Bankruptcy Blogs

Last summer we had news of a pilot project in which audio recordings of bankruptcy hearings were going to be posted online, as .mp3 files, so that those who didn’t attend a court hearing (either in person or telephonically) can listen to what went on. Its a pilot project now. Three bankruptcy courts and two district courts are supposed to be participating. Since getting the news, I have been checking to find an audio file for a hearing which has been posted on the internet.

In the previous post, I covered In re Trejos, 2007 WL 2391184 (Bankr. App. 9th Cir. July 30, 2007), in which the Ninth Circuit BAP first considered BAPCPA’s infamous “hanging paragraph.” The language in issue is found in Bankruptcy Code section 1325(a):

The Ninth Circuit BAP has spoken on the “hanging paragraph” issue, siding with consumer lenders. Ever since the enactment of BAPCPA, some have claimed that poor legislative drafting must be read as substantially liberalizing the treatment of certain consumer loans in chapter 13.

In re Trejos, 2007 WL 2391184 (Bankr. App. 9th Cir. July 30, 2007) interprets the following language which was added to Bankruptcy Code section 1325(a) but left “hanging” without inclusion in any of its subparagraphs:

A recent decision by Judge Montali denied a bankruptcy trustee’s bid to capture a piece of the sole proprietorship business of a non-filing spouse. A lawyer reading this decision may be: (i) intrigued by the idea of applying its principles in the right case; (ii) puzzled by how the end game might have been played had the trustee succeeded.

Everyone who has represented a general unsecured creditor in a big chapter 11 case has had this experience. After the proof of claim has been filed, and usually after the plan has been confirmed, you receive in the mail the “Reorganized Debtor’s First Omnibus Objection to Claims.” Attached to the objection is an exhibit listing, in very small type, literally hundreds of claims. The grounds for objection may be something like “required documentation not attached.” Unless a timely response is submitted, all of these claims will be disallowed.