In re Todd

(Bankr. S.D. Ind. April 24, 2017)

The bankruptcy court grants the debtor’s motion, finding the Indiana Department of Workforce Development in contempt for violation of the debtor’s discharge. The department garnished the debtor’s wages post-discharge based on a claim that the debtor improperly received benefits from the department prepetition. The department argued it was collecting on a post-petition claim because it had not determined the debtor was liable until after the petition date. The court rejects that argument, finding the department had a prepetition claim because it was based on prepetition conduct of the debtor. The department’s date of finding of liability did not control. Opinion below.

Judge: Lorch

Attorneys for Debtor: Kinkade & Associates, P.C., Kevin S. Kinkade

Attorney for Department: Megan E. Binder

2017-04-24 – in re todd

Author: Matt Lindblom

In re Ariana Energy, LLC

(Bankr. E.D. Ky. Oct. 30, 2015)

The bankruptcy court sustains the debtor’s objection and disallows the creditor’s claim. The creditor failed to establish that it was a guarantor of a certain agreement to which the debtor was a party. Therefore, the creditor could not prove an essential element of its subrogation claim. Opinion below.

2015-10-30 – in re ariana energy

Author: Matt Lindblom

Saint Catherine Hospital of Indiana, LLC v. Indiana Family and Social Services Administration

(7th Cir. Aug. 28, 2015)

The Seventh Circuit reverses the district court and affirms the bankruptcy court, finding that the hospital assessment fee of the state was a pre-petition claim and thus subject to the automatic stay. The fee was determined by analyzing conduct of the debtor occurring prepetition. The court discusses and applies the “conduct test” to determine when the claim accrued and ultimately determines it accrued prepetition. Thus, the state was not permitted to withhold Medicaid reimbursements to offset the claim postpetition. Opinion below.

2015-08-28 – saint catherine hospital of indiana v indiana fam

Author: Matt Lindblom

In re Ruben

(7th Cir. Dec. 23, 2014)

The Seventh Circuit affirms the district court’s reversal of the bankruptcy court’s order discharging the debtor’s obligation to pay costs pursuant to an arbitration award. The creditor sued the debtor in state court for fraud and negligence in managing a trust, of which the creditor was trustee. The parties then agreed to arbitrate, but the debtor filed a chapter 7 petition prior to commencement of the arbitration. After the creditor filed the nondischargeability action, the parties again agreed to arbitrate the negligence and fraud claims. All but the fraud claim was settled, and the arbitration panel then ordered that the debtor pay the arbitration costs, rather than deciding the fraud claim. The debtor refused to pay the costs, and the creditor sought an order from the bankruptcy court directing him to do so. The bankruptcy court declined, and the district court reversed. The debtor argued that the arbitration award for costs was a prepetition debt that should be discharged because it only arose as a result of the prepetition claims. The Seventh Circuit disagrees. The debtor chose to arbitrate post petition and thus assumed the risk that he would be liable for the costs. Further, the arbitration panel implied in its award that the debtor had committed fraud, and thus the prepetition debt would not likely have been dischargeable. Opinion below.

2014-12-23 – in re ruben