The court granted summary judgment to a creditor owed a debt arising from damages and injuries resulting from an assault committed by the debtor. The state court judgment established the elements of willfulness and maliciousness under § 523(a)(6), so the debt is excepted from discharge.
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The court, applying New York law, ruled on summary judgment in a preference action that a merchant cash advance (“MCA”) agreement executed between the debtor and a funding company during the preference period was a true sale of receivables and not a disguised financing arrangement. The funding company’s argument that the transfers were in the ordinary course of business required an inquiry into the facts, so the matter was set for trial.
This case presents what appears to be an issue of first impression for this court. That is, what effect, if any, does the conversion of a bankruptcy case from a Chapter 11 case to a Chapter 7 case have on the 11 U.S.C. § 364(c)(l) “super-priority” administrative claim of a Chapter 11 debtor in possession lender. Specifically, the court must decide if conversion to Chapter 7 subjects the “superpriority” status granted to the lender pursuant to § 364(c)(1) to the priority provisions of 11 U.S.C. § 726(b), thereby placing the administrative claims of the Chapter 7 Trustee above the lender's § 364(c)(1) claim. For the reasons that follow, the court finds that conversion does not impact the priority of a Chapter 11 super-priority claim granted under § 364(c)(1).
The debtor in a confirmed Chapter 11 case filed a lawsuit in state court concerning his former and current mortgage loan servicers’ handling of his mortgage, particularly with regard to the post-confirmation interest rates and the amounts collected for property taxes. A defendant removed the case to federal district court, which then referred it to the bankruptcy court as a core proceeding because a cause of action dealt with the application of the terms of the confirmed plan and confirmation order.
When a defendant filed a motion for summary judgment, the bankruptcy court determined it did not have subject-matter jurisdiction over the adversary proceeding and recommended to the district court that it withdraw the reference of the case. The bankruptcy court found that the core proceeding on which the district court based its referral – the applicable interest rate under the confirmation order – was no longer an issue. The parties agreed on the proper contractual rate of interest – but they disagree on whether the defendants actually charged that rate. That is not a core proceeding, because it can exist outside of the bankruptcy context, and it does not fall under the court’s “related-to” jurisdiction as it would have no conceivable effect on the bankruptcy estate because the underlying bankruptcy case has been dismissed and there no longer is an estate.
The bankruptcy court also discussed the defendants’ estoppel argument, in which they argued that the debtor failed to disclose these causes of action in the bankruptcy case and should not be able to raise them now. The bankruptcy court pointed out that the interest rate cause of action did not exist until after the plan was confirmed and could not have been disclosed during the pendency of the case. The court said the estoppel argument was “insufficient to somehow vest jurisdiction in the bankruptcy court where jurisdiction does not otherwise exist.”
The bankruptcy court recommended to the district court that it deny the pending summary judgment motion because disputed issues of material fact exist.
The court granted summary judgment against one defendant in favor of the Chapter 7 trustee, permitting him to recover unauthorized post-petition transfers made by the debtor. The evidence established (1) the funds were property of the bankruptcy estate; (2) the property was transferred; (3) the transfer was made post-petition; and (4) the transfer was not authorized by the Bankruptcy Code or the bankruptcy court. The court declined to enter summary judgment as to the remaining defendants because the evidence did not support an alter ego theory.
The court denied summary judgment in a preference action after determining that the affirmative defenses of contemporaneous exchange for new value, transfers in the ordinary course of business, and new value require factual findings as to the parties’ intent.
An unsecured creditor in a Chapter 7 case may include post-petition attorneys’ fees in its proof of claim, but it may not recover post-petition interest.
The court granted summary judgment to the debtors, ordering that a wholly unsecured junior lien on the debtors’ residential real estate may be avoided after the debtors complete Chapter 13 plan payments.
The debtor and the Nebraska Department of Health & Human Services had entered into a pre-petition agreement settling a lawsuit under the False Medicaid Claims Act, and the debtor had paid a portion of the settlement amount. In the debtor’s bankruptcy, the Department filed a complaint to determine the dischargeability of the balance of the settlement amount under 11 U.S.C. § 523(a)(2)(A).
In cross-motions for summary judgment, the debtor conceded the non-dischargeability of the balance owed. The dispute was whether the Department was entitled to treble damages under its complaint in the state court litigation.
The bankruptcy court determined the settlement agreement was clear as to the parties’ rights and remedies upon a payment default – entry of a judgment for the balance due under the agreement. The evidence did not support the Department’s claim for additional damages under the complaint, particularly since the Department had agreed to dismiss the state court complaint with prejudice as part of the settlement.
An agricultural production input supplier filed a financing statement to perfect its statutory lien against the debtors’ crops and crop proceeds, but the financing statement did not contain the information required by the Nebraska agricultural production inputs lien statutes, so the lien was unperfected. Under the Uniform Commercial Code’s priority rules, a perfected security interest has priority over a conflicting unperfected agricultural lien, so a lender’s prior perfected security interest took priority in the available proceeds.