Today, over a vigorous dissent, the Court of Appeals for the Ninth Circuit denied en banc rehearing in In re: Penrodhere.  Eight other circuit courts have ruled in favor of industry on the so-called “hanging paragraph” of BAPCPA.  Justice Bea, joined by four other judges, objected (in part) to the denial of en banc review:

Neither loan would ever have been made by the car companies absent a secured interest.  The debtor should not be able to turn a secured loan into an unsecured loan just by deciding to buy a newer car.  This change is a complete reversal of the rules by which thousands of loans have been made in one of this country’s largest industries.  In this economy, such a ruling hardly helps the already struggling car industry. . . The statute — as read by all other eight circuits — requires only that the value given “enable” the actual purchase.  Thus the issue is not whether Penrod could have purchased the Taurus without trading in the Explorer, but rather what she in fact did. . . Every other circuit court to address this precise issue has upheld Congress’ clear intent and granted creditors a PMSI in the entire debt incurred in financing a vehicle purchase, including the purchaser’s negative equity.  . . We thus dissent from the denial of rehearing en banc, which could have prevented us from being on the wrong end of an eight to one circuit split.