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May 2004 issue: Washington Hot News May 13, 2004 Supreme Court Decisions The Supreme Court has affirmed the Sixth Circuit (and the Bankruptcy Court) in Tennessee Student Assistance Corporation v. Hood. The issue was whether a Bankruptcy Court could overrule a state’s objection to jurisdiction based on sovereign immunity in an adversary complaint seeking discharge of a student loan. The Supreme Court, in a complicated split, has ruled on the appropriate interest rate for a Chapter 13 plan for a secured claim (whose collateral is an automobile). Nominating Committee Report The Nominating Committee for the Bankruptcy Section met to select a slate of candidates for positions on the Section's Executive Council for terms beginning in July, 2004. Newsletter Committee Committee Co-Chairs: Brian Behar Karen J. Porter Editor Catherine E. Vance Case Law Editor Paige Barr, JD Managing Editor Sarah Jolie Authors needed! The Bankruptcy Section Newsletter Committee is looking for volunteers to write a Case Analysis for an upcoming edition. The Case Analysis is typically based on Court of Appeals or Supreme Court decisions, although you can use your discretion to discuss relevant BAP, District Court and Bankruptcy Court decisions. If you are interested or would like to learn more, please send an email to the Managing Editor. You can view the archive at www.cllabankruptcy.org. Your subscription You have been subscribed to this list as part of your membership in the Bankruptcy Section of the Commercial Law League of America. Changes to your e-mail address and all other comments can be sent to Editor@cllabankruptcy.org CLLA 70 East Lake Street, Suite 630 Phone: 312-781-2000 Newsletter design by: |
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the online version can be found here: Critical Issues Survey: The Bankruptcy Section will be sending its members a survey to update the CLLA’s bankruptcy priorities assuming that no omnibus Bankruptcy Reform Bill is passed by Congress. You can expect this survey in the next week. It will be an online survey. If you could take a moment to provide input, it would greatly assist us. Previously, the Bankruptcy Section produced a “critical issues” paper that identified various issues that were important to the League's membership. A copy of this document is available by clicking here. Sua Sponte Louis S. Robin Although it is a little early, I want to take this opportunity to write about the 78th Annual Meeting of the National Conference of Bankruptcy Judges to be held in Nashville, Tennessee, October 10 – 13, 2004. It is one of the most well attended conferences of the year, with many Bankruptcy Judges attending. Its education programs are excellent, with last year’s program including a “conversation” with United States Supreme Court Justice John Paul Stevens. Case Analysis James T. Asali First Circuit Disagrees with Ninth Circuit’s Claremont Decision and Holds Debtors Need Not Cure Non-monetary Defaults under Section 365(b)(2)(D) Summary: In Eagle Insurance Co. v. BankVest Capital Corp. (In re BankVest Capital Corp.), 360 F.3d 291 (1 st Cir. 2004), the Court of Appeals for the First Circuit held that a chapter 11 debtor need not cure non-monetary defaults before assuming leases under 11 U.S.C. § 365. Case Law UpdatePaige Barr Debtor-Tenant in Shopping Center Lease Required to Assign its Lease Subject to any Provision Restricting Use of the Premises. The court held that § 365(b)(3)(C), which specifically requires a debtor-tenant in a shopping center to assign its lease subject to any provision restricting use of the premises, controlled in this case over § 365(f)(1), which generally allows a debtor to assign its lease notwithstanding a provision restricting assignment. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Sua Sponte
The CLLA has two excellent programs, its opening breakfast and its educational program. It does me great pleasure to announce that this year’s breakfast speaker is James Carvllle. The League has had many prominent speakers in the past, but I think it is safe to say that this year’s speaker will be particularly entertaining. I personally find Mr. Carville’s visits on the Meet the Press (usually with his wife, Mary Matalin) entertaining, whether you agree with him or his wife. It will be particularly relevant as the setting and the time will place the election, which is less than a month after the NCBJ, firmly in view. At the opening breakfast we will also be presenting our annual Lawrence P. King Award for Excellence in the Field of Bankruptcy. We started this award three years ago when the passing of Professor King gave us pause to realize that we needed to honor our friends. In addition to Professor King, we have presented our award to Harvard Professor Elizabeth Warren and Judge Joe Lee of the United States Bankruptcy Court for the Eastern District of Kentucky. Although both expressed their sincere gratitude for our award, the honor was truly our own. If you have any suggestions for this year’s recipient, please note the form/announcement in this newsletter and respond – your recommendations will be greatly appreciated. This year’s educational program promises to be another well received program. Our speakers will be counsel who argued before the Supreme Court on the Hood case (concerning State’s assertions of sovereign immunity in student loan discharge case). Bankruptcy Judge Randy Haines will moderate the discussion. There will also be discussions of current issues concerning consumer credit and financing by Thomas F. Waldron, Chief Judge of the United States Bankruptcy Court for the Southern District of Ohio, a review of the 2003-04 Supreme Court cases by Professor S. Elizabeth Gibson, and discussion on non-bankruptcy alternatives by Larry Schantz, and electronic discovery by Laura Ellsworth. Please click here for further information. Switching gears, I want to thank all those who participated in the Midwest Conference this last April. Perhaps being Chair provides one with a different perspective, but this year’s meeting in Chicago was particularly engaging. Cathy Pike and Alan Gordon arranged excellent educational programs. The social events seemed even more friendly than usual. And the other events were most enjoyable. Finally, I want to thank those who commented on my April Sua Sponte. I seemed to receive more than the usual number of comments. Perhaps it was the subject, Justice Scalia, as he often is contentious and frank. In any event, I stand by my comments that those of us in the bankruptcy forum often display an element of sacrifice. Louis S. Robin Case AnalysisFirst Circuit Disagrees with Ninth Circuit’s Claremont Decision and Holds Debtors Need Not Cure Non-monetary Defaults under Section 365(b)(2)(D) Facts: BankVest Capital Corporation, the debtor and appellee in this case, was in the business of originating and servicing equipment leases. It entered into similar lease arrangements with the appellants, Eagle Insurance Company and Newark Insurance Company, for 190 items of computer equipment. The debtor arranged for delivery of the equipment directly from the manufacturer. The lessee-appellants were aware that the manufacturer would not be able to complete production of 20 of the 190 items until several months into the lease term. These items allegedly accounted for 60 percent of the total value of the leased goods. The manufacturer agreed to provide “loaner” equipment until the 20 items were completed and delivered. Before the loaner equipment could be replaced, however, an involuntary chapter 11 petition was filed against BankVest in the United States Bankruptcy Court for the District of Massachusetts. The debtor proposed a plan of reorganization that contemplated a gradual liquidation of its assets, which the bankruptcy court ultimately confirmed. The plan provided that every equipment lease in which the debtor was the lessor was to be deemed assumed by the estate under 11 U.S.C. § 365 unless (1) the lease is specifically rejected or (2) any party to the lease files a claim for cure costs. If a party filed a claim for cure costs, the debtor could defer its decision whether to assume or reject the lease until the bankruptcy court determined the amount of such cure costs, if any, that would be payable by the estate upon assumption. Meanwhile, Eagle and Newark continued to use the leased equipment but did not pay rent, accumulating an arrearage of approximately $1 million that remained unpaid as of the time of the appeal. Eagle and Newark filed timely claims for cure costs, alleging that the debtor’s failure to replace the loaner equipment with the 20 items that the manufacturer had yet to produce was a default under the leases. Further, they claimed that this non-monetary default was not susceptible to cure. The bankruptcy court held a non-evidentiary hearing on the cure claims and dismissed the claims on a ground not raised by either party. The court held that 11 U.S.C. § 365(b)(2)(D) permits the debtor-in-possession to assume an executory contract or unexpired lease without first curing non-monetary defaults. Since the debtor was not in monetary default (it had no monetary obligations because it was the lessor), there were no cure claims that had to be satisfied prior to assumption. The Bankruptcy Appellate Panel affirmed, and Eagle and Newark appealed. Discussion: The Court of Appeals began its discussion by noting that a debtor-in-possession’s ability to assume or reject pre-petition executory contracts or unexpired leases under § 365 “is one of the basic reorganizational tools available to debtors under the Bankruptcy Code.” BankVest, 360 F.3d at 296. A rejected contract is considered to be a pre-petition breach, leaving the nondebtor party to the contract with a general unsecured claim for contract damages. “If the debtor assumes a contract, however, it accepts both the burdens and the benefits of the bargain, and any liabilities incurred in the contract's post-petition performance will be treated as administrative expenses with priority status.” Id. This procedure advances the Bankruptcy Code’s goal of providing worthy debtors with a fresh start by allowing them to shed disadvantageous contracts but keep those which are beneficial. There are restrictions on a debtor’s power to assume contracts or leases. Section 365(b)(1) provides that if a debtor has defaulted on a contract prior to assumption, the debtor cannot assume that contract unless it (1) cures the default; (2) compensates the nondebtor party to the contract for actual pecuniary losses; and (3) provides adequate assurance of future performance. Nevertheless, this limitation itself contains exceptions. Namely, § 365(b)(2)(D) provides that the requirements of § 365(b)(1) do not apply to a default that is a breach of a provision relating to “the satisfaction of any penalty rate or provision relating to a default arising from any failure by the debtor to perform nonmonetary obligations under the executory contract or unexpired lease.” 11 U.S.C. § 365(b)(2)(D). While the parties did not dispute that the debtor’s failure to deliver the replacement equipment was a non-monetary default, the issue raised on appeal was whether the language in § 365(b)(2)(D) excused the debtor from the requirement in § 365(b)(1) that it cure the default prior to assumption. In analyzing the issue, the Court first looked to the plain text of the statute. Eagle and Newark argued that the word “penalty” applied to both of the terms “rate” and “provision.” This is the reading endorsed by the Ninth Circuit in In re Claremont Acquisition Corp., 113 F.3d 1029 (9th Cir. 1997), and in a number of bankruptcy court cases that have followed it. The debtor, however, argued that the word “penalty” applied only to the term “rate” and that the language creates a separate and distinct exception for all non-monetary defaults. This was the reading adopted by the bankruptcy court and BAP below. The Court, in parsing the plain language, concluded that there was an inherent ambiguity in the text. Absent a clear plain meaning, the Court was unable to decide the matter on this basis. The Court, in a thinly-veiled swipe at the drafters of the language, noted that “With a simple comma or two, Congress could have made its preferred interpretation clear. But the Code as written is ambiguous, so we must divine Congress’s intent from other sources.” BankVest, 360 F.3d at 298. The Court then looked to the legislative history of § 365(b)(2)(D) to ascertain Congress’s intent. Noting that the legislative history pertaining to this subsection is extremely sparse, the Court bluntly concluded that “Like the statutory text, the legislative history simply offers no guidance on the question that divides the parties.” Id. The Court also rejected out of hand the argument of Eagle and Newark that pending bankruptcy reform legislation would codify their interpretation of subsection (b)(2). The final methodology that the Court used in resolving the dispute was to look to the “practical considerations of bankruptcy policy and Congress's overarching purposes in the Bankruptcy Code.” Id. at 299. The Court noted that the Claremont decision has been widely criticized as an obstacle to the successful reorganization of many bankruptcy debtors. This criticism has focused on the problem that many non-monetary defaults are “historical facts” that are impossible to cure after the fact, e.g., a debtor’s failure to maintain leased property in a certain condition, to use leased equipment only for approved purposes, or to meet certain standards of quality or performance. An interpretation of § 365(b)(2)(D) that requires cure of such incurable defaults before assumption of a lease or contract “is tantamount to barring the debtor from assuming any lease or contract in which such a default has occurred -- no matter how essential that contract might be to the debtor's reorganization in bankruptcy.” Id. Declining to adopt such a draconian interpretation, the Court stated that preventing a debtor from assuming a contract based on historical events that it cannot remedy undermines the principal purpose of § 365, which is to promote a successful rehabilitation for the benefit of the debtor and its creditors. Rather than simply seeking an offset for any pecuniary harm they may have suffered from the debtor’s breach, Eagle and Newark argued for an interpretation that would have denied the estate the $1 million in unpaid rent by compelling the debtor to cure an incurable default. The Court further supported its interpretation of § 365(b)(2)(D) by pointing out that it is consistent with the remaining subsections of § 365(b)(2). These subsections (A)-(C) “are directed to so-called ipso facto clauses (for instance, contract provisions that force debtors into default merely for becoming insolvent or seeking bankruptcy protection). See § 365(b)(2)(A)-(C). Like defaults based on breaches of ipso facto clauses, non-monetary defaults are often a product of the debtor's very financial distress.” Id. at 301. The Court held that under § 365(b)(2)(D), the debtor did not need to cure non-monetary defaults before assuming its equipment leases with Eagle and Newark. The debtor was thus free to assume the leases (subject to bankruptcy court approval) and to file an action to collect the $1 million in outstanding rent. In such an action, Eagle and Newark could then raise their defenses to payment and counterclaim for damages for any losses actually suffered as a result of the debtor’s alleged breach. Comment: The BankVest decision creates an unmistakable split among the Circuits as to whether the usual rule that defaults in executory contracts and unexpired leases must be cured before they are assumed applies where the default is non-monetary. This split may be resolved by the Supreme Court, as Eagle and Newark have filed a petition for writ of certiorari. A decision on whether the Supreme Court will take the case is expected in June. Should it decline to do so, the BankVest Court’s comment that the placement of a simple comma or two within the text of the statute could resolve the ambiguity is instructive. It will then be up to Congress to decide whether it wishes to explicitly clarify its intent in § 365(b)(2)(D). James T. Asali, Esquire Case Law UpdateDebtor-Tenant in Shopping Center Lease Required to Assign its Lease Subject to any Provision Restricting Use of the Premises. The court held that § 365(b)(3)(C), which specifically requires a debtor-tenant in a shopping center to assign its lease subject to any provision restricting use of the premises, controlled in this case over § 365(f)(1), which generally allows a debtor to assign its lease notwithstanding a provision restricting assignment. The court relied on basic canons of statutory construction, which provide that when two provisions in a statute are in conflict, “a specific provision closely applicable to the substance of the controversy at hand controls over a more generalized provision.” Debtor’s lease restricted use of the premises for sale of auto parts. Debtor sought to assign lease to an apparel merchandiser. Since the new tenant of the assigned lease did not purpose to take the lease subject to the limiting provisions for use of the premises, the debtor’s motion to assume and assign the lease was denied. The court rejected the bankruptcy court’s conclusion that since no auto parts dealer bid on the lease, the market in the area is saturated and cannot bear the restriction to sale of auto parts. Section 365(b)(3)(C) does not allow the bankruptcy court to modify the original bargain with the debtor. However, the court did note that a shopping center lease provision designed to prevent any assignment whatsoever might be a candidate for the application of § 365(f)(1). Trak Auto Corp. v. West Town Center LLC (In re Trak Auto Corp.), 2004 U.S. App. LEXIS 7945 (4th Cir. Apr. 22, 2004). Surcharge Remedy Found Permissible Equitable Remedy under the Code. Debtors failed to list proceeds from sale of their vehicle and boat in the interim period between the dismissal of their Chapter 13 petition and the filing of their Chapter 7 petition. Debtors were denied discharge of their debts under § 727 since they failed to explain the loss of proceeds from the sales of their car and boat, had made material false statements on their bankruptcy schedules, had not kept adequate records of their assets and expenditures, and had fraudulently concealed an option to purchase real estate. Furthermore, the unaccounted proceeds from the sale of the debtors’ car and boat were surcharged against the debtors’ § 522(d)(5) “catch-all” exemption, thereby rendering non-exempt a minivan and engagement ring (in an amount equal to that of the proceeds) that the debtors had previously exempted under § 522(d)(5). The court rejected debtors’ argument that the doctrine of election of remedies bars the trustee from further seeking to surcharge their catch-all exemption because the trustee had previously elected under § 727(a) to seek a denial of the discharge of their debts as a result of their misconduct. The court reasoned that the Code gives trustees cumulative remedies against improper behavior and the denial of discharge was not an inconsistent remedy with the surcharge. These were different remedies for the enforcement of different and distinct rights under the Code; the denial of discharge punished the debtors for misconduct in the bankruptcy process while the surcharge protected the creditors of the bankruptcy estate. The court further rejected debtors’ argument that res judicata barred the trustee’s action to seek a surcharge on the grounds that the surcharge action arose from the same transactional nucleus of facts as the trustee’s earlier denial of discharge action. The court found the purposes of res judicata would not be served by barring a bankruptcy trustee from bringing a subsequent surcharge action based in part on facts previously used to support an action for denial of discharge. Requiring a surcharge claim at the same time as an objection to discharge would give the trustee little time to investigate concealed debtor misconduct, including a failure to disclose sale proceeds or other property. Finally, the bankruptcy court may equitably surcharge a debtor’s statutory exemptions when reasonably necessary both to protect the integrity of the bankruptcy process and to ensure that a debtor exempts an amount no greater than what is permitted by the exemption scheme of the Code. Latman v. Burdette, 2004 U.S. App. LEXIS 8472 (9th Cir. Apr. 29, 2004). Trustee in Bankruptcy (Or Debtor-In-Possession) May Assume a Credit Card Processing Agreement. A credit card processing agreement is a “financial accommodation” that can be assumed in bankruptcy. Claimant, National Processing, entered into a contract with debtor, United Airlines, to handle the transactions of United’s customers who pay with VISA or MasterCard credit cards prior to United’s bankruptcy filing. The court rejected National Processing’s argument that the credit card system operates like a revolving line of credit since National Processing does not lend United any money, rather National Processing functions as a conduit (intermediary), not a lender, in the transaction. The promise to extend credit that the card-issuing bank makes to its own customer is not something United has assumed or could assume even in principle, for no passenger is obliged to buy a future ticket. That many small loans to passengers add up to a large cash flow for the carrier does not turn the intermediary’s role into a “financial accommodation.” The court also rejected National Processing’s request that the bankruptcy judge condition its approval of the assumption on United’s willingness to set aside a reserve of several hundred million dollars to ensure that it could cover chargebacks in the event it stopped flying under § 365(a) of the Bankruptcy Code. The court held a bankruptcy judge may properly withhold approval of assumption when an executory contract is no longer in the debtor’s interest, or the debtor is unlikely to perform its obligations, but not on an open-ended ground such as “unreasonable risk” (when no default has ever occurred to date) to the other contracting party. In re United Airlines, Inc., 2004 U.S. App. LEXIS 9172 (7th Cir. May 11, 2004). Bankruptcy Code Does Not Preempt the FDCPA. The court held that one federal statute does not preempt another. When two federal statutes address the same subject in different ways, the right question is whether one implicitly repeals the other. Section 362 of the Code and the FDCPA overlap, each with coverage that the other lacks – the Code covers all persons, not just debt collectors, and all activities in bankruptcy; the FDCPA covers all activities by debt collectors, not just those affecting debtors in bankruptcy. Overlapping statutes do not repeal one another by implication; as long as people can comply with both, then courts can enforce both. In a case involving claims that debt collectors violated the FDCPA by sending collection letter after the debtors had filed for bankruptcy protection, the court held that to the extent appellant debtors sought relief under 15 U.S.C. § 1692c(a)(2) on the theory that the debt collectors, and not just the creditors, knew that they had counsel, the FDCPA could be enforced. Randolph v. IMBS, Inc., 2004 U.S. App. LEXIS 9295 (7th Cir. May 12, 2004). No Hard and Fast Rule Exists Precluding a Bankruptcy Court from Entertaining an Upset Bid on a Debtor’s Property Once an Auction Has Concluded or the Deadline for Offers Has Passed. A bankruptcy court asked to confirm the results of a judicial sale is faced with two competing interests. The governing principle at a confirmation proceeding is the securing of the highest price for the bankruptcy estate. But there is also an interest in the finality and integrity of the process by which bids are accepted and approved. A tension arises where, as in this case, someone makes a higher, upset bid after the auction has concluded and bidding has formally closed. Cases dealing with upset bids reflect a continuum. Once a court has confirmed the sale of the debtor’s assets to the auction’s victor, the public interest in finality is high and the parties reasonably expect that the bidding is over. At this point, the simple fact that a late bid offers the estate more money than the bid previously approved by the court will not suffice. However, where the sale has not yet been confirmed, the bankruptcy court enjoys broader discretion to decide whether to obtain a late bid. The court held that bankruptcy courts must be accorded maximum discretion in striking an appropriate balance. The bankruptcy court here did not abuse its discretion in granting a second auction and entertaining additional bids on the property when debtor made the request after consulting its lenders and the committee of unsecured creditors. Furthermore the request was premised on the upset bid, which offered significantly more money for the assets than the high bid at the first auction. The tardiness of the bid was explained by the fact that the upset bidder did not know prior to the first auction of a material revision to the terms of the asset purchase agreement. The upset bidder tendered its bid on the day following the first auction, before the results of that auction had been presented to the bankruptcy court. Since the bankruptcy court had not yet conducted a sale hearing, the debtor retained discretion under the bidding procedures to reject any bid that it believed was not in the best interests of the estate and its creditors and to impose additional conditions on the sale of the property. The bankruptcy court here was found to have carefully weighed the relevant considerations and reasonably concluded that the prospect of additional remuneration for the estate and its creditors outweighed concerns about the finality and regularity of the sale proceeding. Corporate Assets, Inc. v. Paloian, 2004 U.S. LEXIS 9536 (7th Cir. May 13, 2004). Paige Barr Washington Hot NewsMay 13, 2004 According to House Ways and Means Committee Chairman, Rep. Thomas (R-Ca.), the vote pushes the House to act in a timely manner on its version (HR 2896). However, the House bill has also been the subject of much debate and is different than the Senate package (both containing their own "pork"/benefits). It is uncertain how any difference would play out in a subsequent conference and impact the delicate balance of compromises made in the Senate (and likely to occur in the House). Supreme Court DecisionsThe Supreme Court has affirmed the Sixth Circuit (and the Bankruptcy Court) in Tennessee Student Assistance Corporation v. Hood. For the complete syllabus, majority opinion, concurring opinion and dissent click here. The issue was whether a Bankruptcy Court could overrule a state’s objection to jurisdiction based on sovereign immunity in an adversary complaint seeking discharge of a student loan. The Appellant had asserted that the Eleventh Amendment’s protection of state sovereign immunity prohibited the complaint without the assent of the state. The Supreme Court, by a 7 – 2 majority, said that the Bankruptcy Court had in rem jurisdiction to hear the adversary proceeding. Justice Thomas dissented, and was joined by Justice Scalia. He criticized the majority opinion for failing to follow (i) briefing procedural requirements, (ii) case law comparing Article III court with Article I jurisdiction, (iii) a narrow, rather than expansive, interpretation of in rem jurisdiction, and (iv) the complaint (as opposed to suggested motion) procedural requirements. More pointed, Justice Thomas argued that “[t]he only question, then, is whether the Bankruptcy Clause grants Congress the power [abrogate sovereign immunity]". This Court has repeatedly stated that “Congress may not … base its abrogation of the States’ Eleventh Amendment immunity upon the powers enumerated in Article I. [citations and quotes of various decisions omitted]" . . . Despite the clarity of these statements, the Court of Appeals held that the Bankruptcy Clause operates differently than Congress’ other Article I powers because of its “uniformity requirement”, 319 F.3d 755, 764 (CA6 2003). The Court's discussions of Congress’ inability to abrogate state sovereign immunity through the use of its Article I powers reveal no such limitation. I will leave you with some initial thoughts. Use of in rem jurisdiction to protect the debtor’s discharge is certainly a victory for the jurisdiction of the bankruptcy court. It is, however, difficult to reconcile the Majority’s statement that “Bankruptcy courts have exclusive jurisdiction over a debtor’s property, wherever located, and over the estate” with a statement that this case is “unlike an adversary proceeding by the bankruptcy trustee seeking to recover property in the hands of the State.” Further, the majority did not address the Sixth Circuit’s extensively reasoned arguments that the language of the bankruptcy clause in the Constitution abrogated sovereign immunity. Although the minority specifically rejected it, it did so, it appears, only because such an argument had never been considered by the Court previously. We are probably going to experience a period of uncertainty until this issue is addressed by the Supreme Court again. Opinion No. 02-1606 541 U.S._(2004) The Supreme Court, in a complicated split, has ruled on the appropriate interest rate for a Chapter 13 plan for a secured claim (whose collateral is an automobile). Click here for the full opinion. The Court’s opinion, written by Justice Stevens and joined by Justices Souter, Ginsberg and Breyer, states that the appropriate rate is the market rate which includes an element of risk, with a likely result of the prime rate plus an additional 1% to 3%. Justice Thomas wrote that the discount rate need not include an adjustment for risk and, therefore, under the circumstances in which the case was presented, concurred with Justice Stevens. The dissent, author by Justice Scalia and joined by Justices Rehnquist, Kennedy, and O’Connor, agreed that the market rate was appropriate, but found that the “presumptive” rate to be the original contract rate. Because this decision has wide reaching scope into related issues, and the three opinions are so extensive and reasoned but with subtle differences which must be addressed, additional commentary is required. Nominating Committee ReportThe Nominating Committee for the Bankruptcy Section met to select a slate of candidates for positions on the Section's Executive Council for terms beginning in July, 2004. Section bylaws specify that any section member may submit a nominating petition for a position on the Executive Council. Each petition must have signatures of at least ten Section members and be submitted to Judith Greenstone Miller, Nominating Committee Chair, with a copy to Sarah Jolie at the CLLA Office at least five days before the Section's Annual Meeting in July. Elections will be held on July 10, 2004 at the general membership meeting of the Bankruptcy Section during the National Convention at the Newport Marriott Hotel in Newport, Rhode Island. Members of the Nominating Committee are: Judith Greenstone Miller (Jaffe, Raitt, Heuer & Weiss, Detroit, MI), Wanda Borges (Borges & Associates, Syosset, NY), Peter C. Califano (Cooper, White & Cooper, LLP, San Francisco, CA), Charles R. Johanson, III (Engel, Hairston & Johanson, Birmingham, AL), Robert. A. Schatzman ( Adorno & Yoss, PA, Miami, FL) Judith Greenstone Miller, Nominating Committee Chair, announced the following candidates: Officers (1 year term: 2004-2005) Chair - Alan I. Nahmias, Plotkin, Rapoport & Nahmias, Encino, CA Executive Council (three year terms: 2004 - 2007) Brian Behar, Behar, Gutt & Glazer, PA, Aventura, FL Executive Council (one year term, 2004-2006) to complete unexpired term of Cathy Pike: Ivan Reich, Becker & Poliakoff, PA, Fort Lauderdale, FL |
Although it is a little early, I want to take this opportunity to write about the 78 th Annual Meeting of the National Conference of Bankruptcy Judges to be held in Nashville, Tennessee, October 10 – 13, 2004. It is one of the most well attended conferences of the year, with many Bankruptcy Judges attending. Its education programs are excellent, with last year’s program including a “conversation” with United States Supreme Court Justice John Paul Stevens. 
Summary: In Eagle Insurance Co. v. BankVest Capital Corp. (In re BankVest Capital Corp.), 360 F.3d 291 (1 st Cir. 2004), the Court of Appeals for the First Circuit held that a chapter 11 debtor need not cure non-monetary defaults before assuming leases under 11 U.S.C. § 365. In doing so, the Court disagreed with the ruling of the Ninth Circuit in In re Claremont Acquisition Corp., 113 F.3d 1029 (9 th Cir. 1997), which held that the exceptions set forth in § 365(b)(2)(D) pertain only to “penalty” non-monetary defaults, thus requiring a debtor to cure all other non-monetary defaults before it can assume an unexpired lease or executory contract.