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A Better Partnership


Sep 2015
September 23, 2015

Warner Norcross Asks SCOTUS to Clarify Issue Present in 20+ Percent of All Bankruptcy Filings

Warner Norcross appellate attorneys are asking the U.S. Supreme Court to settle a $425 million commercial contract dispute – and give clarity to federal bankruptcy laws.
The law firm recent filed a cert petition in Larry J. Winget and the Larry J. Winget Living Trust v. JP Morgan Chase Bank, NA asking the nation’s highest court to resolve a “statutory and constitutional subject that has flummoxed federal courts, split the circuits and been implicated in more than 20 percent of all recent bankruptcy filings.”  The issue at stake is 363 sales of a debtor’s assets, which allows a court to authorize the sale of the debtor’s property “free and clear of any interest” in the property if proper notice is given and certain conditions are met. 
As the cert petition points out, though, the bankruptcy code never defines what sort of “interest” is extinguishable in a 363 sale – “and courts have struggled to fill the gap.”  In this particular case, petitioners, Larry Winget and Larry Winget Living Trust, guaranteed a debt owed to JP Morgan Chase by the debtor.  When a sale of the debtor’s assets proved insufficient to pay the debt, Chase filed suit against Larry Winget and the Trust to enforce the guaranty.
“There is a circuit conflict about what ‘interests’ can be extinguished in a 363 bankruptcy sale,” said Conor B. Dugan, a Warner Norcross attorney filing the cert petition on behalf of Winget and the trust.  “Predictably, this gap in the bankruptcy code has led to confusion and conflict among the federal courts. 
“We are asking the U.S. Supreme Court to take this case and decide once and for all whether a bankruptcy court has constitutional authority to resolve with finality a state-law claim between non-debtors.”
Dugan and his co-counsel, John J. Bursch, are available for interviews.

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