In re Schwartz

(7th Cir. Aug. 24, 2015)

The Seventh Circuit affirms the dismissal of the debtors’ chapter 7 petition for cause under 11 U.S.C. § 707(a). The movant had obtained a large arbitration award against the debtors and the debtors failed to make an effort to pay the award. They continued incurring monthly living expenses of $11,100 with monthly income of $9,500. The court finds that “cause” under § 707(a) is not restricted to the three procedural defects listed in that section. Cause existed here because the debtors failed to make any effort to pay creditors when they had the means to do so. “What the Schwartzes failed to do was pay as much of their indebtedness as they could without hardship. Their action was deliberate and selfish, and provides good cause for denying the discharge.” Opinion below.

2015-08-24 – in re schwartz

Author: Matt Lindblom

In re JW Resources, Inc.

(Bankr. E.D. Ky. Aug. 21, 2015)

The bankruptcy court overrules the unsecured creditors committee’s objection to the proposed break-up fees (totaling $375,000) in asset purchase agreements that the debtors entered into with a proposed stalking horse bidder. The court reviews the various approaches to determining the reasonableness of break-up fees, as well as the benefits in permitting them. The court ultimately concludes the fees here are based on the sound business judgment of the debtors and the committee failed to present compelling evidence or arguments in opposition. Opinion below.

2015-08-21 – in re jw resources

Author: Matt Lindblom

In re Licking River Mining, LLC

(Bankr. E.D. Ky. Aug. 21, 2015)

The bankruptcy court approves the final fee applications of the Chapter 11 professionals following conversion to Chapter 7. The secured lenders objected on a number of grounds. The court first determines that certain funds should be turned over to the Chapter 7 trustee despite the lenders’ prepetition liens. The court also determines the requested fees are reasonable and for actual and necessary services. Finally, the court determines that the fees are within the authorized “carve-out” amounts and can be paid from the lenders’ collateral, despite the fact that the lenders had appealed certain earlier orders on fee applications based on procedural issues. Opinion below.

2015-08-21 – in re licking river mining

Author: Matt Lindblom

First National Bank of Manchester v. Elza

(E.D. Ky. Aug. 21, 2015)

The district court affirms the bankruptcy court’s order avoiding the mortgage foreclosure deficiency judgment liens on the debtor’s residence. The creditor had obtained a deficiency judgment following foreclosure of its mortgage lien and filed a judgment lien for the deficiency, which encumbered the debtors’ residence. The debtors moved to avoid the lien under 11 U.S.C. § 522(f) and the bankruptcy court granted the motion. The creditor appealed, arguing that § 522(f)(2)(C), which provides that judgments arising out of mortgage foreclosures are not avoidable, applied to the deficiency judgment lien. The court recognizes the split in authority on the issue, but ultimately concludes that § 522(f)(2)(C) merely provides that judgments in foreclosure actions (i.e. sale orders enforcing the mortgage lien) cannot be avoided such that the mortgage lien is avoided. The section does not apply to deficiency judgment liens. Opinion below.

2015-08-21 – first national bank v elza

Author: Matt Lindblom

In re Ausmus

(Bankr. W.D. Ky. Aug. 20, 2015)

The bankruptcy court holds that the creditor may not proceed with a damages hearing in state court, as the liability judgment has already been discharged in the bankruptcy. The creditor requests that the court allow her to challenge the dischargeability of the debt, despite the fact that the deadline for filing complaints to determine dischargeability has already passed. The court finds no basis to permit the late challenge. The creditor had notice of the bankruptcy and simply filed to timely file a complaint. Opinion below.

2015-08-20 – in re ausmus

Author: Matt Lindblom

In re Asch

(Bankr. E.D. Ky. Aug. 18, 2015)

The bankruptcy court grants the trustee’s motion to dismiss the Chapter 13 based on the debtor having secured claims in excess of that allowed under 11 U.S.C. § 109(e). The debtor argued that her schedules, which listed secured debt less than the 109(e) threshold, should control on the issue of her eligibility. The court holds that it may review other items in the record to determine eligibility. For reasons including that the debtor failed to include prepetition interest on her mortgage debt and listed certain debts as unliquidated and contingent when they almost certainly were not, the court finds that the debtor is not eligible for Chapter 13. Opinion below.

2015-08-18 – in re ash

Author: Matt Lindblom

In re Bicker

(Bankr. N.D. Ind. Aug. 10, 2015)

The bankruptcy court grants in part the motion to restrict access to filings with personally identifiable information. The court finds that the motion fails to comply with Bankruptcy Rule 9013, which requires motions to state both the relief sought and the grounds therefore with particularity. The court states that “particularity is not the same thing as verbosity.” The motion fails to state exactly which pleading the movant is asking to redact. The court quotes a Seventh Circuit opinion: “Judges are not like pigs, hunting for truffles buried in briefs.” Opinion below.

2015-08-10 – in re bicker

Author: Matt Lindblom

Bankr. N.D. Ind. Opinions

In re Radtke (Bankr. N.D. Ind. June 9, 2015) – Court sustains trustee’s objection to claimed exemption for real property because property sold on a land contract.

2015-06-09 – in re radtke

Hernandez v. Montgomery (In re Montgomery) (Bankr. N.D. Ind. June 10, 2015) – Court enters judgment in favor of debtor, finding debt dischargeable. The Debtor had failed to disclose that she did not yet own real property when she entered into contract to sell it to plaintiff, but that did not satisfy requirements for finding debt non dischargeable.

2015-06-10 – hernandez-gutierrez v montgomery

In re Sensibaugh (Bankr. N.D. Ind. July 21, 2015) – Court overrules debtor’s objection to claim that had been paid in full after the petition was filed. The court reasons that the claim is accurate as of the petition date and, even though it has been fully paid, it was properly filed.

2015-07-21 – in re sensibaugh

Author: Matt Lindblom

Mileusnic v. Planet Home Lending LLC

(N.D. Ind. Aug. 11, 2015)

The district court grants appellee’s motion to dismiss the appeal. The pro se appellant failed to file an appellate brief by the deadline and failed to explain that failure in response to the motion to dismiss the appeal. Opinion below.

2015-08-11 – mileusnic v planet home lending

Author: Matt Lindblom

Spradlin v. Khouri (In re Bruner)

(Bankr. E.D. Ky. Aug. 10, 2015)

The bankruptcy court grants judgment in favor of the defendants in this turnover action brought by the Chapter 7 trustee. After the petition was filed, the debtor’s mother transferred $50,000 to the debtor’s criminal defense attorney for legal representation. The trustee argued and presented evidence at trial that the funds were actually the debtor’s funds and sought a judgment directing that the $50,000 be turned over to the estate. The bankruptcy court holds that even if the funds originated with the debtor, because the transfer had not been avoided, the funds were no longer property of the estate and thus not subject to turnover under 11 U.S.C. § 542. Opinion below.

2015-08-10 – spradlin v khouri

Author: Matt Lindblom