Haire v. Padgett (In re Padgett)

(Bankr. W.D. Ky. Sep. 1, 2017)

The bankruptcy court finds in favor of the debtor in this nondischargeability action. The creditor’s claim was based on missing restaurant equipment following the termination of a real property lease to the debtor. The court finds the creditor failed to present evidence establishing that the debtor was responsible for the loss. The elements of §§ 523(a)(2), (4), and (6) were not satisfied. Opinion below.

Judge: Fulton

Attorneys for Debtor: Farmer & Wright, PLLC, Todd A. Farmer

Attorney for Creditor: Steve Vidmer

2017-09-01 – in re padgett

Author: Matt Lindblom


Sunshine Heifers, LLC v. Citizens First Bank (In re Purdy)

(6th Cir. Aug. 31, 2017)

The Sixth Circuit affirms the bankruptcy court’s decision finding the bank had a superior interest in the proceeds of an auction of the debtor’s cattle. The appellant contended its interest as lessor was superior and that the Sixth Circuit had already determined it was entitled to the proceeds. The bankruptcy did not err in determining ownership of the cattle at the time of the auction after the prior remand. Opinion below.

Judge: Moore

Attorneys for Appellant: Keller & Almassian, Michael D. Almassian, Nicholas S. Laue

Attorneys for Bank: Kerrick Bachert PSC, Scott A. Bachert, Ashley D. Gerughty

2017-08-31 – in re purdy

Author: Matt Lindblom

Sunshine Heifers, LLC v. Purdy

(W.D. Ky. Aug. 15, 2016)

The district court affirms the bankruptcy court’s decision that proceeds of the auction of the debtor’s cattle were properly payable to the bank, which held a first priority security interest in the debtor’s assets. While the Sixth Circuit had reversed the bankruptcy court’s prior decision finding the second creditor’s lease of the cattle to be a second priority lien (rather than a true lease), the bankruptcy court’s decision here was not clearly erroneous and was based on the evidence presented at the hearing to determine ownership of the cattle auctioned. The bankruptcy court found that all of the cattle subject to the leases had been sold prior to the auction. Opinion below.

Judge: McKinley

Attorneys for Plaintiff: Keller & Almassian, PLC, Michael D. Almassian, Nicholas S. Laue

Attorneys for Defendants: Kerrick Bachert PSC, Ashley D. Gerughty, Scott A. Bachert

2016-08-15 – sunshine heifers v purdy

Author: Matt Lindblom


Official Committee of Unsecured Creditors v. T.D. Investments, LLP (In re Great Lakes Quick Lube LP)

(7th Cir. Mar. 11, 2016)

The Seventh Circuit reverses the bankruptcy court’s judgment dismissing the committee’s fraudulent and preferential transfer claims. The committee brought the claims against the debtor’s landlord. The basis of the claims was the debtor’s termination of the leases 52 days before declaring bankruptcy. The court holds that there could have been value available to creditors if the leases remained in effect on the petition date. The committee was not seeking to evict the new tenant, but was merely seeking the value that was allegedly lost. The court remands to the bankruptcy court to determine the value of the transfer and any defenses of the landlord. Opinion below.

Judge: Posner

Attorneys for Committee: Kerkman & Dunn, Evan P. Schmit, Gregory M. Schrieber

Attorneys for Landlord: Hudec Law Offices, S.C., Patrick J. Hudec

2016-03-11 – in re great lakes quick lube

Author: Matt Lindblom

In re Walbert Trucking, Inc.

(Bankr. W.D. Ky. Nov. 16, 2015)

The bankruptcy court denies the creditor’s motion to treat a post-petition claim as an administrative claim. The creditor had leased trailers to the debtor prepetition, and the debtor returned all but a few of the trailers to the creditor. The few trailers that were not returned apparently were stolen and not in the debtor’s possession post-petition. The creditor moved to allow the claim for post-petition lease payments for the missing trailers as an administrative expense claim. The court finds that there was no benefit to the estate for the post-petition lease of the trailers and all of the subject leases were entered into prepetition. Thus, it was inappropriate to treat the claim as an administrative claim. Opinion below.

2015-11-16 – in re walbert trucking

Author: Matt Lindblom

In re Purdy

(W.D. Ky. Sep. 2, 2015)

Following the Sixth Circuit’s reversal of the bankruptcy court’s finding that livestock leases were disguised security agreements (see Sunshine Heifers, LLC v. Citizens First Bank (In re Purdy)), the bankruptcy court determines the rights of the lessor and lessee debtor in the proceeds of the earlier sale of the livestock. After a lengthy discussion of testimony on the issue, the court ultimately concludes that the lessor is entitled to the proceeds. Opinion below.

2015-09-02 – in re purdy

Author: Matt Lindblom

Sager v. Bennett (In re Bennett)

(Bankr. E.D. Ky. Jan. 7, 2015)

The bankruptcy court had found the debtor liable to her landlord for damage done to the leased property and held that liability nondischargeable under 11 U.S.C § 523(a)(6), because the debtor willfully and maliciously caused the damage. The court had also avoided a preferential transfer to the landlord, granting the debtor’s requested relief in her counterclaim. Here, the court holds that the landlord is entitled to recover its attorney fees as part of the nondischargeable debt. The Kentucky statute permits recovery of reasonable attorney fees when a tenant willfully breaches a lease. The court also holds that the landlord is entitled to set-off the preference liability against the nondischargeability judgment. Because the nondischargeability judgment and the preference judgment were both post-petition mutual obligations, set-off is permitted. Opinion below.

2015-01-07 – sager v bennett

Kendrick v. The Lamar Company, LLC (In re Parr)

(Bankr. E.D. Ky. Sep. 8, 2014)

The bankruptcy court holds that a lease of property for purposes of erecting and maintaining a billboard is a lease of real property and thus the lessee may retain its rights under the lease upon rejection of the lease by the trustee, pursuant to 11 U.S.C. § 365(h)(1)(A). The trustee had sold the debtor’s commercial real estate in the bankruptcy, but the billboard lessee refused to relocate following the sale. The trustee sought a judgment declaring the lease rejected, which was granted, and sought injunctive relief ordering the lessee to vacate the premises, which was denied. Opinion below.

2014-09-08 – in re parr

Sunshine Heifers, LLC v. Citizens First Bank (In re Purdy)

(6th Cir. Aug. 14, 2014)

The Sixth Circuit reverses the bankruptcy court’s decision holding that the livestock business’s leases of livestock to the debtor dairy farmer were per se security agreements such that the bank’s purchase money security interest trumped the livestock business’s interest in the livestock. The court applies Arizona state law (per the choice of law provision in the leases) and determines that the agreements are true leases—not security agreements—because they lacked an option for the dairy farmer to purchase the livestock. Judge Drain dissents, stating the “leases” should be considered security agreements because the economic life of the individual heads of cattle would not last the term of their lease. Opinion below.

2014-08-14 – in re purdy