Articles Posted in Bankruptcy

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In 2008 the Seymours filed a Chapter 13 bankruptcy petition. In 2010 the Seymours filed a personal injury action, based on a 2010 automobile accident that occurred while Seymour was being transported in an ambulance. A 2010 plan modification entailed a reduction in the Seymours’s monthly payment amount based on an allegation that Seymour was unable to work and was only receiving workers’ compensation payments. The Seymours never apprised the bankruptcy court that their circumstances had changed after the 2010 modification. Defendants in the injury action successfully obtained summary judgment, based on estoppel because the Seymours failed to disclose their personal injury action in the bankruptcy proceeding. The Illinois Supreme Court reversed,The fact that the Seymours had a legal duty to disclose this suit and failed to do so does not establish intent to deceive or manipulate the bankruptcy court. The 2010 motion to modify the bankruptcy plan did not evince their awareness of the need to disclose the personal injury cause of action. View "Seymour v. Collins" on Justia Law

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Pielet Brothers Scrap Iron and Metal, was founded Arthur Pielet and his brothers shortly after World War II. Arthur sold his interest to his sons in 1986 through an agreement providing for a lifetime payment to him of a “consulting” fee, and, on his death, for a lifetime fee payment to his wife, Dorothy. The agreement was binding on successors and assigns. In 1994, the then- successor company, P.B.S., dissolved, but payments to Arthur continued until 1998, when its successor, MM, had financial difficulties. It filed for bankruptcy in 1999. Litigation began. The trial court awarded Dorothy almost $2 million. In the appellate court, P.B.S. argued the traditional rule that a cause of action that accrued (1998) after dissolution (1994) cannot be brought against a dissolved corporation. The appellate court rejected the argument, holding that Dorothy’s claim could survive, but remanded for determination of whether the companies could be relieved of liability for the fee under a theory of novation. The Supreme Court reversed in part, holding that the claim of breach of contract against P.B.S. could not survive the corporate dissolution. The issue of novation is relevant as to two other successor corporations and required remand. View "Pielet v. Pielet" on Justia Law