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entered an agreement regarding the sale of certain assets claimed to be
property of the estates being administered by the receiver and bankruptcy
examiner, respectively. The agreement provided that the funds from the sale of
the subject properties would be held in escrow pending a negotiated resolution
of the dispute as to ownership, or pending a final order of the United States
Bankruptcy Court for the District of Utah. Ultimately, the bankruptcy examiner
filed an adversarial proceeding claiming that the properties at issue were
fraudulently transferred to the insolvent insurance company. The receiver
asserted that the bankruptcy court had no jurisdiction due to the reverse
preemption provisions of the McCarran‐Ferguson Act, or alternatively, due to
the permissive abstention powers under federal law. The court first held that
the McCarran‐Ferguson Act did not apply, because the bankruptcy court’s
jurisdiction does not invalidate, impair, or supersede the state insolvency law.
The court reasoned that to deny the court jurisdiction in this case on the basis of
the McCarran‐Ferguson Act would remove federal jurisdiction from every claim
involving an insolvent insurer. Moreover, the receiver agreed to submit to the
jurisdiction of the bankruptcy court in the agreement with the bankruptcy
examiner related to the disposition and sale of the subject receivership
property. After denying the receiver’s challenge to jurisdiction on the basis of
McCarran‐Ferguson, the court denied the receiver’s alternative request that the
bankruptcy court abstain from hearing the bankruptcy examiner’s petition for
adversarial proceeding. The court reasoned that the abstention was within the
sound discretion of the lower court and would not be overturned on appeal.
Florida
In re Aloisi, Anna Patricia, Debtor, 261 B.R. 504 (M.D. Fla. 2001). A proof of claim
may be filed with the Bankruptcy Court, but any recovery is unlikely. The Debtor
simply has no money to defend the District Court Action, and it would be unjust
and unfair to a debtor seeking a fresh start to return to litigating a claim that is
already discharged. 261 B.R. at 509.
The effect of a Chapter 7 discharge is to release a debtor from “all debts that
arose before the date of the order for relief... and any liability on a claim that is
determined under section 502 of this title as if such claim had arisen before the
commencement of the case, whether or not a proof of claim based on any such
debt or liability is filed under section 501 of this title, and whether or not a claim
based on any such debt or liability is allowed under section 502 of this title.” 11
U.S.C. § 727(b). As applied to this case, Bankruptcy Code Sections 727(a) and (b)
release the Debtor from any judgment the District Court may award, even if the
action were permitted to proceed. 261 B.R. at 509.