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Bankruptcy

A Texas Bankruptcy Lawyer's Blog

Case updates and commentary of interest to Texas bankruptcy lawyers.
By Stephen Sather

Post Frequency: 1.1/day

Last Entry: September 30, 2020 at 11:22:00

A Modest Proposal

Posted on March 03, 2008
There has been a lot of talk about the sub-prime mortgage crisis lately. The presidential candidates are very concerned about it, but don't seem to be offering a lot of specifics. One of the candidates wants to impose a 90 day moratorium on foreclosures...

How to Count Backwards

Posted on February 21, 2008
Deadlines are important. As a result, it is important to know when a deadline falls. Fed.R.Bankr.P. 9006(a) explains that the last day of a period is not counted if it falls on a Saturday, Sunday or legal holiday. In that instance, the time period ?runs until the end of the next day which is not one of the aforementioned days...

Ten Day Rule Protects Trustee

Posted on February 21, 2008
Most bankruptcy lawyers find the arcane details of the Federal Rules of Civil Procedure to be deadly dull. However, for Austin Bankruptcy Trustee Dan Roberts, the difference between Fed.R.Civ.P. 59 and 60 proved to be very important. In re Geneva Peterson Berg, No...

Impressions of Jury Duty

Posted on February 02, 2008
As a lawyer, I never expected to be selected for jury duty. Although I have gone through voir dire several times in the past, I had always been struck or not reached. As a result, when I was called for service in County Court at Law #7, I expected to be back in the office by the end of the afternoon...

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Fifth Circuit Rules on Homestead Cap

Posted on January 30, 2008
The Fifth Circuit started off the new year with an opinion construing the homestead cap under 11 U.S.C. Sec. 522(p)(1). Matter of Rogers, 2008 U.S. App. LEXIS 129 (5th Cir. 1/4/08). While the case addresses a fairly narrow issue, it is significant because it appears to be the first appellate court opinion construing the new statute...

Judge Follows Legal Priority While Acknowledging "Moral Priority" Of Losing Parties

Posted on January 16, 2008
San Antonio Bankruptcy Judge Leif Clark is known as the master of the footnote. Thus, when faced with a relatively straightforward case requiring him to construe a confirmed chapter 11 plan, he held his nose and applied the law. In re Texas Pig Stands, Inc...

Fifth Circuit Recommends Impeachment of Federal Judge Based on Bankruptcy Misconduct

Posted on January 11, 2008
On December 20, 2007, the Judicial Council of the Fifth Circuit entered a Memorandum Order and Certification in which it certified to the Judicial Conference of the United States its determination that U.S. District Judge G. Thomas Porteous had engaged in conduct which might constitute grounds for impeachment...

Texas Supreme Court Limits Penalties for Invalid Home Equity Loan

Posted on January 10, 2008
Texas has a long tradition of protecting its homesteads. Texas was the last state in the nation to allow home equity lending. When it did, the loans came with a host of technical requirements and draconian penalties for failing to meet those requirements...

Interesting Cases That I Didn't Get Around To This Year

Posted on December 21, 2007
As we reach the end of another year, I have a few cases that I meant to blog about, but never quite found the time. Many of these cases are every bit as important as the ones that I did write about. Here are the best of the rest in capsule form. Maybe I will find time to write some more about them next year...

Update on Deductibility of 401k Loan Payments Under Means Test

Posted on December 21, 2007
This blog previously reported on Judge Larry Kelly's decision in In re Otero which allowed payments on 401k loans to be deducted under the chapter 7 means test. http://stevesathersbankruptcynews.blogspot.com/2006_11_01_archive.html. That decision was subsequently reversed on appeal by the U...

Gadzooks Update

Posted on December 21, 2007
This blog previously reported on an opinion by Judge Harlin Hale of the Northern District of Texas which limited the effect of the Fifth Circuit's opinion in Matter of Pro-Snax Distributors, Inc., 157 F.3d 414 (5th Cir. 1998). http://stevesathersbankruptcynews...

Dallas Judge Investigates Mortgage Rescue Scam; Urges Debtor's Bar to Warn Clients

Posted on December 20, 2007
Dallas Judge Stacey Jernigan recently issued an opinion concerning a mortgage protection scheme which the court found to prey upon both desperate debtors and mortgage lenders seeking to protect their legal rights. In re Michael White, No. 06-32324 (Bankr...

Pakistani Lawyers Risk Lives for Rule of Law

Posted on November 06, 2007
In Pakistan, thousands of lawyers dressed in black suits and ties took to the street to protest the dissolution of the supreme court and the suspension of the constitution. It is estimated that 500-700 were arrested. "Bush criticizes Musharraf," Austin American Statesman, November 6, 2007, p...

Timely Amended Claim Avoids Usury Penalty

Posted on October 24, 2007
After just sixteen days on the bench, Austin Bankruptcy Judge Craig Gargotta has penned his first opinion. In Ingalls vs. Cunningham, Adv. No. 06-1236 (Bankr. W.D. Tex. 10/16/07), Judge Gargotta considered whether a creditor which filed an arguably usurious claim could take advantage of Texas's usury cure provision when it amended the claim to delete the offending charges...

Court Protects Homestead Proceeds But Leaves Open Question on Tardy Objections

Posted on October 23, 2007
Texas has one of the most generous homestead exemptions in the country. However, a quirk in the law allows an exemption in homestead proceeds to be lost due to the passage of time. San Antonio Bankruptcy Judge Leif Clark recently found a creative solution to the problem created by an obstreperous creditor seeking to outlast the debtor and preclude reinvestment of the proceeds from sale of a homestead...

Creditor Trust Fails to Revive Claims Brought by Debtor; Creditors Found to Have Derivative Standing Only

Posted on October 17, 2007
While plan trusts have many uses, overcoming res judicata is not one of them. In Medlin, Trustee v. Wells Fargo Bank, N.A., Adv. No. 04-5041 (Bankr. W.D. Tex. 7/31/07), the Bankruptcy Court considered whether claims contributed to a plan trust by investors could overcome a prior take nothing judgment entered in a suit by the debtor?s trustee...

Fifth Circuit Rules on Bradley Appeal; Lazarus Trust Is Not Resurrected From Bankruptcy Court Judgment

Posted on September 24, 2007
?This is the way the world ends/Not with a bang but a whimper.?--T.S. ElliottThe long-running bankruptcy case of flamboyant Austin developer Gary Bradley came one step closer to its end with a dissertation by the Fifth Circuit Court of Appeals on . . ...

Cash Value of Surrendered Policy Not Exempt In Texas

Posted on August 08, 2007
The Fifth Circuit has held that proceeds from a surrendered whole-life policy are not exempt under Texas law. Trautman vs. Milligan, No. 06-50363 (5th Cir. 8/8/07). The Trautman decision relied on both interpretation of the Texas Insurance Code and policy considerations...

District Court Reverses Discharge Violation; Finds Some Violations Too Technical to Punish

Posted on July 23, 2007
Are some violations of the discharge injunction too technical or trivial to justify enforcement? According to a U.S. District Court Judge in Texas, the answer is yes, and the holding, if correct, may highlight an important distinction between the penalties for violation of the stay and the discharge...

Judge Isgur Refuses to Apply Vicarious Disqualification

Posted on June 26, 2007
Judge Marvin Isgur of the Southern District of Texas has rejected application of a per se vicarious disqualification rule in a case involving Bracewell Giuliani. No. 07-32417, In re Cygnus Oil and Gas Corporation, (Bankr. S.D. Tex. 5/29/07). In the Cygnus case, a Bracewell partner owed 100,000 shares of the debtor and has served as a director for four months during the year prior to bankruptcy...

Assigned Credit Card Debt: A Problem of Paper, Electronic Images and Faith

Posted on June 13, 2007
Two recent decisions from Texas Bankruptcy Courts highlight the practical problems inherent in proving up a claim based on assigned credit card debt. However, they also illustrate the tenuous connection between trust and value in the electronic age...

Bad Debtors Find Limited Homestead Protection

Posted on June 05, 2007
When Congress amended the bankruptcy laws, one of its goals was to eliminate the practice of pouring money into an exempt homestead prior to filing bankruptcy. Due to the inviolability of the homestead under Texas law, this had been a time-honored practice...

Texas State Court Strikes Down Ch. 11 Litigation Trust Agreement As Void Against Public Policy

Posted on May 11, 2007
A Texas Court of Appeals has ruled that a litigation trust created under a chapter 11 plan of reorganization was void as against public policy as a ?Mary Carter Agreement.? Turoff v. McCaslin, 2007 Tex. App. LEXIS 2343 (Tex. App.?Waco, 3/21/07). As a result, the court sustained a take-nothing summary judgment rendered against the plan trustee and in favor of the corporate officers and directors (D & O Defendants) and the corporate auditor who had been sued...

BAPCPA Allows Bad Faith Debtor To Escape Trustee Based on Failure To Make Necessary Filings

Posted on May 08, 2007
In a recent case described as ?the poster child for a bad faith debtor,? the debtor was allowed to escape bankruptcy over the objection of his chapter 7 trustee because he failed to file meaningful schedules within 45 days from the petition date. In re Walter Lee Hall, Jr...

Brief Representation Comes Back to Haunt Attorney Six Years Later

Posted on May 07, 2007
?The law has not been dead, though it has slept.? Shakespeare, Measure for Measure, Act. II, Scene ii, l. 90.A Houston lawyer recently discovered that the passage of time was not sufficient to protect him from the consequences of actions taken in a brief representation nearly six years earlier...

Mother-Daughter Debacle Plays Out in Waco; Family Debts Determined to Be Dischargeable

Posted on April 25, 2007
?Traditionally, trials of family conflicts often involve emotion and controversy, yet are short on reason, logic and admissible evidence. These adversary proceedings share these traits.? Thus, began Judge Larry Kelly?s Memorandum Opinion in which he sought to sort out the tangled mother-daughter disputes in Rose Douso Petro v...

Houston Judges Continue Inquiry Into Practices of Prominent Creditors' Firm

Posted on March 28, 2007
Proceedings involving a prominent Houston creditors? firm (hereafter referred to as the Firm)* heated up recently as two bankruptcy judges considered sanctions issues arising out of the Firm?s extensive bankruptcy practice. The Firm feuded publicly with the U...

Mental Incapacity Excuses Debtor From Credit Counseling; Prior History Proves Insufficient Grounds for Dismissal

Posted on March 24, 2007
Judge Robert Jones from the Northern District of Texas was recently faced with a situation which looked like an easy candidate for dismissal. The debtor filed pro se, did not obtain credit counseling, had previously filed ten unsuccessful bankruptcy cases and had filed over 100 suits against various parties...

Supreme Court Allows Recovery of Post-Petition Attorney's Fees Based On Pre-Petition Contract

Posted on March 20, 2007
In a unanimous opinion, the Supreme Court ruled that nothing in the Bankruptcy Code prohibits a creditor from asserting an unsecured claim for attorney's fees incurred post-petition where such fees would have been recoverable outside of bankruptcy. Travelers Casualty & Surety Co...

Judge Clark Protects the Brooklyn Bridge

Posted on March 20, 2007
The prolific Judge Leif Clark, who has written many memorable footnotes, including one quoted here yesterday, has written another one which is both quotable and addresses an important point. In In re Rendon, No. 06-52501 (Bankr. W.D. Tex. 3/15/07), a party who claimed to be purchasing a home from the debtors filed a Motion to Create Equitable Lien/Motion for Expedited or Emergency Hearing...

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