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case update: cir 5, 6, 10

5th cir

Kane v. Nat’l Union Fire Ins. Co., 07-30611 (Jul 14)
A finding of summary judgment in a PI suit, as well as judicial estoppal of the plaintiffs/debtors due to their failure to list the suit in their Chapter 7 schedules, and denial of trustee’s motion to be substituted in the case as the real party in interest, are reversed and the case is remanded because

+the PI claim became an asset of the estate upon filing of the petition

+the trustee is the real party in interest and never abandoned his right

+the debtors only benefit if a PI judgment yields a surplus to the estate

The Appellate Court also found that a prior circuit court determination in the case did not control in bankruptcy court, and the district court (which ruled that the circuit court decision controlled as a matter of law) abused its discretion.

6th cir

Phar-Mor, Inc. v. McKesson Corp., 05-4525, 05-4526 (Jul 17)

Vendor’s administrative-expense priority on a reclamation claim is not extinguished when the goods to which that claim applies are sold and the proceeds used to satisfy a secured creditor’s claim. The vendor retains it’s priority in those proceeds of the estate that remain after secured creditors are satisfied.

10th cir

In re Tri-Valley Distrib., Inc., 06-4279, 06-4280 (Jul 15)

In suit alleging state claims for fraudulent transfer and negligent lending, the parties’ motions to dismiss each other’s appeals for lack of jurisdiction are granted where:

+ bankruptcy appellate panel’s order was not final and appealable

+ denial of defendant’s motion to dismiss was not a final collateral order entitled to review

+ bankruptcy appellate panel acted within its authority

+ there was no jurisdiction to review the merits of a section 1334(c)(1) abstention issue

In re: US Med., Inc., 07-1259 (Jul 15)

Creditor is not a non-statutory insider of the debtor for purposes of 547(b)(4)(B) and a transaction between that creditor and the debtor will not be avoided where

+ the transactions at issue were at arm’s length

+ there is no undue influence or control by creditor

In sum, while creditor is only a “non-statutory insider” when its transaction of business with the debtor is not at arm’s length or there is undue influence; no such requirements are needed if the creditor qualifies as an insider per statute (“statutory insider”).

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