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.
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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.
The debtors’ president signed a guaranty on a loan made to the debtors. He filed a proof of claim based on subrogation rights for the amount he paid on the guaranty. Available funds were insufficient to pay in full his claim and the lien claims of other creditors. In overruling the objections of the lien creditors, the court ruled that the claim for equitable subrogation was valid and had not been waived or subordinated by language in the guaranty or in a composition agreement. It also had priority over the claims of holders of second liens, and the court approved as fair, reasonable, and adequate a settlement agreement among the debtors, the guarantor, and the creditors’ committee calling for payment of the subrogation claim in full with a waiver of the guarantor’s $1 million unsecured claim.
The court denied the debtor-defendant’s request for a special appearance to challenge the entry of a default judgment finding a debt owed to her former spouse to be non-dischargeable. The debtor asserted that she was not served with process or any documents in the case, but evidence submitted by the plaintiff indicated otherwise. The court also stated that even if the debtor had not been served with notice, the debt was excepted from discharge as a matter of law under §§ 523(a)(15) and 727(b).