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Case Title Date & Status Case Number(s) Judge & PDF Summary

John Deere Co. v. Iverson (In re Iverson), 66 B.R. 219 (Bankr.D.Utah)

(Internal Ref: Opinion 192)




Judge Clark

PDF icon 192.pdf

Plaintiffs argued that their claim, based on sales of farm equipment to debtor on credit, was non-dischargeable under 11 U.S.C. § 523(a)(2)(B) because debtor had provided false financial statements to them. The court found that debtor had intentionally or recklessly made false representations in four financial statements provided to plaintiffs in order to obtain equipment on credit, and that the false statements were intended to deceive plaintiffs. However, plaintiffs' failure to conduct any investigation, despite numerous warning signals contained in the financial statements themselves, resulted in a finding that plaintiffs had not reasonably relied on debtor's financial statements to provide debtor with financing. Plaintiffs' claim was therefore dischargeable.

In re Exec. Air Serv., Inc.

(Internal Ref: Opinion 191)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 191.pdf

Management company sought approval of its management agreement with debtor, which included a provision that debtor would seek an order awarding manager superpriority on its advances, pursuant to 11 U.S.C. § 364(c). Debtor issued a notice of hearing on the priority issue, indicating that manager's advances would be treated as administrative expenses and would be paid as priority claims under 11 U.S.C. § 507. Manager received copies of the notice, but did not object to it or suggest any changes. The bankruptcy court approved the management agreement without addressing the priority issue. More than a year later, manager realized it had not been awarded superpriority and moved to amend the court's approval order to include such priority, nunc pro tunc, to the date of the approval order. The bankruptcy court ruled that the priority notice that had been given was insufficient to allow superpriority. Manager appealed, and the district court held that nunc pro tunc orders may only be granted when an act was actually done but not properly recorded, and that there had not been any grant of superpriority to manager at the previous hearing. The district court also agreed with the bankruptcy court's conclusion that the notice of hearing did not adequately advise other administrative creditors that manager's claims would be paid prior to theirs, as is required by § 364. The district court considered manager's equitable claims, including that other creditors were aware that manager's advances had been made based on its belief that it had superpriority status, but concluded that the record was insufficient to resolve those claims. Since manager had not submitted evidence in support of its claim, and no error had been committed at the trial level, the bankruptcy court's decision was affirmed.

Sutherland v. Brown (In re Brown), 66 B.R. 13 (Bankr.D.Utah)

(Internal Ref: Opinion 190)




Judge Clark

PDF icon 190.pdf

Pursuant to plaintiff's motion for summary judgment, the court considered whether elements established and the standard of proof applied in a state court action against debtor satisfied the elements of non-dischargeable fraud under 11 U.S.C. § 523(a)(2)(A). The court concluded that the state court common law fraud findings were entitled to collateral estoppel effect, but that § 523 contained no provision that would allow the state court's assessment of punitive damages to become part of a non-dischargeable debt.

Research-Planning, Inc. v. Segal (In re First Capital Mortg. Loan Corp.), 60 B.R. 915 (Bankr.D.Utah)

(Internal Ref: Opinion 189)


PUBLISHED See 226.pdf and 313a.pdf


Judge Clark

PDF icon 189.pdf

Debtor had agreed to act as escrow agent on a loan from plaintiff to a third party, but improperly used escrowed funds to pay its own debts to a good faith creditor. Chapter 7 trustee recovered the funds from debtor's creditor on the ground that the payments had been preferences, and plaintiff filed an adversary proceeding contending that the recovered amount was subject to a constructive trust in its favor. The bankruptcy court ruled in favor of trustee, concluding that the recovered funds were not subject to a trust, although plaintiff did have an unsecured claim against debtor's estate based on debtor's wrongful disbursement of escrowed funds. This decision was affirmed by the district court in 226.pdf and, ultimately, by the Tenth Circuit, sitting en banc, in 313a.pdf.

Rees v. Emp't Sec. Comm'n of Wyo. (In re Rees), 61 B.R. 114 (Bankr.D.Utah)

(Internal Ref: Opinion 188)




Judge Clark

PDF icon 188.pdf

By statute, Wyoming imposed a higher employment security tax rate on employers that failed to pay their taxes by the due date. Debtor asserted that the higher tax rate imposed on him was impeding his ability to reorganize, and that it thereby violated the non-discrimination mandate of 11 U.S.C. § 525(a). The court considered the extensive history of § 525's enactment, and concluded that many bankruptcy courts had interpreted the statute more broadly than was intended by Congress. Since the Wyoming statute imposed the higher tax rate on anyone who failed to pay taxes timely, and the Wyoming tax commission does not issue licenses, permits, charters, or franchises, the court ruled that the statute did not discriminate against bankruptcy debtors within the parameters of § 525(a).

In re IML Freight, Inc.

(Internal Ref: Opinion 187)


APPEAL 789 F.2d 1460 (10th Cir.)


Tenth Circuit Court of Appeals

PDF icon 187.pdf

The bankruptcy court granted chapter 11 debtor's petition to reject its collective bargaining agreements with unions that represented the majority of its employees, which order was affirmed by the district court. The Tenth Circuit reversed and remanded on the ground that the lower courts had failed to make the detailed findings of fact required for rejection of such contracts. Specifically, the Circuit held that a "doomsday" finding, that the collective bargaining agreements were so burdensome that performance of them would result in liquidation of the debtor, should not be controlling. Instead, the bankruptcy court has a special responsibility to make detailed findings, after careful scrutiny of the equities of all parties in interest, that the balance of the equities favors rejection.

L. Joel & Elliott Anderson Gen. Contractor v. Sorenson (In re Sorenson)

(Internal Ref: Opinion 186)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 186.pdf

The district court reversed the bankruptcy court's ruling that a mechanic's lien was invalid because the verification block on the back of the notice of lien form had not been signed. The district court concluded that the form, which had been signed and orally verified, satisfied the Utah statutory requirement that the notice be verified by oath.

Merrill v. Allen (In re Universal Clearing House)

(Internal Ref: Opinion 185)


APPEAL 60 B.R. 985 (D.Utah) See 157.pdf and 239.pdf


U.S. District Court, Utah

PDF icon 185.pdf

In the bankruptcy court, trustee for Ponzi scheme debtors avoided transfers made by debtors to their sales agents, as fraudulent transfers under 11 U.S.C. § 548. On appeal, sales agents argued that the bankruptcy court lacked subject matter jurisdiction over the avoidance action because debtors were not "persons" eligible for bankruptcy relief, as defined in 11 U.S.C. § 109. Appellants also argued that debtors could not meet the "good faith" requirement for filing bankruptcy petitions, and had no interest in the transferred funds that could be enforced by the trustee, because all of "debtors' property" had been obtained by fraud. The district court held that debtors qualified as "business trusts," which are within the § 109 definition of "corporations," and rejected appellants' first claim. The district court also rejected appellants' good faith claim, on the ground that it was not raised in the bankruptcy court and was a matter within the bankruptcy court's discretion. Appellants' claim that debtors had no interest in the transferred funds was also rejected, based on the reasoning in 180.pdf. However, the district court determined that the bankruptcy court erred in ruling that appellants had failed to convey "legally cognizable value" for the payments they received, concluding that appellants' services constituted "value" as a matter of law. The case was therefore remanded for factual findings by the bankruptcy court on the issue of whether that value was "reasonably equivalent" to the payments appellants received.

C & C Co. v. Seattle First Nat'l Bank (In re Coal-X Ltd., "76"), 60 B.R. 907 (Bankr.D.Utah)

(Internal Ref: Opinion 184)


PUBLISHED See 209.pdf


Judge Clark

PDF icon 184.pdf

The court considered the priority status of a state law landlord's lien versus a lender's lien, on debtor's personal property, and concluded that the landlord's lien was superior to that of the lender. The court apportioned debtor's annual rent payment from the date it was due until the date on which trustee rejected the lease, and refused to impose prejudgment interest on the apportioned amount. This decision was affirmed in part, and reversed in part, by 209.pdf.

In re Horne

(Internal Ref: Opinion 183)




Judge Allen

PDF icon 183.pdf

The court considered whether attorney's fees and expenses incurred by debtor in defense of non-dischargeability actions could be recovered from the estate as administrative expenses. The court ruled that, since such services are unrelated to estate administration and do not affect the estate either positively or negatively, they are not "necessary services" covered by 11 U.S.C. § 330(a), and debtor's counsel would have to look to debtor for payment.

Artistic Tape & Label Printers v. Coordinated Fin. Servs. (In re Artistic Tape & Label Printers)

(Internal Ref: Opinion 181)




Judge Allen

PDF icon 181.pdf

Bankruptcy court dismissed plaintiffs/debtors' complaint objecting to defendant's proof of claim, then denied their motion to reinstate the complaint on the grounds that (1) counsel failed to appear at the hearing on the motion, and (2) the complaint failed to state a claim upon which relief could be granted. Plaintiffs' subsequent FRCP 60(b) motion was also denied. The district court dismissed plaintiffs' appeal, and the Tenth Circuit remanded to the district court, which remanded to the bankruptcy court. The bankruptcy court interpreted the remands as a mandate to allow plaintiffs another opportunity to present their Rule 60(b) motion, which it did.

In re Allen

(Internal Ref: Opinion 182)




Judge Allen

PDF icon 182.pdf

Debtors sought to dismiss their chapter 7 bankruptcy in order to immediately refile it and obtain a discharge of both medical expenses incurred postpetition and a student loan. The court denied the motion, concluding that 11 U.S.C. § 707 applies to voluntary dismissals and requires a showing of "cause" for the dismissal. The court found that neither debtors' desire to discharge debts incurred postpetition, nor to time bar a claim of non-dischargeability constituted "cause" for dismissal of their bankruptcy case.

Merrill v. Dietz (In re Universal Clearing House Co.)

(Internal Ref: Opinion 180)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 180.pdf

Trustee for Ponzi-scheme debtors sought to avoid and recover payments made to defendant, and the bankruptcy court awarded judgment in the amount of all payments, plus interest, to trustee. On appeal, defendant argued that, since all of debtors' funds were obtained through fraud, debtors had acquired no interest in them that could be recovered by trustee. The district court rejected defendant's argument, noting that cases unanimously hold that trustees can recover preferential and fraudulent transfers made by debtors to investors in their Ponzi schemes, because agreements induced by fraud are voidable, rather than void. Thus, where debtor had obtained investments through fraud, mingled them such that they could not be traced, and the investor failed to timely avoid the transaction, the money became property of the estate for avoidance purposes. The district court reviewed the evidence from the parties' trial and determined that, under § 550(a), defendant had been the initial transferee of some of the payments, and a transferee of the initial transferee in others. As a mediate transferee, defendant was entitled to the protection afforded by § 550(b), the elements of which (for value, in good faith, and without knowledge) had been established at trial in defendant's favor. The bankruptcy court's decision was reversed as to transactions determined on appeal to be § 550(a)(2) transactions, and affirmed as to § 550(a)(1) transactions. With respect to the affirmed transactions, the district court concluded that the bankruptcy court had not abused its discretion in awarding prejudgment interest.

Wasatch Factoring, Inc. v. Martin (In re Wasatch Factoring, Inc.)

(Internal Ref: Opinion 179)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 179.pdf

Debtor issued a check, postpetition, to three of its officers and directors to indemnify them for expenses incurred defending themselves from lawsuits against them in their corporate capacities. The officers transferred the check to their attorney, who placed the check funds into an account, withdrew them in payment of legal fees, and returned the balance to officers. Debtor sought to recover the attorney's fee amount from attorney under 11 U.S.C. § 550(a), alleging the fee payment was a voidable postpetition transfer under 11 U.S.C. § 549(a). The bankruptcy court entered summary judgment in favor of debtor under § 550(a)(1), concluding that attorney was the entity for whose benefit debtor's transfer had been made. The district court disagreed, concluding that the funds were transferred by debtor to the officers for their benefit, and it did not matter if attorney ultimately benefitted as well. However, the district court also concluded that attorney was an immediate transferee of officers, within the meaning of § 550(a)(2), and would therefore be required to relinquish the fee unless he could prove that he gave value for the funds in good faith, as required by § 550(b). Because there were issues of fact regarding attorney's good faith, the case was remanded for further proceedings in the bankruptcy court.

In re Irving Fin. Corp.

(Internal Ref: Opinion 178)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 178.pdf

The bankruptcy court approved trustee's compromise of three secured creditors' claims, and debtor appealed. The district court determined that debtor had no standing to appeal the bankruptcy court orders, because the claims against its estate were approximately ten times the estate's value and debtor would gain nothing from the relief it was seeking on appeal. Therefore, debtor was not an "aggrieved person" entitled to appeal, which standard had been judicially applied to appeals under the Bankruptcy Code.

The Lockhart Co. v. Hansen (In re Hansen)

(Internal Ref: Opinion 177)




Judge Clark

PDF icon 177.pdf

The court considered several claims to real property asserted by the debtors/record owners, the occupier/improver, and debtors' lender/holder of a trust deed. In the course of untangling the parties' interests, the court considered the impacts of the statute of frauds and its exception for part performance, ratification, good faith purchase for value, Utah's race-notice recording act, constructive/inquiry notice, and fraud under 11 U.S.C. § 523(a). Ultimately, the court concluded that a state court judgment in favor of occupiers made their claim to the property superior to both debtors and lender, but that lender's claim against debtor met the standard for a non-dischargeable debt under § 523(a)(2)(B).

Zions First Nat'l Bank v. Sanders Livestock Co., Inc. (In re L.W. Gardner Co.)

(Internal Ref: Opinion 176)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 176.pdf

In an adversary proceeding, various parties asserted interests in real property that was owned by, and the sole asset of, a corporation owned by another corporation, which was owned by the debtor partnership. Debtor listed the property as an asset in its bankruptcy filings, noting that it was subject to a contract with original sellers of the property to the corporation it remotely owned. Debtor claimed that the property had been designated to it by the corporate buyer, but no record of such a transaction existed. The bankruptcy court allowed the property to be transferred to bank, debtor's principal creditor and only apparent lienholder on the property. Sellers received no notice of debtor's chapter 11 filing or of the subsequent transfer of the property. On appeal, the district court found the inclusion of the property in debtor's estate to have been a de facto substantive consolidation of debtor and its related corporation, which deprived sellers of due process by denying them any opportunity to have their claim heard on its merits. The case was remanded for further proceedings.

Styler v. Aztec Copy, Inc. (In re Gleed Inv. Corp.)

(Internal Ref: Opinion 175)




Judge Clark

PDF icon 175.pdf

Chapter 11 trustee filed an adversary complaint against defendant alleging that numerous payments to it by debtor, its franchisee, were preferential under 11 U.S.C. § 547(b). The court considered the elements required for a preference, as well as the preference exceptions, with respect to all of the payments at issue. The court concluded that one of those payments, although satisfying the elements of a preference, fell within the new value exception set forth in § 547(c)(4), and was therefore not avoidable. All of the other payments trustee sought to avoid fell within the general preference rule, did not satisfy any exception to that rule, and were avoided.

In re Colvin, 57 B.R. 299 (Bankr.D.Utah)

(Internal Ref: Opinion 174)




Judge Allen

PDF icon 174.pdf

Second lienholder on debtors' primary residence moved for relief from stay because debtors' confirmed chapter 13 plan did not include payment of creditor's postpetition attorney's fees. The bankruptcy court had initially denied all postpetition fees, which decision was reversed by the district court's holding that an oversecured chapter 13 creditor is entitled to postpetition fees under 11 U.S.C. § 506(b). On remand, the bankruptcy court allowed all of creditor's claimed fees and costs. However, debtors failed either to pay that amount or to amend their plan, which caused creditor to file its motion for relief. The court held that 11 U.S.C. § 1322(b)(2) allows debtors to cure defaults, but also requires that the rights of mortgage lienholders be preserved. Therefore, chapter 13 debtors must pay creditor's arrearage claim, plus attorney's fees, under their plan in order to return the parties to their pre-default condition. Debtor's were given an opportunity to amend the plan, or the court would grant creditor's motion for relief.

In re Pacheco

(Internal Ref: Opinion 173)


APPEAL Unpublished


U.S. District Court, Utah

PDF icon 173.pdf

Discharged chapter 7 debtors asserted in the bankruptcy court that prepetition judgment creditors had violated the discharge injunction of 11 U.S.C. § 524(a), because their judgment remained on debtors' post-discharge credit report, and allegedly caused them to be refused credit. The bankruptcy court denied the claim and awarded attorney's fees to creditors, on the ground that debtors' claim had been filed in bad faith by their attorney. On debtors' motion for rehearing, the bankruptcy court again awarded fees to creditors. On appeal, the district court agreed with the bankruptcy court's denial of the claim and its award of fees in connection with the motion. However, the award of fees on rehearing was reversed, based on debtor's counsel's assertion that he had done more research on the issue and had found no law on either side. Noting that the research performed may not have been "brilliant," the district court held that, under the circumstances, sanctions could have a chilling effect on legitimate rehearing motions.

Tracy Collins Bank & Trust Co. v. McClean (In re McClean)

(Internal Ref: Opinion 172)



85PC-0144 and -0145

Judge Clark

PDF icon 172.pdf

On debtors' demand for a jury trial on a non-dischargeability claim against them, the court determined that it was unnecessary to determine whether, or under what circumstances, it may be appropriate to preside over a jury trial, as 28 U.S.C. § 1411 did not enlarge the right to jury trial on the issue of dischargeability. Therefore, the court ruled that the action to determine dischargeability, in which the existence and amount of the debt were not at issue, fell within its equitable jurisdiction and that no right to jury trial existed.

In re Wright

(Internal Ref: Opinion 171)




Judge Allen

PDF icon 171.pdf

The court considered an application by a creditor to recover its attorney's fees as an administrative expense, pursuant to the "substantial contribution" provision of 11 U.S.C. § 503(b)(3)(D). The court identified two prerequisites to such recovery, which are (1) that creditor's action must have been taken with the intent of benefiting the estate generally, and (2) there is an actual benefit. The court found that most of the claimed fees were performed on behalf of creditor, rather than the estate generally, but awarded the fees for services it deemed to have made a substantial contribution in the case.

In re Alta Title Co., 55 B.R. 133 (Bankr.D.Utah)

(Internal Ref: Opinion 170)




Judge Clark

PDF icon 170.pdf

A single creditor filed an involuntary chapter 7 petition against debtor, indicating that debtor had fewer than 12 holders of non-contingent claims. On debtor's motion asserting that it had approximately 150 creditors, the court allowed creditor time to amend its petition to add at least 2 more creditors, which it did. Superseded non-judicially appointed trustee for debtor requested that the court clarify whether the commencement date of the bankruptcy was the filing date of the single creditor petition, or the date the amended petition was filed. The court determined, first, that the 3-petitioning creditor requirement was not jurisdictional. The court then applied a version of the good faith test to creditor's initial petition, which required it to consider both creditor's pre-filing inquiry and its subjective purpose for filing, on which debtor bears the burden of proving bad faith. Finally, the court determined that, since the initial petition was not insufficient on its face and was not filed in bad faith, the defect in the initial petition was cured either by the other creditors' filing of their own involuntary petition, or by the filing of an amended petition that named all 3 creditors, and that the joinder related back to the initial filing date.

In re Albrechtsen

(Internal Ref: Opinion 169)




Judge Allen

PDF icon 169.pdf

Chapter 13 debtor executed a postpetition stipulation with its principal creditor, which was approved by the court. The stipulation covered payments debtor would make on a dump truck it wanted to retain. Later, debtor requested a release of lien from creditor so the truck could be sold, but was informed he still owed approximately $10,000 in interest. Debtor paid that amount under protest, and requested that the court clarify the parties' agreement and compel creditor to repay the interest. Trustee's argument that the court should ignore the stipulation and order, which were not referenced in a subsequent confirmation order, was rejected, as the court considered the stipulation to be a part of debtor's restructuring process. The court also determined that the stipulation provided that creditor would be paid interest on the unpaid balance of the debt at the rate set forth in the parties' previous contract, which rate was significantly higher than the interest rate required by 11 U.S.C. § 1325(a)(5)(B)(ii). However, the contract rate was not so disproportionate to the statutory rate as to be unconscionable, and there was no evidence of overreaching or undue influence by the creditor. The court declined to second-guess the debtor's informed decision to enter into the stipulation, but did order creditor to provide debtor with a detailed accounting of his post-confirmation payments.

In re Fulton, 52 B.R. 627 (Bankr.D.Utah)

(Internal Ref: Opinion 168)




Judge Allen

PDF icon 168.pdf

Debtors filed a previous chapter 7 petition that was dismissed by the court based on debtors' failure to appear at the creditors meeting, which debtors explained was due to inadvertently writing down the wrong date. They filed a new petition shortly after the dismissal was entered, and creditor moved to dismiss their petition on the grounds that they were precluded from refiling by 11 U.S.C. § 109(f)(1). That provision precludes refiling for 180 days after a previous filing was dismissed for "willful failure" to abide by the court's orders or to appear before the court in proper prosecution of their case. The court ruled that failure to appear at the creditors meeting satisfied both situations covered by § 109(f)(1), and thus considered whether debtors' failure to appear had been willful, which standard the court determined was applicable to both § 109(f)(1) situations. The court decided that "willful" in this context should be defined the same as it is under 11 U.S.C. § 523(a)(6), or "deliberate or intentional," found that debtors had presented credible testimony that their failure to appear was not deliberate or intentional, and ruled that § 109(f)(1) was inapplicable.

In re IML Freight, Inc.

(Internal Ref: Opinion 167)




Judge Clark

PDF icon 167.pdf

Plaintiffs in an employment discrimination action against debtor sought relief from stay to proceed with their pending action in Colorado district court. The court agreed with the parties that plaintiffs' motion was not a motion to withdraw the reference pursuant to 28 U.S.C. § 157(d), and determined that it was a core proceeding for relief from stay. The court reiterated the twelve factors applicable to modification of the automatic stay set forth in In re Curtis, 40 B.R. 795 (Bankr. D. Utah 1984). After balancing those factors, on the basis of only the parties' legal arguments, the court ruled that plaintiffs had established a legally sufficient basis for relief from stay.

In re Arrow Huss, Inc., 51 B.R. 853 (Bankr.D.Utah)

(Internal Ref: Opinion 166)




Judge Clark

PDF icon 166.pdf

Prior to the filing of an involuntary chapter 11 petition against it, debtor's officers and employees personally incurred business expenses on debtor's behalf. Postpetition, those employees were subjected to collection efforts, and debtor requested that the court extend the automatic stay to its present officers and employees with respect to those debts. Noting that the Bankruptcy Code does not provide a stay for non-debtor codefendants, the court determined that the sole basis upon which the collection efforts against debtor's employees could be enjoined was the court's injunction power under 11 U.S.C. § 105(a). The court held that, in extraordinary cases and under limited circumstances, § 105(a) may be necessary and appropriate to effect the objectives of bankruptcy. The court identified three considerations relevant to the use of its injunctive power from case law, and concluded that debtor had made enough of a case to warrant a very limited stay, so that its officers and employees could devote themselves to the reorganization effort.

Davis v. Painter (In re Palmer)

(Internal Ref: Opinion 165)




Judge Clark

PDF icon 165.pdf

Debtors operated a restaurant, which they sold within 90 days of filing their chapter 7 petition, and used some of the proceeds to pay the restaurant's landlord for past due rent. On stipulated facts, the court found that every one of the elements of a preferential transfer under 11 U.S.C. § 547(b) was met by the transfer to landlord. The court then considered whether the transfer was covered by an exception for payments made in the ordinary course of business, set forth in § 547(c), on which issue landlord had the burden of proof. The court ruled that, as landlord failed to establish 3 out of 4 ordinary course elements, trustee was entitled to recover the payment.

In re Snyder, 51 B.R. 432 (Bankr.D.Utah)

(Internal Ref: Opinion 164)




Judge Clark

PDF icon 164.pdf

Chapter 11 debtor's counsel issued a letter to all creditors, asking for their input regarding five potential "plans" that would result in dismissal of the bankruptcy. The letter attached exhibits, including appraisals of debtor's properties, debtor's estimates of costs, and various payout provisions for secured and unsecured creditors. Trustee filed a contempt motion asserting that the communication was an unauthorized solicitation of plan votes that violated 11 U.S.C. § 1125(b), and that debtor's attorney had inappropriately had direct contact with creditors who were represented by counsel. The court ruled that "solicitation" must be narrowly construed, and that debtor's communication, which was not a specific request for official votes, was not an unauthorized solicitation under § 1125(b). However, the court further ruled that debtor's attorney's direct communication with creditors without obtaining their attorneys' permission was a violation of Utah's Disciplinary Rule 7-104(A)(1), and the attorney was reprimanded, but was not required to bear the costs of the proceedings.

In re McNeeley, 51 B.R. 816 (Bankr.D.Utah)

(Internal Ref: Opinion 163)




Judge Clark

PDF icon 163.pdf

Creditor obtained pre-judgment writs of attachment against debtor's property prior to the filing of debtor's chapter 7 petition. On the day the petition was filed, creditor obtained a state court judgment that exceeded the value of the property subject to the writs. Creditor moved for relief from stay, which was opposed by both debtor and trustee. The court ruled that a judicial lien was superior to the interest of a bankruptcy trustee and, upon entry of judgment, became perfected as of the time of its initial filing. Therefore, the court granted creditor relief from stay, as well as a lien on the proceeds of property sold by trustee, subject to the claims of superior lien holders.