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U.S. Circuit Court of Appeals

1st circuit

Nisselson v. Lernout (11/08/06 – No. 05-1774)Dismissal of an action by a bankruptcy trustee to recover damages based in the legal rights of a company that entered into a merger with another company upon that company’s financial misrepresentations is affirmed where the wrongdoing of the second company was, as a matter of law, imputed to the surviving entity in the merger, thus the doctrine of in pari delicto bars the suit.

2nd circuit

In Re: Ostashko (11/06/06 – No. 05-6935)Reversal of bankruptcy court decision, and judgment in favor of defendant wife — which ruled that her rights to marital property vested when the state court awarded assets to her, before the husband filed his Chapter 7 petition — are vacated as: 1) an equitable distribution award is a remedy under New York law, and the enforcement of that remedy is no different than the enforcement of any other judgment; 2) New York adheres to the rule that the priority of judgment creditors is determined on the basis of order in which judgments are docketed or executed; 3) 11 U.S.C. section 544 gives the bankruptcy trustee rights of a hypothetical perfected judgment lien creditor as of the petition date; and 4) while the Decision After Inquest determined the rights to the marital assets between husband and wife, it did not determine the rights to the assets between wife and all other judgment lien creditors.

5th circuit

Arevalo v. Comm’r of Internal Revenue (11/07/06 – No. 05-61129)A tax court’s determination that petitioner was not allowed either a depreciation deduction under 26 U.S.C. section 167 or a tax credit under 26 U.S.C. section 44 in connection with a payphone scheme is affirmed where: 1) there was no clear error in a finding that petitioner did not have ownership of payphones entitling him to a depreciation deduction; and 2) the tax court correctly concluded that petitioner did not have an obligation to comply with the Americans with Disabilities Act and his investment in the payphones did not qualify as an eligible access expenditure.

U.S. 6th Circuit Court of Appeals

In re: 5900 Assocs., Inc. (11/07/06 – No. 05-1838)

A bankruptcy court retains jurisdiction to approve attorney’s fees under 11 U.S.C. section 330 even after the underlying case is dismissed. In a proceeding arising from a bankruptcy trustee’s efforts to set aside a debtor’s transfer of property as a fraudulent transfer, an adverse judgment against the trustee is affirmed where, for purposes of determining the debtor’s solvency at the time of the challenged transfer, a claim for attorney’s fees from a prior case was unenforceable because the debtor’s attorney never sought bankruptcy court approval of those fees under 11 U.S.C. section 330(a).


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