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Justia Weekly Opinion Summaries

Bankruptcy
December 25, 2020

Table of Contents

United Surety & Indemnity Co. v. Lopez-Munoz

Bankruptcy

US Court of Appeals for the First Circuit

USF Federal Credit Union v. Gateway Radiology Consultants, P.A.

Bankruptcy, Business Law, Government & Administrative Law

US Court of Appeals for the Eleventh Circuit

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Legal Analysis and Commentary

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Bankruptcy Opinions

United Surety & Indemnity Co. v. Lopez-Munoz

Court: US Court of Appeals for the First Circuit

Docket: 19-9003

Opinion Date: December 21, 2020

Judge: Ojetta Rogeriee Thompson

Areas of Law: Bankruptcy

The First Circuit affirmed the judgment of the Bankruptcy Appellate Panel (BAP) dismissing under the doctrine of equitable mootness this appeal brought by United Surety & Indemnification Company (USIC), holding that USIC's appeal was equitably moot. In 2013, Pedro Lopez-Munoz filed a voluntary petition for chapter 11 bankruptcy. In 2018, the bankruptcy court confirmed a reorganization plan. One of Lopez-Munoz's creditors was USIC, which had an unsecured claim in the amount of $2,700,000. USIC appealed. The BAP dismissed USIC's appeal under the doctrine of equitable mootness. The First Circuit affirmed after analyzing the three factors for determining whether an appeal is equitably moot, holding that USIC's appeal was equitably moot.

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USF Federal Credit Union v. Gateway Radiology Consultants, P.A.

Court: US Court of Appeals for the Eleventh Circuit

Docket: 20-13462

Opinion Date: December 22, 2020

Judge: Edward Earl Carnes

Areas of Law: Bankruptcy, Business Law, Government & Administrative Law

Gateway is a small business debtor in an active Chapter 11 bankruptcy proceeding seeking a loan under the Paycheck Protection Program (PPP). Gateway applied for a PPP loan and falsely stated that it was not in bankruptcy in order to be eligible for the program. When Gateway filed a motion for approval in the bankruptcy court, the SBA objected that Gateway was ineligible for a PPP loan because it was in bankruptcy. The bankruptcy court granted Gateway's motion anyway, concluding that the SBA's rule rendering bankruptcy debtors ineligible for PPP loans was an unreasonable interpretation of the statute, was arbitrary and capricious under the Administrative Procedure Act, and as a result was unlawful and unenforceable against Gateway. The Eleventh Circuit vacated the bankruptcy court's approval order, concluding that the SBA's rule is neither an unreasonable interpretation of the relevant statute nor arbitrary and capricious. The court concluded that the SBA did not exceed its authority in adopting the non-bankruptcy rule for PPP eligibility; the rule does not violate the CARES Act, is based on a reasonable interpretation of the Act, and the SBA did not act arbitrarily and capriciously in adopting the rule; and the bankruptcy court committed an error of law in concluding otherwise in its approval order and its preliminary injunction order. Accordingly, the court remanded for further proceedings. The court dismissed the appeal from the memorandum opinion for lack of jurisdiction.

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