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Westlaw Case Updates

In re: Kleibrink (Cir. 5, Sep. 28)

In a debtor’s appeal from a district court‘s affirmance of a bankruptcy court’s ruling that a creditor held an enforceable security interest in a property of his, despite his having received a discharge in an earlier bankruptcy proceeding, the order is affirmed where the notice given to the creditor did not satisfy the due process standard for notice set forth in Mullane.

In re: NM Holdings Co., LLC (Cir. 6, Sep. 30)

In a bankruptcy trustee‘s suit against debtor-company’s former auditor, claiming that the auditor negligently performed its audits by failing to uncover and report unsound related-party transactions entered into by the company’s sole shareholder and CEO, as well as aided and abetted the CEO’s breach of his fiduciary duty to the company, district court’s grant of the auditor’s motion for summary judgment is affirmed where: 1) the trustee’s amended complaint does not allege reliance by the company or by the company’s fairness committee, and the alleged reliance by the company’s creditors cannot support a claim brought by the trustee on behalf of the company; and 2) district court did not err in holding that the residual statute of limitations applied to the trustee’s aiding-and-abetting claim.

In Re: Res. Tech. Corp. (Cir. 7, Oct. 1)

District Court affirmed Bankruptcy Court‘s rejection of Trustee’s proposed assignment of Debtor‘s contracts to a company managed by its former officers in exchange for that company paying debtor’s operating expenses because

1) Bankruptcy court carefully evaluated the assumption-and-assignment proposal under section 365(f)(2)(B), and its decision to deny the trustee’s motion was sound;

2) There was no reason to disturb Bankruptcy judge’s determination that the company failed to comply with its order requiring an escrow deposit; and

3) District Court’s contempt finding was fully supported by the record, and the court thoroughly considered and properly rejected the company’s defense to contempt.

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