Transfers made to the defendants in repayment of their loans to the debtors’ principal, who was conducting a Ponzi scheme, were not avoidable as fraudulent. After a trial on the matter, the court found that the defendants received less than they loaned; they acted in good faith; and they gave reasonably equivalent value for the transfers.
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In a dispute about the value of the debtors’ vehicle, the lender’s NADA report was more credible than the debtors’ appraisal. The court found the value to be nearly equal to the amount of the lender’s claim. Because the debtors had used a lower valuation in their plan, the court gave them time to file an amended plan.
In the trustee’s declaratory judgment action to determine competing ownership interests in an asset, the court denied the defendant’s motion for summary judgment because both of her contentions – jurisdiction and statute of limitations – have previously been decided and the matter should move forward on the merits.
After a trial, the court found the debtor’s payments on a promissory note were fraudulent and preferential transfers because the note’s proceeds were used to purchase an asset held in the debtor’s wife’s name to put it beyond the reach of his creditors. The purchase of the asset (an interest in a limited liability company managed by the debtor) occurred outside the statute of limitations, so it was not avoidable. Under §§ 550 and 551, the trustee was entitled to recover the value of the note payments. In light of Stern v. Marshall constraints on a bankruptcy court’s authority to enter final judgments, the court’s findings of fact and proposed conclusions of law were sent to the district court for entry of judgment.
An unsecured junior lien on the debtor’s residential real estate may be avoided after the debtor completes Chapter 13 plan payments. The case law in the Eighth Circuit, interpreting Nobelman, permits wholly unsecured liens to be stripped off.
An unsecured junior lien on the debtors' residential real estate may be avoided after the debtors complete Chapter 13 plan payments. The case law in the Eighth Circuit, interpreting Nobelman, permits wholly unsecured liens to be stripped off.
The court sustained an unsecured creditor’s objection to the debtor’s plan because a class of allegedly impaired creditors who voted to accept the plan had not filed a proof of claim, so their claim had not “been allowed under § 502" as required to vote on the plan by § 1126(a). Because this issue was dispositive, the court did not reach the parties’ argument concerning the applicability of the absolute priority rule to an individual debtor.
The court overruled a creditor’s objections to confirmation of a Chapter 13 plan after a trial concerning the existence and valuation of assets. The court found no bad faith under the totality of the circumstances, as the debtor had not intentionally failed to disclose assets and had not intentionally undervalued them. The court also found the debtor was not a head of household and could not claim a homestead exemption, nor did she use her vehicle for work other than commuting to and from her job, so she was not able to claim a tool-of-the-trade exemption in it. The court overruled the creditor’s argument that the debtor was obligated to honor a contractual duty with a lienholder on her vehicle to have damage repaired in order to maintain its value; the court said the movant, as a third-party beneficiary, was not entitled to the benefit of that agreement.
The court denied the defendant’s motion to dismiss for failure to state a claim and motion for summary judgment based on statutes of limitation. The additional counts in the trustee’s amended complaint related back to the original counts concerning fraudulent and preferential transfers, so they were not time-barred. The original counts were rather vague but were fleshed out by discovery and incorporated into the parties’ preliminary pretrial statement, which became the operative pleading, so they survived the motion to dismiss.
The first lien holder of a single-asset real estate debtor moved to dismiss the case for cause under § 1112(b)(4), alleging that the president of the debtor’s owner was acting in the interests of himself and his other related companies, and not those of the debtor. Because the court found no evidence of cause such as illegal dealings, poor maintenance, lack of equity, or significant cash flow problems, it denied the motion to dismiss.