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Opinions
| Case Title | Date & Status | Case Number(s) | Judge & PDF | Summary | |
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In re IML Freight, Inc., 52 B.R. 124 (Bankr.D.Utah) (Internal Ref: Opinion 162) |
Jun-25-1985 PUBLISHED See 253.pdf |
83C-1950 |
Judge Clark |
In a case that began in chapter 11, but was subsequently converted to chapter 7, the court considered several claims for payment of approved professional fees incurred in connection with the chapter 11 proceedings. Trustee established that complete liquidation of debtor's assets would not provide sufficient funds to satisfy all administrative claims. The court noted that professional fees are allowed under 11 U.S.C. § 330, may be paid on an interim basis under 11 U.S.C. § 331, and are considered administrative expenses under 11 U.S.C. § 503(b)(2). All administrative expenses, including professional fees, incurred under chapter 11 are treated in parity with each other. However, pursuant to 11 U.S.C. § 726(b), chapter 7 administrative expenses that are incurred after conversion of a chapter 11 case to chapter 7 are entitled to superpriority, and administrative expenses incurred in the chapter 11 are paid pro rata if there are insufficient funds to pay all administrative expenses in full. Given the substantial doubt that all administrative claims will be paid in full, the court ruled that only the amount that would almost certainly be paid under all possible contingencies would be paid on an interim basis. In the absence of evidence on best and worst case scenarios, trustee's motion to pay all professional fees in full was denied. | |
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Larson v. Zion's First Nat'l Bank (In re Larson) (Internal Ref: Opinion 161) |
Jun-22-1985 UNPUBLISHED |
84PC-1950 |
Judge Clark |
Bank filed a motion for relief from stay in chapter 11 debtor's bankruptcy case in order to foreclose a lien it had on property either formerly or currently owned by debtor. Debtor then filed an adversary complaint against bank, asserting causes of action that arose from the parties' dealings with respect to the property. Bank raised a number of defenses to the adversary complaint by motion. The court concluded that, because debtor's claims primarily involved adjudication of rights under state law, the adversary action was not a "core" bankruptcy proceeding. The court then rejected bank's argument that debtor was precluded by collateral estoppel from re-litigating issues decided in a state court restraining order proceeding, on the ground that the state court record had not been provided. The court also refused to dismiss the complaint based on bank's argument that the claims stated were compulsory counterclaims in its foreclosure action, concluding that no foreclosure action had been filed. Finally, bank's requests, (1) to dismiss for failure to plead jurisdiction, (2) to strike portions of debtor's complaint, and (3) to abstain, were all denied. | |
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In re Hall, 51 B.R. 326 (Bankr.D.Utah) (Internal Ref: Opinion 160) |
May-31-1985 PUBLISHED |
82C-3137 |
Judge Clark |
After debtors' chapter 11 case was converted to chapter 7, the court issued an order directing creditors to file claims within 30 days of the order. As a result, claims were due only 4 days after the first meeting of creditors. Creditor that filed its claim 7 days after the meeting of creditors (3 days after the noticed cut-off date) moved for leave to file its untimely claim. The court determined that Bankruptcy Rule 3002(c) sets the cut-off date for filing claims in a chapter 7 case at 90 days after the creditors meeting (with exceptions that were not applicable), and that Bankruptcy Rule 9006(c)(2) specifically prohibits reduction of that time. Therefore, creditor's claim had been timely filed. | |
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Orosco v. Veterans Admin. (In re Orosco) (Internal Ref: Opinion 159) |
May-15-1985 UNPUBLISHED |
84PA-1409 |
Judge Allen |
Debtor purchased a residence that was subject to an outstanding trust deed. Although debtor made payments on the trust deed loan, she never assumed that obligation. When debtor allowed the loan to default, lender foreclosed, and the house was purchased at the foreclosure sale by the loan guarantor for the outstanding loan amount. One day later, debtor filed a chapter 13 petition. Debtor's attempt to avoid the foreclosure sale pursuant to 11 U.S.C. § 547 was rejected by the court, which first assumed without deciding that guarantor was a "creditor" of the debtor. The court ruled that debtor's § 547 claim would still fail because the outstanding loan was fully secured and, therefore, debtor could not establish that defendant received more than it would have in a chapter 7 liquidation. However, because evidence of the property's value established that it was worth more than the amount defendant had paid for it, the court determined that defendant had given less than reasonably equivalent value for the transfer, and the foreclosure sale was declared null and void as a fraudulent transfer under 11 U.S.C. § 548(a). | |
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In re Mobile Mfg. Co. (Internal Ref: Opinion 158) |
May-8-1985 UNPUBLISHED |
82A-1195 |
Judge Allen |
In the course of this chapter 7, creditors were notified that debtor probably had no assets from which to pay claims and, therefore, no proofs of claim would be necessary unless creditors were subsequently notified that assets had become available. Assets did become available, and the court issued a notice to that effect, requiring creditors to file their proofs of claim within 60 days of the notice if they wanted to participate. Shortly after the deadline set forth in the notice, the IRS filed its claim, asserting both a secured amount and an unsecured priority amount, and both trustee and another creditor objected that the claim was untimely. The court denied the timeliness objection, based on its conclusion that the notice had inadvertently specified a shorter time period for filing claims than the 90-day period prescribed by Bankruptcy Rule 3002(c)(5), and that, due to Bankruptcy Rule 9006(c)(2), the court had no authority to reduce that time period. The court then identified four issues it had with the IRS' claim, which were that (1) the unsecured portion of the claim was estimated, (2) the secured portion of the claim was not supported by evidence that the security had been perfected, (3) a stipulation to the secured claim amount, between the IRS, trustee, and creditor, had not been approved by the court, and (4) debtor's filing of a claim on behalf of the IRS, pursuant to 11 U.S.C. § 501(c), may not have been effective if creditor's failure to file its own claim is a precondition to such a filing. The IRS was given 20 days within which to amend its claim, which must reflect a tax that has actually been assessed, and must be accompanied by evidence of perfection. | |
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Merrill v. Allen (In re Universal Clearing House Co.) (Internal Ref: Opinion 157) |
May-3-1985 UNPUBLISHED See 185.pdf |
82PA-0253 |
Judge Allen |
Trustee asserted adversary claims against salesmen for Ponzi scheme debtors, claiming that commissions defendants had received from debtors were fraudulent under 11 U.S.C. § 548(a)(2). The court determined that the first three elements of a § 548(a)(2) fraudulent conveyance were not in question and, therefore, the only issue before it was whether defendants had given less than reasonably equivalent value in exchange for debtors' payments. The court held, as a matter of law, that services rendered on behalf of a Ponzi scheme, even if performed in good faith and without any knowledge of fraud, are without legally cognizable value, and awarded judgment to trustee. On appeal, in 185.pdf, this decision was remanded by the district court for a factual determination of the value of defendants' services, and whether they were "reasonably equivalent" to the payments defendants received. | |
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Segal v. Bennett (In re Meacham-Brown Ctr., Inc.) (Internal Ref: Opinion 156) |
May-2-1985 UNPUBLISHED |
84PC-1618 |
Judge Clark |
Defendant moved to dismiss chapter 7 trustee's avoidance claim against it, asserting that debtor had not complied with a state statute requiring it to file an assumed name certificate, which would be an absolute defense to any claim asserted by debtor under state law. The court first discussed the real party in interest rule set forth in Fed. R. Civ. P. 17 (Bankr. R. 7017), noting that the rule is intended to ensure that plaintiff has an interest in the proceeding that is sufficient to cause its diligent advancement. In pursuing avoidance actions, a trustee acts on behalf of debtor's creditors, which is authorized by 11 U.S.C. § 323 and Bankruptcy Rule 6009. Thus, with respect to such claims, trustee, rather than debtor, is the real party in interest. Moreover, the court held that trustee's avoidance powers are not limited to the debtor's right to assert a claim, but also include the rights of creditors. Debtor's failure to file the assumed name certificate under state law was held to have no application to trustee's exercise of his avoidance powers. | |
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In re Am. Res. Mgmt. Corp., 51 B.R. 713 (Bankr.D.Utah) (Internal Ref: Opinion 155) |
Apr-23-1985 PUBLISHED See 44.pdf |
84C-1749 |
Judge Clark |
Bank, which held a significantly undersecured claim in virtually all of chapter 11 debtor's assets, obtained relief from stay to foreclose its interests in those assets. Subsequently, bank agreed, pursuant to stipulations approved by the court, to provide a set amount of funds per month for debtor's operating expenses. The stipulations further required that all administrative expenses would be paid first from assets not subject to bank's security and, if available funds were insufficient to pay them, payment of trustee's and creditors committee's attorney and accounting fees would be paid from bank's cash collateral, up to a specified amount. Bank's advances were to be treated as superpriority claims. At a hearing to consider interim professional compensation, the court allowed the attorney and accountant applications for fees in full, but restricted trustee's payments to one-half of each amount authorized. On rehearing, the court explained that secured creditors are protected in bankruptcy up to the value of their collateral, and only surplus proceeds are available to pay estate creditors and administrative expenses. Therefore, unless debtor has equity in encumbered property, administrative expenses may not be paid from collateral. The court found that the stipulations were reasonably designed to allow debtor to continue its business and, without bank's advances, there would be no surplus with which to pay administrative expenses, and bank could not be forced to pay more administrative expenses than it had agreed to pay. | |
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Am. Bank & Trust Co. v. Moyer (In re Moyer), 51 B.R. 302 (Bankr.D.Utah) (Internal Ref: Opinion 154) |
Apr-18-1985 PUBLISHED |
83PC-0892 |
Judge Clark |
Chapter 13 debtors obtained confirmation of their plan from the court. Shortly thereafter, creditor filed an adversary complaint against debtors, to which debtors counterclaimed. The court set the matter for an expedited 2-hour trial to take place approximately 4 months later. On the day prior to trial, debtors' counsel informed the court that the parties had settled and the trial could be stricken. Pursuant to the scheduling order, the court assessed plaintiff's and debtors' attorneys with costs, in the amount of $25 each. Plaintiff's attorney paid the assessment by the deadline, but debtors' attorney did not pay the assessment at all, and argued at a subsequent hearing that the assessment was improper. The court held that it had authority to assess reasonable expenses under Fed. R. Civ. P. 16(f) [Bankr. Rule 7016], and that it had authority to enforce its assessment by contempt pursuant to Fed. R. Civ. P. 37(b)(2) [Bankr. R. 7037]. Therefore, the court imposed an additional sum of $10 on debtors' attorney for his contempt of court in failing to timely pay the previous assessment. | |
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In re Sunstone Ridge Assocs. (Internal Ref: Opinion 153) |
Apr-12-1985 UNPUBLISHED |
85C-0199 |
Judge Clark |
Debtor's principal asset was an apartment complex, which was valued at approximately $2 million less than the debt secured by it. Creditor moved for relief from stay, and debtor opposed the motion on the ground that the property, which it intended to "condominiumize," was necessary to an effective reorganization. The court granted creditor's motion for relief from stay, concluding that debtor's planned development of the property was "wholly speculative." The district court vacated and remanded the bankruptcy court's decision in 153a.pdf, concluding that § 362(d)(2) does not require a showing of feasibility in addition to necessity. In 153b.pdf, the Tenth Circuit dismissed creditor's appeal from the district court judgment, finding that the appeal had "become entirely moot." | |
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In re Clark (Internal Ref: Opinion 152) |
Apr-3-1985 UNPUBLISHED |
81C-1228 and -1230 |
Judge Clark |
Creditor held a prepetition lien on chapter 7 debtors' property. After debtors were discharged in bankruptcy, they requested a lien release from creditor. Creditor agreed to release the lien if debtors agreed to pay an amount that included creditor's claim, which had been discharged in the bankruptcy. Debtors accepted, and began making payments to creditor. When debtors defaulted on their payments, creditor obtained a judgment against them in state court. Debtors then asked the bankruptcy court to declare their post-discharge agreement void, as a violation of 11 U.S.C. § 524(c). The court held § 524(c) to be inapplicable, as it only applies to agreements that include dischargeable debt as consideration, and debtor's personal liability to creditor had already been discharged when the parties entered their agreement. Creditor had provided completely new value, consisting of a release of the lien on debtors' property, in exchange for debtors' agreement to accept personal liability for payments. Debtors' motion was denied. | |
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In re Lettuce Entertain You, Inc. (Internal Ref: Opinion 151) |
Mar-26-1985 UNPUBLISHED See 123.pdf |
83C-3014 |
Judge Clark |
Creditor, the lessor of commercial mall space to chapter 11 debtor, filed a prepetition state court action against debtor seeking unpaid rent and recovery of the leased property. Over a period of more than a year, debtor made a number of payments to the clerk of the state court, in order to retain possession of the property during the lawsuit. When debtor filed its petition in bankruptcy, the amount being held by the state court was approximately $33,000, which was significantly less than the amount creditor was entitled to under the lease. The court considered the parties' conflicting claims to those funds, which it determined to be "cash collateral" under 11 U.S.C. § 363(a), and ruled both that creditor had established its interest in the funds, in satisfaction of § 363(o)(1), and that debtor had not satisfied its burden to provide creditor with adequate protection under § 363(o)(2). Therefore, the court vacated its previous order granting turnover of the funds to debtor, and granted creditor's motion to prohibit debtor's use of the funds. | |
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In re By-Rite Distrib., Inc., 47 B.R. 660 (Bankr.D.Utah) (Internal Ref: Opinion 150) |
Mar-12-1985 PUBLISHED See 55 B.R. 740 (D.Utah 1985) |
84A-3050 |
Judge Allen |
Chapter 11 debtor/lessee filed a motion to assume unexpired leases of non-residential property on the 60th day after the petition was filed, and the matter was not heard by the court until after the 60-day time period required for assumptions, set forth in 11 U.S.C. § 365(d)(4), had expired. The court held that "assumption" requires court approval and, as debtor failed to obtain approval of its motion within the 60-day time period, the leases sought to be assumed had terminated by operation of law and could no longer be assumed. This decision was reversed by the district court in 55 B.R. 740. | |
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In re Jensen-Farley Pictures, Inc., 47 B.R. 557 (Bankr.D.Utah) (Internal Ref: Opinion 149) |
Feb-14-1985 PUBLISHED |
83A-3391 |
Judge Allen |
On applications for interim compensation filed by co-attorneys for an unofficial creditors committee, an accountant for the chapter 11 debtor, and an accountant for the creditors committee, the court considered the following issues: (1) whether compensation for prepetition services by creditors committee counsel and debtor's accountant is allowable as an administrative expense; (2) whether professional fee payments are limited to local hourly rates; (3) whether the committee's accountant represented an interest adverse to the debtor's estate, and is therefore not entitled to compensation; and (4) whether the fees and costs applied for may be otherwise allowed. The court concluded that (1) prepetition legal services to the creditors committee did not substantially benefit the bankruptcy estate and were not compensable by the estate; (2) prepetition accounting services may not be allowed as administrative claims; (3) when out-of-state attorneys practice before the court, they are entitled to charge their customary billing rates; and (4) attorneys' postpetition fees were reasonable, proper, and allowable as administrative expenses, but the accountants' applications required an additional hearing to determine whether they had conflicts of interest. | |
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In re Roberts, 46 B.R. 815 (Bankr.D.Utah)In re Roberts, Inc. (Internal Ref: Opinion 148) |
Feb-4-1985 PUBLISHED See 75 B.R. 402 (D.Utah 1987) [229.pdf] |
82C-1037 and -1038 |
Judge Clark |
Law firm, which had previously represented the corporate and individual debtors, and was still owed fees by the corporation, was approved to represent debtors in their bankruptcy cases. The bankruptcy court raised the issue of conflict of interest for the first time in connection with law firm's fee application for work performed in the bankruptcies. Finding multiple conflicts of interest that law firm had not revealed, the bankruptcy court denied all requested fees. This decision was affirmed in part, and reversed and remanded in part, by the district court in 229.pdf. | |
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Sandy State Bank v. Fetzer (In re Lehwalder) (Internal Ref: Opinion 147) |
Feb-4-1985 UNPUBLISHED |
82PC-0882 |
Judge Clark |
Bank filed an adversary complaint against various defendants who owed money to debtor, seeking recovery of debts based on bank's superior security interest. Bank filed motions for summary judgment, to which the only defense was that the court was without subject matter jurisdiction. No evidence was presented at the hearing on the motions by defendants. The court granted summary judgment, indicating that it was unopposed and appeared to be meritorious. Shortly thereafter, defendants filed an objection to entry of summary judgment, raising factual issues regarding service of the motions, counsel's entry of appearance for defendants at the summary judgment hearing, and service of the complaint on one of the defendants. Bank's counsel filed an affidavit controverting defendants' claims, but defendants again failed to offer any evidentiary support. Based on defendants' failure to controvert the facts sworn to by plaintiff's counsel, and the fact that defendants were attempting to raise new defenses to summary judgment that they had not made at the hearing, the court found that their objection was not properly a motion under either Bankr. Rule 9023(c) or Rule 9024(a), nor could it be granted under 11 U.S.C. § 105, as there were no facts before the court to support their allegations. Defendants' objection was denied. | |
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In re Todd (Internal Ref: Opinion 146) |
Jan-16-1985 UNPUBLISHED |
83C-2153 |
Judge Clark |
Chapter 11 debtors submitted a repayment plan proposing a 300-month repayment of their principal secured creditor, mortgagee, to begin immediately. Other secured creditors would also be paid in full, beginning immediately, over a period of 15 months. One secured creditor would be paid in full on the effective date of the plan, while smaller unsecured creditors would be paid over a 7-month period, beginning approximately 18 months after the plan was submitted for approval. Finally, larger unsecured creditors would be paid over a 51-month period, beginning at the end of the 7-month period. All claims would be paid in full, plus interest. Mortgagee objected to the plan, and the court considered whether the plan could be confirmed over the objection of the principal secured creditor by use of the "cramdown" provision of 11 U.S.C. § 1129(b), which the court described as a partial codification of the absolute priority rule. The court held that § 1129(b) does not require full payment of senior creditors before junior creditors may be paid, nor must confirmation be denied where junior creditors will be paid in full before senior creditors, so long as the senior creditors are adequately protected. Adequate protection of mortgagee consisted of its retention of its lien and sufficient cash payments to provide it with the indubitable equivalent of its claim. Applying those rules, debtors' plan satisfied the standards required for confirmation. | |
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Joseph v. Stone (In re Stone) (Internal Ref: Opinion 145) |
Dec-10-1984 UNPUBLISHED See 264.pdf |
84PC-0988 |
Judge Clark |
Limited partners filed a class action adversary complaint against debtor, the partnership's general partner, alleging that debtor had engaged in fraud while acting as a fiduciary, and that limited partners' claims were therefore non-dischargeable. Debtor moved to dismiss the complaint, asserting that plaintiffs had failed both to certify their class action and to plead fraud with particularity. The court refused to dismiss plaintiffs' claims based on failure to certify the class, concluding that dismissal was not appropriate because plaintiffs' claims could be maintained as non-class claims. However, the court granted dismissal pursuant to Fed. R. Civ. P. 9(b) [Bankr. R. 7009], based on plaintiffs' failure to plead fraud with particularity. The court refused to adopt a liberal reading of the claims in the case, because plaintiffs were all parties to the alleged fraudulent transactions, and should therefore be able to describe the facts of the fraud with particularity. The complaint was dismissed without prejudice. | |
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In re Garfield (Internal Ref: Opinion 144) |
Dec-8-1984 UNPUBLISHED |
83C-3017 |
Judge Clark |
Chapter 7 debtors filed an uncalendared, post-discharge motion to discharge student loans, claiming undue hardship. Debtors' motion was verified, and the loan servicer indicated it had no reason to disbelieve the hardship allegations. The parties agreed to have the court determine dischargeability based on the motion and a letter from debtor/wife's doctor. The court determined, based on Bankruptcy Rule 7001, that determination of a debt's dischargeability is an "adversary" proceeding, which must be commenced by a complaint. The court denied debtors' motion on the basis that it was in an improper procedural posture. | |
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In re Riding, 44 B.R. 846 (Bankr.D.Utah) (Internal Ref: Opinion 143) |
Dec-5-1984 PUBLISHED |
84A-1327 |
Judge Allen |
Relying on 11 U.S.C. § 542, chapter 13 debtor filed a motion to compel bank to turnover estate property, consisting of a previously repossessed vehicle. In an effort to facilitate a uniform practice for turnover claims under the newly enacted Bankruptcy Rules, the court ruled that such claims must be initiated by an adversary complaint, rather than by motion. | |
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N. Park Credit v. Harmer (In re Harmer), 61 B.R. 1 (Bankr.D.Utah) (Internal Ref: Opinion 142) |
Oct-24-1984 PUBLISHED |
82PC-0158 |
Judge Clark |
Creditor filed an adversary complaint against debtor asserting that a loan was obtained by debtor based on written, materially false, statements regarding his financial condition, and that the debt was therefore non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(B). After a trial, the court considered three issues, which were whether: (1) financing statements provided by debtor were "materially false," (2) creditor's predecessor "reasonably relied" on the statements, and (3) debtor had submitted the statements with the intent to deceive. The court found that debtor's financial statements were examples of extreme material falsity, that lender had reasonably relied on one of the financial statements in making the loan, and that debtor's uncorroborated denial of intent to deceive was insufficient to overcome the presumption of intent that arose from creditor's evidence on the first two issues. Creditor's claim against debtor was determined to be non-dischargeable. | |
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In re Lambert, 43 B.R. 913 (Bankr.D.Utah) (Internal Ref: Opinion 141) |
Oct-22-1984 PUBLISHED See 138.pdf |
82C-2143 |
Judge Clark |
Creditors moved to dismiss or convert debtors' chapter 13 petition, claiming that their debts exceeded the $100,000 limit for "noncontingent, liquidated, unsecured debts" for chapter 13 eligibility under 11 U.S.C. § 109(e). After defining all of the relevant terms in § 109(e), the court concluded that both "liquidated" and "noncontingent" debts may also be "disputed," and that a bona fide dispute regarding either debtor's liability for, or the amount of, a debt renders it "unliquidated," and therefore not includable in the § 109(e) eligibility calculation. The court further held that, where there is a question regarding a debt's inclusion in the chapter 13 debt limit, § 109(e) requires a hearing to determine debtor's qualification for chapter 13 relief, unless that issue cannot be resolved expeditiously. In cases where resolution cannot be accomplished expeditiously, the court will rely on the debtor's characterization of the debt in its schedules over the creditor's version of the facts. Because an adversary proceeding between creditors and debtors regarding the validity of creditors' claims was already pending in the district court, the court relied on debtors' characterization of the debt as disputed, and denied creditor's motion to dismiss in order to allow the adversary to proceed. The court acknowledged that its ruling, which largely adopted the position taken in In re King, 9 B.R. 376 (Bankr. D. Ore. 1981), was not in line with the majority view. | |
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In re Schofield Greenhouse (Internal Ref: Opinion 140) |
Oct-19-1984 UNPUBLISHED |
82A-3165 |
Judge Allen |
Attorney appointed to represent debtor partnership filed an interim application for fees. There were no objections, and no complaints regarding attorney's work on behalf of debtor. Attorney also represented two general partners of debtor in connection with their personal bankruptcies, and all three cases were under joint administration. The court concluded that attorney was not a "disinterested person," as required by 11 U.S.C. § 327(a) and defined by 11 U.S.C. § 101(13)(E), based on his representation of both a partnership and its partners, even though such interests will generally be the same, due to the potential for conflicts to arise, especially as between the two partners. Attorney's application was denied. | |
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In re Wasatch Factoring, Inc. (Internal Ref: Opinion 139) |
Sep-28-1984 UNPUBLISHED |
83A-0134 |
Judge Allen |
Attorney appointed to represent corporate chapter 11 debtor filed an application for fees. There were no objections, and no complaints regarding attorney's work on behalf of debtor. However, the court concluded that attorney was not a "disinterested person," as required by 11 U.S.C. § 327(a) and defined by 11 U.S.C. § 101(13)(E), because he represented both debtor and its principals, which could result in conflicts of interest, especially in a bankruptcy. In addition, the court found counsel to have a conflict in fact, as the principals and debtor were defendants in litigation, in which principals were seeking indemnification from debtor. The court denied attorney's current application and set aside its prior order granting interim compensation. | |
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Lambert v. Petty Motor Lease, Inc. (In re Lambert) (Internal Ref: Opinion 138) |
Sep-20-1984 UNPUBLISHED See 141.pdf |
83PC-0112 |
Judge Clark |
Debtors filed an adversary proceeding seeking a declaratory judgment that any claims asserted by defendant in debtors' bankruptcy had been settled by contract, in addition to other relief. Defendant filed a motion to dismiss the adversary complaint, asserting the court lacked jurisdiction under N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982). The court held that the district court's interim rule after Marathon, which had been validated by the Tenth Circuit, gave the court jurisdiction over "bankruptcy proceedings," and that debtors' adversary, which dealt with their eligibility to be chapter 13 debtors, was just such a matter. Additionally, the court noted that it continued to have jurisdiction pursuant to 28 U.S.C. § 157, as the adversary was a "core matter." | |
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In re ChristensonIn re EicksIn re CarlgrenIn re WilldenIn re Johnson (Internal Ref: Opinion 137) |
Sep-15-1984 UNPUBLISHED |
82A-1180, -1108, -1128, -1156, and -1157 |
Judge Clark |
Chapter 13 debtors, who were all represented by the same counsel, moved to dismiss their cases, in which no schedules had been filed, pursuant to 11 U.S.C. § 1307(b). After the court's orders dismissing the cases and discharging the trustee had been entered, trustee moved to convert the cases to chapter 7. The court held that, in the absence of an improper motive for filing, debtors have an absolute right to dismiss at any time prior to entry of an order of conversion. Trustee's motion was denied. | |
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In re Flygare (Internal Ref: Opinion 135) |
Aug-20-1984 UNPUBLISHED |
80C-1330 |
Judge Mai (WY Bankr. Court, by designation) |
Chapter 13 trustee objected to debtors' third proposed plan on the ground it had not been proposed in good faith, as required by 11 U.S.C. § 1325(a)(3). The court considered the eleven good faith factors identified by the Tenth Circuit in debtors' previous appeal, Flygare v. Boulden (In re Flygare), 709 F.2d 1344 (10th Cir. 1983), concluding that only 2 of those factors were relevant. The court found that the percentage of debtors' payments to their total monthly surplus was 91%, which weighed in favor of confirmation. The court then found that the 47-month term of debtors' plan, which resulted in a 2% payback to unsecured creditors was, under all of the facts of the case, sufficient to satisfy the § 1325(a)(3) good faith standard. The proposed plan was confirmed. | |
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In re Snyderville Props., Inc. (Internal Ref: Opinion 136) |
Aug-20-1984 UNPUBLISHED |
84C-0673 |
Judge Mai (WY Bankr. Court, by designation) |
Bank, the first lienholder on property subject to chapter 11 debtor's second lien, began postpetition non-judicial foreclosure proceedings. Bank then filed a motion in the bankruptcy case seeking a determination of the automatic stay's applicability, stay relief, and other alternative relief. The court held that debtor's second trust deed on the property, which was its only asset, was property of the estate and subject to the automatic stay. The court found that debtor had a three-month right to cure under state law, which had been tolled by the stay, and that foreclosure would be injurious to that right. As bank's lien was oversecured by the property, the court denied stay relief, as well as bank's requests for conversion, dismissal, and the shortening of the chapter 11 time periods pursuant to 11 U.S.C. § 1121(d). | |
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Merrill v. Abbott (In re Indep. Clearing House Co.), 41 B.R. 985 (Bankr.D.Utah) (Internal Ref: Opinion 134) |
Aug-6-1984 PUBLISHED See 237.pdf |
83PA-0986 |
Judge Allen |
Chapter 11 debtors, the perpetrators of a massive Ponzi scheme, were subject to a confirmed plan of reorganization providing for substantive consolidation of the debtors, liquidation of all assets, and distribution to creditors based on priority. Trustee filed 2,000 adversary complaints against debtors' investors, seeking to recover (1) all payments made to them by debtors within 90 days of the petition filings, as preferences; (2) all payments, to the extent that they exceeded the amount of each investor's deposit with debtors, as fraudulent conveyances; and (3) all payments made by debtors to the investors, as fraudulent conveyances. On trustee's motion for summary judgment, the court found that there were no material issues of fact and proceeded to issue a ruling based on legal issues. Investors asserted that their investments were subject to a constructive trust and, therefore, never became estate property, but the court rejected this contention due to both the impossibility of tracing the investments, and because imposition of such a trust would nullify trustee's avoidance powers. The court dismissed trustee's third cause of action, concluding that all payments made outside of the preference period, except those that exceeded investors' investments, were not avoidable under any provision of the Bankruptcy Code. The court also held that any payments that exceeded investors' investment were not supported by reasonably equivalent value, and granted judgment in favor of trustee on his second claim for relief. Finally, the court ruled that all payments made within the preference period satisfied the elements of 11 U.S.C. § 547(b), and were not subject to the ordinary course of business exception. Trustee's first claim for relief was granted, including prejudgment interest at the legal rate. This decision was reversed, in part, by the en banc district court decision in 237.pdf. | |
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In re Loveridge Mach. & Tool Co., Inc.In re Loveridge (Internal Ref: Opinion 133) |
Jul-18-1984 UNPUBLISHED |
83C-0071, -0238, -0312, -0313, and -0315 |
Judge Mai (WY Bankr. Court, by designation) |
Oversecured creditor sought payment of its attorney's fees under 11 U.S.C. § 506(b), which allows such payment to oversecured creditors, as provided by their agreement with the debtor. The court determined that § 506(b) was an exception to the general "American rule" that parties must bear their own attorney's fees, and that such exceptions must be strictly construed. Creditor failed to provide a copy of its agreement with its proof of claim, as required by Bankruptcy Rule 3001, and again failed to provide it in response to debtor's objection to its attorney's fees claim. Without the agreement in the record, the court found that the application for attorney's fees under § 506(b) must be disallowed. |
