(W.D. Ky. July 24, 2014)
The district court affirms the bankruptcy court’s finding that the creditor’s claim was not a secured claim. The agreement giving rise to the creditor’s claim did not evidence an intent to create a security interest in proceeds of the bankruptcy trustee’s settlement agreement with a preferential transfer defendant. There was no provision in the agreement regarding any particular property serving as collateral. Further, even if the agreement had created a security interest, the creditor had not taken steps to perfect such interest and thus the trustee could have avoided the lien in the bankruptcy. Opinion below.
2014-07-24 – jones v simon
(E.D. Ky. July 22, 2014)
The district court grants the trustee’s motion for sanctions against the defendants for spoliation of evidence. The district court found that there was sufficient evidence to conclude that at least two of the defendants intentionally destroyed relevant documents and others negligently did so, although there was not sufficient evidence to find they did so in bad faith (i.e., with knowledge of the value to the litigation). The court orders that permissive adverse inference jury instructions are appropriate. The jury will decide whether the absence of documents most likely reveals that the trustee should prevail on her claims. Opinion below.
2014-07-22 – in re black diamond mining
(N.D. Ind. July 21, 2014)
The district court denies the defendant’s motion for leave to appeal the bankruptcy court’s denial of its motion to dismiss the adversary proceeding. The court rules that the order denying the motion to dismiss was not final and appealable, and although the district court had discretion to hear the matter as an interlocutory appeal, it declined to do so because the appeal did not present a contestable question of law. The bankruptcy court applied the correct law (a case regarding equitable tolling). The defendant’s arguments were related to how that correct law was applied to the facts of this particular case, which was not sufficient to meet the standard for a discretionary interlocutory appeal. Opinion below.
2014-07-21 – in re livemercial aviation holding
(6th Cir. July 21, 2014)
The Sixth Circuit affirms the bankruptcy court’s holding that the Ohio real property tax certificate holder was not entitled to Chapter 13 plan payments that included 18% interest pursuant to an Ohio statute, but rather was only entitled to .25% interest as set forth on the certificate itself. The creditor argued the statute governing “redemption” of the certificate, which required 18% interest, controlled over another statute that provided that the interest on a tax certificate accrues at the “certificate rate of interest” while the property owner’s bankruptcy is pending. The Court held that the .25% interest rate applied, as that statutory provision was more specific and controlled over the other more general statute. Opinion below.
2014-07-21 – in re bowers
(Sixth Circuit B.A.P July 14, 2014)
The Sixth Circuit B.A.P reverses the bankruptcy court’s denial of the debtor’s unopposed motion to strip off a wholly unsecured mortgage lien on the debtor’s residence. The debtor filed this Chapter 13 within four years of receiving a Chapter 7 discharge, and was thus not eligible for a discharge in the Chapter 13. The Sixth Circuit, considering this issue for the first time, follows other circuits in holding that the discharge ineligibility is not a bar to the right to strip off the lien. Opinion below.
2014-07-14 – in re cain
(W.D. Ky. Bankr. July 15, 2014)
The court grants the Chapter 13 debtors’ motion to for summary judgment, avoiding the bank’s mortgage due to the bank’s failure to record the mortgage before the filing of the bankruptcy petition. The avoidance action was not commenced until some time after the Chapter 13 plan had been confirmed, which classified the bank’s claim as secured. The court concludes that classification is not a bar to the later lien avoidance. Opinion below.
2014-07-15 – in re hazelwood
(E.D. Ky. Bankr. July 14, 2014)
The court denies the debtor’s motion for summary judgment in this nondischargeability action. The court rejects the debtor’s argument that transactions older than two years before the bankruptcy filing cannot support a denial of a discharge for failure to keep adequate records and failure to explain the loss of assets. Opinion below.
2014-07-14 – in re stiff