Richer v. Morehead

(7th Cir. Aug. 11, 2015)

The Seventh Circuit affirms the bankruptcy court’s decision upholding the creditor’s claim following the debtor’s objection. The court analyzes an equity participation agreement entered into by the debtor and the creditor and ultimately decides the creditor’s interpretation of a notice provision and associated deadlines for converting the participation interest to a demand note is the more plausible interpretation. Opinion below.

2015-08-11 – richer v morehead

Author: Matt Lindblom

Matteson v. Bank of America, N.A. (In re Matteson)

(6th Cir. B.A.P. Aug. 10, 2015)

The Sixth Circuit B.A.P. reverses the bankruptcy court’s finding that the mortgagee’s claim should be reduced by the amount the mortgagee would have received under the Chapter 13 plan if it had filed a proof of claim. The plan required the filing of a proof of claim in order to receive distributions under the plan. The mortgagee did not receive payments under the plan, and the debtor did not make the loan payments outside of the plan. After completion of the plan, the bankruptcy court held that, while the mortgagee’s liens remained, the amount of the debt must be reduced by the amount that would have been paid on the claims through the plan. The B.A.P. holds that there is no justification for this result, as the debtor or the trustee could have filed a proof of claim for the mortgagee if the debtor wished to pay the claim through the plan and avoid defaulting by not making payments outside the plan. Opinion below.

2015-08-10 – matteson v bank of america

Author: Matt Lindblom

Lee Group Holding Company, LLC v. Walro (In re Lee)

(S.D. Ind. Aug. 10, 2015)

The district court affirms the bankruptcy court’s order granting the trustee’s motion for summary judgment and finding that the debtor’s voting rights in the non-debtor Indiana limited liability company were property of the estate. The other members of the LLC argued that the debtor did not hold an interest that could be property of the estate, because his voting rights derived from his role as manager rather than a membership interest in the LLC. Applying Indiana law and interpreting the language of the operating agreement, the court disagrees and affirms. Opinion below.

2015-08-10 – lee group holding company v walro

Author: Matt Lindblom

In re Wilson

(7th Cir. Aug. 10, 2015)

The Seventh Circuit affirms the bankruptcy court’s approval of the Chapter 7 trustee’s fee. The principal unsecured creditor objected to the fee because it was based on a distributed amount that included the proceeds of the sale of the debtors’ home that paid off secured claims of mortgagees. The creditor claimed the amount of the proceeds should be deducted because the mortgagees did not have to participate in the bankruptcy to enforce their secured claims. The court finds that it was appropriate to include that amount when calculating the maximum fee under 11 U.S.C. § 326(a), and the trustee’s fee was under that maximum fee. Opinion below.

2015-08-10 – in re wilson

Author: Matt Lindblom

Cornerstone Industries Corp. v. Kaufman (In re Kaufman)

(Bankr. W.D. Ky. Aug. 6, 2015)

The bankruptcy court enters summary judgment in favor of the plaintiff, holding a $1.8 million claim arising from a state court judgment non-dischargeable. The state court judgment has preclusive effect, and the jury’s findings establish the requisite elements under § 523(a)(2) and (a)(6). The court discusses the applicability of § 523(a)(4) but because the jury may not have defined the term “fiduciary” the same as the bankruptcy code, the court states it is not convinced the plaintiff is entitled to summary judgment under that particular section. Opinion below.

2015-08-06 – cornerstone industries v kaufman

Author: Matt Lindblom

In re Back

(Bankr. E.D. Ky. Aug. 3, 2015)

The bankruptcy court overrules the debtor’s objection to the claim based on a 1996 state court judgment. The debtor argued the claim was time-barred by the Kentucky 15-year statute of limitations for actions to enforce judgments. The creditor had filed a judgment lien on September 8, 1998 and did not take any other action with respect to the judgment until filing a motion to intervene in a foreclosure action against the debtor on September 2, 2013. The state court had allowed the intervening complaint by order entered September 26, 2013. The bankruptcy court holds that the motion to intervene constituted “execution” on the judgment under KRS 413.090(1), and thus the limitations period was restarted before expiring on September 8, 2013. Opinion below.

2015-08-03 – in re back

Author: Matt Lindblom

In re Jones

(Bankr. E.D. Ky. Aug. 3, 2015)

The bankruptcy court revisits the issue of the appropriate cramdown interest rate to apply in a Chapter 13 plan. The court holds that the “formula approach,” as set forth in the plurality opinion in Till, determines the correct rate. The debtor’s plan proposed to pay the secured creditor’s claim with interest at 5.25% (2% over the Wall Street Journal prime rate). The creditor argued that Till was not binding and that prior Sixth Circuit law provided the appropriate standard. The court provides a good discussion of the history of Till and its application in the Sixth Circuit and concludes that the “formula approach” is the correct standard. Opinion below.

2015-08-03 – in re jones

Author: Matt Lindblom

In re Henry

(6th Cir. B.A.P. Aug. 3, 2015)

The Sixth Circuit Bankruptcy Appellate Panel affirms the bankruptcy court’s dismissal of the pro se debtor’s chapter 13 case. The debtor’s proposed plan could not be confirmed, and the court directed that the debtor remedy errors in the plan within 14 days. The debtor failed to timely submit an amended plan. Opinion below.

2015-08-03 – in re henry

Author: Matt Lindblom

Official Committee of Unsecured Creditors of Bulk Petroleum Corp. v. Kentucky Department of Revenue (In re Bulk Petroleum Corp. and Bulk Petroleum Kentucky Properties, LLC)

(7th Cir. July 31, 2015)

The Seventh Circuit addresses issues related to Kentucky gasoline taxes in a bankruptcy case pending in the Eastern District of Wisconsin. The debtor argued in the adversary proceeding that it improperly paid an excise tax when purchasing gasoline from suppliers in Louisville. The court holds that the debtor is entitled to a $774,000 tax refund from the Kentucky Department of Revenue. Opinion below.

2015-07-31 – in re bulk petroleum corp

Author: Matt Lindblom

In re Dave’s Detailing, Inc.

(Bankr. S.D. Ind. July 30, 2015)

In this lengthy opinion, the bankruptcy court declines to confirm two competing Chapter 11 plans. The debtor’s plan is not confirmed because it is not feasible under § 1129(a)(11) and it is not “fair and equitable” under § 1129(b). The other plan, proposed by the debtor’s competitor and largest unsecured creditor, can not be confirmed because certain claims are not properly classified and the plan unfairly discriminates against a class of creditors. The opinion provides a good discussion of standards under § 1129. Opinion below.

2015-07-30 – in re daves detailing

Author: Matt Lindblom