State Bank of Toulon v. Covey (In re Duckworth)

(7th Cir. Nov. 21, 2014)

The Seventh Circuit reverses the bankruptcy court’s orders finding the lender’s security interests enforceable despite a mistaken reference to the promissory note purportedly secured. The security agreement recited that it secured a promissory note dated December 13, but the promissory note was dated December 15. The court holds that parol evidence cannot be used to save the security agreement, due to the trustee’s strong-arm powers. Opinion below.

2014-11-21 – state bank of toulon v covey

In re Baham

(Bankr. W.D. Ky. Nov. 18, 2014)

The bankruptcy court grants the chapter 7 debtors’ motion to avoid judicial liens on a parcel of real property. After an evidentiary hearing, the court finds that the debtor’s appraisal is too low, because it included an inappropriate depreciation deduction, and finds that the appraisal obtained by the bank (one of the judicial lienholders) is too high, because it did not take into account the unfinished nature of the improvements. The court sets a value for the property, applies the Sixth Circuit’s calculations set forth in Brinley, and holds that the judicial liens are avoided pursuant to § 522(f) to the extent they impair the debtors’ exemption in the property. Opinion below.

2014-11-18 – in re baham

Rogan v. U.S. Bank, N.A. (In re Partin)

(Bankr. E.D. Ky. Sep. 9, 2014)

The bankruptcy court finds that the bank’s three mortgages were not in recordable form when they were accepted by the county clerk, and thus the trustee can avoid them. KRS § 382.330 requires the date and maturity date of the underlying obligation to be included in recordable instruments. The three mortgages only contained the maturity date for the underlying promissory notes. Under Kentucky case law, the trustee, as a hypothetical lien creditor or bona fide purchaser, did not have constructive notice even though the county clerk accepted and recorded the noncompliant mortgages. Opinion below.

2014-09-09 – in re partin

Jones v. Simon

(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

In re Cain

(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

In re Hazelwood

(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

Executive Benefits Insurance Agency v. Arkison

(U.S. Supreme Court, Issued June 9, 2014)

The U.S. Supreme Court holds that when a bankruptcy court is prohibited from entering a final judgment on certain claims under the Court’s prior Stern opinion, the bankruptcy court may still enter proposed findings of fact and conclusions of law to be reviewed de novo by the district court. This opinion gives some guidance to bankruptcy courts as to how to proceed when faced with a “Stern claim.” Opinion below.

2014-06-09 – executive benefits insurance agency v arkison

Indiana Family And Social Services Administration v. Saint Catherine Hospital of Indiana, LLC (In re Saint Catherine Hospital of Indiana, LLC)

(S.D. Ind. Issued May 30, 2014)

The Southern District of Indiana affirms the bankruptcy court’s summary judgment in favor of the debtor hospital on its preference claim against the Indiana Family and Social Services Administration (“FSSA”).  The Court held that FSSA’s withholding of Medicaid reimbursements to the debtor were preferential and no defenses applied.  Opinion below.

2014-05-30 – in family and social services v st catherine hospital

Levin v. Verizon Business Global, LLC (In re OneStar Long Distance, Inc.)

Issued May 2, 2014

Judge Young of the Southern District of Indiana reverses the bankruptcy court’s decision in the trustee’s avoidance action that almost $2.5 million in pre-petition transfers were subject to the new value affirmative defense.  Opinion below.

2014-05-02 – levin v verizon