In re Atlas Red-D Mix, Inc.

(Bankr. S.D. Ind. Nov. 10, 2015)

The bankruptcy court dismisses the chapter 7 business debtor’s bankruptcy for cause under 11 U.S.C. § 707(a). The debtor had ceased operations a few years prior to the bankruptcy, due to the death of its principal. The individual that inherited the stock then caused the debtor to withdraw from a pension fund to which the debtor was a contributing employer, which caused the debtor to incur a $3.5 million liability. The fund obtained a judgment against the debtor, took steps to collect on the judgment, and the debtor then filed a chapter 7 petition. The court finds that the case should be dismissed for cause because the debtor filed the bankruptcy in bad faith. The court finds that factors supporting a dismissal for bad faith include that the debtor had transferred four parcels of real property after the fund sued the debtor, the bankruptcy was essentially a two-party dispute, and there was no real purpose for the bankruptcy because the corporate debtor would not receive a discharge. Opinion below.

2015-11-10 – in re atlas red-d mix

Author: Matt Lindblom

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 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

In re Peterson

(Bankr. S.D. Ind. Feb. 4, 2015)

The bankruptcy court denies the creditor’s motion to dismiss or convert the chapter 7 case. The creditor had obtained a judgment against the debtor and her employer for the debtor’s unlawful accessing and dissemination of the creditor’s medical information. The creditor sought dismissal of the case under § 707(b) (failure of means test), but the court determined the debtor’s debts were not primarily consumer debts and thus that section did not apply. While the judgment was not a business debt, that did not necessarily mean it was a consumer debt. The creditor also sought dismissal for cause under § 707(a). The court recognized that seeking to pay a large debt of one creditor is a factor in favor of dismissal, but that alone did not warrant dismissal for cause. There was no evidence of the debtor’s ability to pay the large judgment. Finally, the creditor alternatively sought to convert the case to chapter 11, but the court denied the request, finding no credible evidence of the debtor’s ability to pay the debt or that chapter 11 would benefit creditors more than chapter 7 (in part because the creditor could collect the judgment from the debtor’s employer). Opinion below.

2015-02-04 – in re peterson

Author: Matt Lindblom