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.
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The court granted the defendants’ motion to alter or amend the portion of a fraudulent transfer summary judgment order concerning the plaintiff’s entitlement to a presumption of intent to defraud. The court denied the motion to alter or amend with regard to the applicable standard of good faith under the Nebraska Uniform Fraudulent Transfer Act.
The debtors previously entered into a stipulation settling a motion for stay relief filed by the creditor holding liens on numerous rental properties owned by the debtors. The stipulation contained a provision that any attempt by the debtors to modify its terms without the creditor’s express written consent would be an event of default which would automatically terminate any stay or injunctive provision of the Bankruptcy Code. The debtors later moved to modify the amount of adequate protection payments, based on changed circumstances. The creditor deemed this an event of default and moved for relief from the stay.
The court denied the debtors’ motion to modify the adequate protection payments, finding unconvincing evidence of changed circumstances. The court also denied the creditor’s motion for relief, finding that the default provision in the stipulation gave the creditor too much power at the expense of the debtors’ rights under the Bankruptcy Code. “Although the stipulation was negotiated in good faith, and approved by this court, it is the function of the court to determine if there is cause for relief from the automatic stay. The parties cannot negotiate away the authority of the court or the right of a debtor in bankruptcy to request relief from the court.”
The debt resulting from a limited liability company manager’s unauthorized use of company funds was non-dischargeable under § 523(a)(4). The debtor admitted to acting in a fiduciary capacity as the manager, and his misappropriation of funds constituted defalcation by a fiduciary. The court also awarded pre- and post-judgment interest on the debt.
The court sustained a creditor’s objection to confirmation of the debtor’s Chapter 13 plan on the basis of the proposed post-confirmation interest rate on the debt. The court ruled that the debtor should pay the contract rate of 8.5 percent, rather than the formula rate of 5.25 percent, because of the significant degree of risk the creditor will face. The debt was delinquent on the petition date, the debtor had not made payments pursuant to the plan, and there would be delays and possible additional costs before the creditor could collect if the case was dismissed.
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.
In this fraudulent transfer action, the court denied the defendant transferee’s motion for summary judgment on the grounds that factual issues exist as to whether there was any unencumbered value in the property that was transferred and whether the debtor received a reasonably equivalent value for the transfer. Additional evidence is needed to explain the difference between the valuation of the property on the debtor’s financial statement and the valuation of the property in the asset purchase agreement executed approximately two months later.
The court denied the debtor’s motion challenging the court’s jurisdiction over an adversary proceeding seeking denial of the debtor’s Chapter 11 discharge. Dischargeability is a core proceeding over which the bankruptcy court has jurisdiction. It is also an action in equity, so the debtor is not entitled to a jury trial in an Article III court.
The court denied the debtor’s proposed use of cash collateral from the sale of cattle because the creditor was not adequately protected. The debtor’s cash flow estimates were not reliable as there was no evidence of the future market value of the animals or even the actual number of animals on hand at the time of the hearing.
The debtor was a homebuilder. The debtor’s lender held a deed of trust lien on certain real estate and improvements owned by the debtor. A construction lien was subsequently filed against the same property for work performed. When the home sold, the court ruled that the deed of trust lien had priority over the construction lien, so the lender was entitled to the distribution of the sale proceeds.