Supreme Court Decides Two Cases

Tennessee Student Assistance Corp. v. Hood
The Supreme Court held that the discharge of a student loan debt, as an exercise of the bankruptcy court’s in rem jurisdiction, does not infringe the state’s sovereign immunity. The court did not address the underlying issue as to abrogation of the state's sovereign immunity from private suits under §106(a) of the Bankruptcy Code.

The underlying case involved an adversary proceeding by the debtor, Pamela Hood, seeking the discharge of her student loans as constituting an “undue hardship” under §523(a)(8). A proof of claim was originally filed by Sallie Mae and later assigned to the Tennessee Student Assistance Corporation (TSAC). Because this was a no-asset case, there was no active participation in the underlying bankruptcy case by TSAC, other than its acceptance of the assigned claim. Because the filing of a proof of claim has been held in previous cases to constitute submission to the bankruptcy court’s jurisdiction, the debtor never advanced the argument that TSAC, as an agency of the state, waived its sovereign immunity. The Supreme Court, therefore, declined to address this specific constitutional issue.

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Till vs. SCS Credit Corporation
The Supreme Court, apparently without resort to a calculator, decided the cramdown interest issue by employing a formula approach.

Confronted by the difficult and arcane issue of what interest rate best satisfies the requirements of §1325(a)(5)(B)(ii) that the secured creditor receive “…the value, as of the effective date of the plan, of property to be distributed under the plan on account of such claim is not less that the allowed amount of such claim …”, a plurality of the Court held that the so-called formula approach (the prime rate plus a calculated risk factor) best meets the intent of Congress and the objectives of the Bankruptcy Code.

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Supreme Court Finds Rule 4004(a) Is Not Jurisdictional
Hon. William Houston Brown Western District of Tennessee
and Donna T. Snow Law Clerk, Memphis, Tenn.

The Supreme Court has issued its unanimous opinion in Kontrick v. Ryan, ___ U.S.____, 124 S.Ct. 906, ____ L.Ed.2d ____ (2004), on certiorari from the Seventh Circuit, In re Kontrick, 295 F.3d 724 (7th Cir.) (Norton Bankr. L. & Practice 2d Section §47:68). A recent article in the Adviser by Venessa Lantin, "Are the Deadlines in Bankruptcy Rules 4003, 4004, and 4007 Jurisdictional or Subject to Equitable Defenses? The Sixth Circuit Sides with Equity," NORTON BANKRUPTCY LAW ADVISER 7 (2003), discussed the Circuit split on the issue of whether the Bankruptcy Rules limited the bankruptcy court's jurisdiction over untimely discharge and dischargeability complaints. Has the Supreme Court answered all of the questions that might be raised about untimely complaints and the trial courts authority to hear them? No, but it has answered some critical questions, including that Rule 4004's time limitation is not subject-matter jurisdictional. [See Norton Bankr. L. & Prac. 2d §§139:5, 139:7, 139:8.]

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ABI to Host Chicago Consumer Bankruptcy Conference, July 24
Join ABI for the first Chicago Consumer Bankruptcy Conference on Saturday, July 24, at the Chicago-Kent College of Law, Illinois Institute of Technology in Chicago. The educational program has been developed to provide an interactive learning experience for consumer practitioners of all levels, led by a faculty of bankruptcy judges and locally prominent lawyers. The conference format emphasizes the discussion of relevant consumer insolvency issues between the faculty and the participants. Sessions will include: Initial Debtor Representation—Is Bankruptcy the Right Decision? Choice of Chapter, Essentials of the Retainer Agreement; Creating Accurate Schedules—Income, Expenses, Assets/Valuations and Exemptions/Exclusions; Bankruptcy Filings—Electronic Filing, Filing Fees (Installment Payment) and Creditor Matrix; Creditors’ Meeting—Preparation, Negotiation of Reaffirmation and Reaffirmation Procedures; Chapter 13 Plans—Use of Model Plan, Accounting for Disposable Income, Treating Secured Claims, Objections; Divorce Issues—Conflict of Interest, Property of the Estate, Effect of the Automatic Stay, Dischargeability; Litigation Substance—Elements for Relief From Stay, 707(b) and Other Dismissal Motions, Dischargeability Complaints, Objections to Discharge; and Litigation Practice—Preparation of Motions and Briefs, Preparation for Trial, Rules of Evidence, Hearing Etiquette.

Up to 6.5 hours of CLE credit can be earned at this unique and affordable opportunity for participants to network with other practitioners, discuss salient issues with bankruptcy judges and learn from experts who practice in the area. In addition, registrants will receive written materials including ABI’s new publication, Fundamentals of Chapter 7 & Chapter 13 of the U.S. Bankruptcy Code, authored by Thomas J. Yerbich. The conference will be held at the Chicago-Kent College of Law, conveniently located in downtown Chicago. Founded in 1888, Chicago-Kent is a national leader in continuing legal and professional education, recognized for the excellence of its faculty and curricular innovation. Register online today!

Committee Focuses on Compensation for Debtor's Counsel at 2004 Annual Spring Meeting
Compensation of debtor's counsel in consumer cases was the focus of the Consumer Committee meeting held on April 16, 2004, at the Annual Spring Meeting in Washington, D.C., and attended by approximately 50 members. The program featured a panel discussion led by the Honorable Jennie Latta of the Western District of Tennessee, Diane Livingstone, an Assistant United States Trustee from Region 7 and Marjorie Payne Britt, a bankruptcy practitioner in Houston, Texas. Topics included recent holdings by the United States Supreme Court in Lamie v. United States Trustee and the Seventh Circuit's decision in Bethea v. Adams & Associates and their implications for debtor's counsel and the provision of legal services to debtors in chapter 7 cases.

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