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Debtors who ignore instructions from the Bankruptcy Court do so at their own peril, as a recent case from the First Circuit Court of Appeals illustrates. In
In re Francis, the First Circuit reminds debtors and practitioners that “the road to a bankruptcy discharge is a two-way street, and a debtor must comply (or at least make good-faith efforts to comply) with lawful orders of the bankruptcy court.”
[1] Otherwise, debtors risk dismissal of their petition and denial of a discharge.
The debtor filed a Chapter 13 bankruptcy petition and shortly thereafter was informed that his case was subject to dismissal because his liabilities exceeded the then-current secured debt limit. The debtor moved to convert his case to Chapter 11, which the bankruptcy court granted. The debtor then failed to comply with a court order obligating him to file certain documents. As a result, the Trustee moved to convert the case t
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Unjust enrichment offers an avenue for recovery in situations where no actual agreement exists between parties to a dispute. But this theory of quasi-contract does not apply to just any type of commercial arrangement.
In New York, although a written agreement may not be required to state a claim for unjust enrichment, there still must exist “a relationship or connection between the parties that is not too attenuated.”[1] In other words, an unjust enrichment claim cannot withstand a motion to dismiss unless the plaintiff alleges a “sufficiently close relationship with the other party.”[2] The absence of allegations indicating such a relationship between the parties, “or at least an awareness by the defendant of the plaintiff’s existence,” can be fatal.[3]
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On April 14, 2021, the New York Department of Financial Services (“DFS”) announced a cybersecurity settlement with insurance company National Securities Corporation, which suffered four separate breaches, two of which went unreported in violation of 23 NYCRR § 500.17(a). The settlement not only includes a monetary penalty but also mandates increased training and implementation of security tools, and underscores the urgency of addressing cybersecurity threats and DFS’s increasing enforcement activity for non-compliance with its cyber regulations.
The settlement, one of a few just beginning to be released after the 2017 implementation of the Cybersecurity Regulation, 23 NYRR § 500, provides insurers and other companies a window into how DFS interprets and enforces this regulation.
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A recent case shows how even late payments can be used to satisfy the ordinary course of business defense in a preference avoidance action.
Baumgart v. Savani Props Ltd. (In re Murphy), Case No. 20-11873, Adv. Pro. No. 20-1070, 2021 Bankr. LEXIS 1035 (Bankr. N.D. Ohio Apr. 19, 2021).
The defendant owned an apartment building where the debtor was a tenant. Rent was due on the first of each month, with a five-day grace period before a late charge was imposed. About 20 months after the lease began, the tenant filed for chapter 7. Two monthly payments were made on time. The other payments were late, ranging from 6 to 29 days after the due date.
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Can the purchasers of promissory notes containing non-New York forum-selection clauses enforce the notes in the Commercial Division? Not without an extraordinary showing as to why the clauses should be set aside, according to Commercial Division Justice Elizabeth Emerson’s recent decision in
Stein v. United Wind, Inc.[1] In
Stein, Justice Emerson granted a motion to dismiss an action to enforce promissory notes where the notes designated Delaware as the exclusive forum for any disputes arising in connection with the notes.
Background
The dispute in
Stein arose from defendant United Wind’s efforts to raise additional funds for its wind-energy development and leasing operations. In 2017, plaintiffs Howard and Cathy Stein (the “Steins”), and Jeremy Tark (“Tark”) entered into subscription agreements and purchased convertible promissory notes. The Steins invested $75,000 and Tark invested $100,000.