faith standard in determining that the bank employees' testimony provided competent objective evidence that satisfied the bank's burden of proving its affirmative defense under section 548(c). The court also concluded that the bankruptcy court did not clearly err in holding that the bank accepted the payments from FMI in good faith. Accordingly, the court affirmed the judgment of the district court. View "Taneja v. First Tennessee Bank NA" on Justia Law

Qimonda, a German corporation that manufactured semiconductor devices, filed for insolvency in Munich, Germany. Plaintiff, the insolvency administratort, filed an application in the United States Bankruptcy Court under Chapter 15 of the Bankruptcy Code, petitioning the U.S. court to recognize the German insolvency proceeding as a "foreign main proceeding" in order to obtain privileges available under Chapter 15. At issue before the court was how to mediate between the United States' interests in recognizing and cooperating with the foreign insolvency proceeding and its interests in protecting creditors of Qimonda with respect to U.S. assets, as provided by 11 U.S.C. 1521 and 1522. The court concluded that the bankruptcy court properly recognized that plaintiff's request for discretionary relief under section 1521(a) required it to consider the interest of the creditors and other interested parties, including the debtor under section 1522(a) and that it properly construed section 1522(a) as requiring the application of a balancing test. The court also concluded that the bankruptcy court reasonably exercised its discretion in balancing the interest of the licensees against the interests of the debtor and finding that application of 11 U.S.C. 365(n) was necessary to ensure the licensees under Qimonda's U.S. patents were sufficiently protected. Accordingly, the court affirmed the judgment of the district court. View "Dr. Michael Jaffe v. Samsung Electronics Co." on Justia Law

Debtors claimed that the bankruptcy court erred by including an inheritance that postdated their Chapter 13 bankruptcy petition by more than 180 days as part of their bankruptcy estate. The court concluded that Bankruptcy Code Section 1306(a) extended the timeline for including "the kind" of property "specified in" Section 541 in Chapter 13 bankruptcy estates. Accordingly, the court affirmed the bankruptcy court's inclusion of the inheritance in debtors' Chapter 13 bankruptcy estate. View "Carroll v. Logan" on Justia Law