Arlington Capital LLC v. Bainton McCarthy LLC

(N.D. Ind. June 26, 2015)

The district court affirms the bankruptcy court’s approval of the attorney fee application. The law firm was retained by the trustee to pursue a 11 U.S.C. § 363(n) claim against the purchaser of the chapter 11 debtor’s assets for colluding with bidders to set the sale price. The defendant argued the award of attorney fees was inappropriate because they were not incurred for services “reasonably likely to benefit the debtor’s estate,” as a secured creditor had a lien on the property sold and thus should have recovered any difference between the sale price and the actual value of the property sold. The court holds that the recovery would be “after acquired property” under § 552(a) and thus property of the estate. As such, the attorney fees were incurred to benefit the debtor’s estate. Opinion below.

2015-06-26 – arlington capital llc v bainton mccarthy llc

Author: Matt Lindblom

Simmons v. Crossroads Bank

(N.D. Ind. June 22, 2015)

The district court affirms the bankruptcy court’s order denying the debtor a discharge for making false oaths in connection with his bankruptcy case. The debtor failed to list a number of assets and transactions in his schedules and statement of financial affairs. The creditor filed the complaint to deny the discharge and then amended the complaint well after the deadline for filing such complaints. The debtor argued the amendments should not have been allowed. The court recognizes the narrower standard for amendments to relate back to the original complaint in denial of discharge proceedings, but it holds that here the amendments merely listed additional omissions from the debtor’s filings and served as additional support for the original claim, and thus should relate back to the original filing date. The court also finds that the bankruptcy court did not abuse its discretion in finding the debtor had the requisite intent. Opinion below.

2015-06-22 – simmons v crossroads bank

Author: Matt Lindblom

In re Fremont Hospitality Group, LLC

(B.A.P. 6th Cir. June 22, 2015)

The bankruptcy appellate panel affirms the bankruptcy court’s orders. The debtor appealed two orders but failed to designate them or any related documents as part of the appellate record. The appellant also failed to make any arguments with respect to the two orders in its brief. Opinion below.

2015-06-22 – in re fremont hospitality group

Author: Matt Lindblom

In re Wring

(B.A.P. 6th Cir. June 22, 2015)

The bankruptcy appellate panel affirms the bankruptcy court’s order denying the debtor’s motion to remove the chapter 11 trustee and its order denying the chapter 11 trustee’s motion for instructions. The debtor failed to present proof of any undisclosed conflicts, incompetency, or wrong doing on the part of the trustee, and thus the bankruptcy court held there was no cause to remove the trustee. The appellate court holds there is no indication that the bankruptcy court abused its discretion in making this decision. The court also affirms the denial of the trustee’s motion for instructions. The trustee asked for instructions as to whether to continue to make payments to the debtor after he had been barred from operating the business. The court holds that this decision should be made by the trustee, as it deals with the day-to-day operations of the debtor’s business and the bankruptcy court should not weigh in on such business decisions. Opinion below.

2015-06-22 – in re wring

Author: Matt Lindblom

In re Manalpan Mining Company, Inc.

(Bankr. E.D. Ky. June 19, 2015)

The bankruptcy court grants the trustee’s motions to transfer coal mining leases under 11 U.S.C. § 363. The “lessor” argued that the agreements were leases, and thus § 365 should control. However, the court recognizes that under Kentucky law coal mining leases are treated as conveyances of real property. Thus these agreements were not leases, despite contract language suggesting they were. Opinion below.

2015-06-19 – in re manalpan mining company

Author: Matt Lindblom

Walro v. Lee (In re Lee)

(Bankr. S.D. Ind. June 16, 2015)

The bankruptcy court held that certain transfers of real property and shares of stock were fraudulent transfers. The debtor had transferred the property to his wife without receiving adequate consideration. The court orders that the trustee is entitled to recover title to the real property and a money judgment against the defendant. Opinion below.

2015-06-16 – walro v lee
2015-06-16 – walro v lee judgment

Author: Matt Lindblom

Baker Botts L.L.P. v. ASARCO LLC

(U.S. Sup. Ct. June 15, 2015)

The Supreme Court holds that professionals employed by trustees may not be compensated for time spent defending their fee applications in court. Because 11 U.S.C. § 330(a)(1) provides that professionals may be compensated for “actual, necessary services rendered,” the Court concludes that compensation for work defending a fee application is not authorized. The Court reasons that such work is not an actual and necessary service for the estate, and thus the “American Rule”—that each litigant pays his or her own attorney’s fees unless a statute or contract provides otherwise—should not be altered. Opinion below.

2015-06-15 – baker botts v asarco

Author: Matt Lindblom

In re Haffey

(Bankr. E.D. Ky. June 5, 2015)

The bankruptcy court grants the U.S. Trustee’s motion to dismiss the Chapter 12 case. The debtor failed to timely propose an amended plan after the first plan was deemed unconfirmable, failed to appropriately respond to discovery requests, and failed to file required reports. Dismissal was appropriate under 11 U.S.C. § 1208(c). Opinion below.

2015-06-05 – in re haffey

Author: Matt Lindblom

Stoughton Lumber Company v. Sveum

(7th Cir. June 4, 2015)

The Seventh Circuit affirms the bankruptcy court’s order denying discharge of a debt under 11 U.S.C. § 523(a)(4). Under Wisconsin law, the debtor had committed “theft by contractor” when he paid other creditors out of funds held in trust for the creditor. The creditor had sold hundreds of thousands of dollars’ worth of building materials to the debtor’s construction company. The court affirms, finding the evidence was sufficient to establish the requisite intent. Opinion below.

2015-06-04 – stoughton lumber co v sveum

Author: Matt Lindblom

Bank of America, N.A. v. Caulkett

(U.S. Sup. Ct. June 1, 2015)

The Supreme Court holds that a Chapter 7 debtor may not void a junior mortgage lien when the senior lien exceeds the value of the collateral. The Court recognizes that 11 U.S.C. § 506(a)(1) provides that an allowed claim is only a secured claim to the extent of the value of such creditor’s interest in the collateral. Section 506(d) provides that to the extent a lien secures a claim that is not an allowed secured claim, it is void. The Court suggests that the Code could be interpreted such that § 506(d) would allow the voiding of the junior mortgage lien, if not for the Court’s prior decision in Dewsnup v. Timm, 502 U.S. 410 (1992). There, the Court held that for purposes of § 506(d) a claim is a secured claim regardless of whether the collateral value is less than the lien amount. Thus, Dewsnup controls here and the debtors are not permitted to void the junior mortgages. Opinion below.

2015-06-01 – bank of america v caulkett

Author: Matt Lindblom