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

In re Cannon

(Internal Ref: Opinion 570)




Judge Thurman

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The Chapter 13 Trustee and PNC Bank moved to dismiss the Debtor's Chapter 13 case because his secured debts exceeded the $1,149,525 limit imposed by § 109(e). The Court found, despite the Debtor's objections, that the motions were timely, PNC had standing to file proofs of claim, and those claims were prima facie valid. Following the § 109(e) analysis prescribed by Kanke v. Adams (In re Adams), 373 B.R. 116 (B.A.P. 10th Cir. 2007), the Court reviewed the Debtor's schedules and PNC's proofs of claim and found that the facial amount of his debts surpassed the statutory threshold. The Court held that neither a dispute over liability on the debts nor the Debtor's assertion of offsets against PNC rendered his debts unliquidated, and the Court ruled that the debt limit of § 109(e) did not violate the Debtor's due process rights. The Court therefore dismissed the Debtor's case.

In re Cotant, In re Davidson

(Internal Ref: Opinion 580)



13-34235, 13-34268

Judge Thurman

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Debtors filed a request for "special notice," through which all pleadings would be served personally on the Debtors in addition to their counsel. The Chapter 13 Trustee objected, which did not serve as a bar to confirmation. The Court held that Debtors did not have standing because there was no injury in fact nor certainly impending injury. Alternatively, the Court held that denying the special notice request would not violate the Debtors' rights to due process or equal protection.

In re Evans

(Internal Ref: Opinion 569)




Judge Mosier

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Debtor filed a chapter 13 plan, which was neither novel or complex. The plan provided for payment of a prepetition arrearage to an oversecured creditor. A dispute arose between debtor and creditor over the amount of the prepetition arrearage and, at the court's urging, the parties negotiated a settlement. After reaching the settlement, creditor filed a motion under § 506(b) for allowance of postpetition attorney's fees in the amount of $24,647.50. Debtor objected arguing that the fees sought by creditor were unnecessary, that creditor did not act reasonably or prudently and the time expended by creditor"s counsel was excessive, not adequately described, and that many services were duplicative. The Court found that § 506(b) awards were controlled by federal law and that a lodestar approach to allowance of a § 506(b) claims should be followed using a two step approach: 1) were the services were necessary to protect the creditor's legitimate interests ?; and 2) were the fees sought for the legal services reasonable? The Court allowed some, but not all of the fees requested and applied nine factors to weigh the necessity and the reasonableness of the fee request.

In re Jensen

(Internal Ref: Opinion 568)




Judge Thurman

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Chapter 13 Debtors commenced voluntary contributions to wife's retirement plan less than three months prior to the date of petition and deducted such contributions as an expense on their Form 22C. The Chapter 13 Trustee objected to confirmation of Debtors' Plan, arguing that Debtors were not contributing all of their projected disposable income to the repayment of unsecured creditors as required by § 1325(b). The Trustee also objected on the grounds that beginning voluntary retirement contributions so close to the petition date showed that the Debtors were not proceeding in good faith. The Court concluded that voluntary contributions to qualified retirement plans are not disposable income as long as they are being made as of the date of petition, adopting the reasoning of the Sixth Circuit Bankruptcy Appellate Panel in Burden v. Seafort (In re Seafort), 437 B.R. 204 (B.A.P. 6th Cir. 2010). Turning to the issue of good faith, the Court held that this and other cases involving voluntary contributions to qualified retirement plans must be subjected to a good faith analysis. The Court applied the totality of the circumstances test and found that, on the facts of the case, the Debtors were not proceeding in bad faith.

In re Kealamakia

(Internal Ref: Opinion 567)




Judge Thurman

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As a matter of first impression, the Court considered a creditor's motion to dismiss a chapter 7 case for bad faith under § 707(a). The creditor argued that "cause" for dismissal under § 707(a) encompassed a debtor's bad faith, and that the Court should dismiss this case because the facts showed that the debtor was not acting in good faith. In support of its position, the creditor pointed to the three bankruptcy cases the debtor had been in during a period of under four years, inconsistencies in information placed on the various Statements of Financial Affairs and Schedules and what it considered a dearth of creditors. The Court determined that a chapter 7 case may be dismissed for lack of good faith. However, applying the factors found in In re O'Brien, from the bankruptcy court of the W.D.N.Y., the Court found under a totality of circumstances that the evidence did not support dismissal.

In re Cornia

(Internal Ref: Opinion 566)




Judge Marker

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A creditor in a chapter 13 case moved to lift the automatic stay on a parcel of real property held in trust. The creditor argued that cause existed to lift the stay under § 362(d)(1) because the property was not part of the debtor's estate and because the debtor had no contractual relationship with the creditor with respect to the property. The Court denied the creditor's motion, holding that under Utah law the debtor was a beneficiary of the trust and had an equitable interest in the property, which was included in the estate by § 541(a)(1). The Court then concluded that an equitable interest in the property was sufficient to claim a homestead exemption in the property, and that a lack of a contractual relationship between the debtor and the creditor was not cause to lift the stay.

In re Wensel

(Internal Ref: Opinion 565)




Judge Thurman

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The debtors' proposed plan failed to provide for all projected disposable income as required by § 1325(b)(1)(B), particularly tax refunds received during the applicable commitment period. Pursuant to Skougard, 438 B.R. 738 (Bankr. D. Utah 2010), tax refunds in excess of $1,000 or up to $2,000, if a debtor receives certain tax credits, are surrendered to the Trustee. The debtors proposed to include an annualized amount on Schedule I for tax refunds and retain all refunds over the course of the plan. However, the Court noted the debtors' employment had changed prior to filing and the annualization of tax refunds skewed the refund amount. Additionally, because of the difficulty in predicting actual tax liabilities the Court found that the current practice was more accurate and fairer to all parties and did not allow annualization of tax refunds.

In re Tejal Investment

(Internal Ref: Opinion 564)




Judge Thurman

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The Court granted a creditor's motion for relief from stay on the debtor's real property pursuant to 11 U.S.C. § 362(d)(2) and (d)(4)(B). The parties stipulated that debtor did not have equity in the property. Under the second prong of § 362(d)(2), the Court found that the debtor failed to meet its burden of proof in establishing that the property was necessary to an effective reorganization because the proposed plan was “essential for an effective reorganization that is in prospect” given the debtor's financial circumstances. United Sav. Ass'n of Tex. v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 375-76 (1988). The Court also granted relief under § 362(d)(4)(B), concluding that the Debtor's filing of two cases – one on the eve of receivership and one of the eve of foreclosure – was enough to constitute a “scheme” to delay or hinder creditors that involved multiple bankruptcy filings affecting such property, especially where the Debtor did not show a change in financial circumstances between the filings.

In re Kofford

(Internal Ref: Opinion 562)




Judge Thurman

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The Court concluded that a chapter 13 plan could not be confirmed where the Debtor was proposing to deduct on Line 55 of the Form 22C the actual contractual monthly amounts due under 401(k) repayment loans where the repayments would conclude before the end of the 60-month plan. The Court found that requiring the Debtor to prorate the amount of her retirement loan payments over the 60-month plan term for the purposes of Line 55 of the Form 22C “is the only way to ensure that the amount required to repay the loan (and only the amount required to repay the loan) will be excluded from the disposable income calculation.” In re Novak, 379 B.R. 908, 911 (Bankr. D. Neb. 2007). In addition, the Court found that the Debtor should provide for step-increases in plan payments at the maturity of each of the Debtor's retirement loans.

In re Krantz

(Internal Ref: Opinion 563)




Judge Thurman

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The chapter 7 debtors brought a motion to avoid a creditor's judgment lien 19 months after their petition date, after the property to which the judgment lien was fixed had been transferred out of and back into the debtors' possession, and after the creditor had obtained unopposed relief from stay. The Court found that the debtors had standing to avoid the lien as § 522(f) serves to undo the “fixing” of a lien, and so a court looks to the time period the lien fixed to determine a debtor's interest in the property. The Court determined that the date of the filing of the § 522(f) motion is irrelevant to the standing analysis, and postpetition transfers have no bearing on the debtor's standing to avoid a judgment lien. The Court declined the creditor's request to abstain from ruling on the § 522(f) motion. The Court also declined to deny the Debtors' motion on the basis of laches. The Court found that the debtors lacked diligence in bringing their § 522(f) motion and that the creditor suffered some prejudice when its motion for relief from stay went unopposed and it pursued state court action. The Court determined that an appropriate equitable remedy would be to require the Debtors to compensate the creditor for reasonable attorneys fees and costs the creditor incurred in pursuing state court relief.

Stott v. U.S. Bank (In re Stott)

(Internal Ref: Opinion 561)




Judge Marker

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Chapter 13 Debtors commenced adversary proceeding to immediately and permanently void U.S. Bank's wholly underwater junior mortgage lien on their primary residence based on both § 1322(b)(2) of the Bankruptcy Code and slander of title under Utah state law, without regard to either full payment of U.S. Bank's claim or completion of the chapter 13 case. As for the slander of title theory, the Debtors argued that no valid lien exists under Utah law when such lien is unsupported by any present economic value. Based on the trial court and Tenth Circuit decisions in In re Woolsey and a slander of title analysis under Utah law, the Court held that wholly underwater junior mortgage liens may ultimately be removed from the property but only after full payment or completion of the chapter 13 case in accordance with § 1325(a)(5)(B) of the Bankruptcy Code.

In the Paint, LLC v. Archibald (In re Archibald)

(Internal Ref: Opinion 560)




Judge Mosier

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Creditors filed and adversary proceeding against the Debtor under § 523(a)(2)(A) and § 727(a)(2). Creditors asserted that their debt should be excepted from discharge because the Debtor failed to disclose that he had violated his noncompete agreement when the parties were negotiating a separation agreement. The Creditors also asserted that the Debtor should be denied a discharge because he transferred his equity interest in a business within one year of filing for bankruptcy.Creditors' § 523(a)(2)(A) claim. Held: To prevail on a claim for nondisclosure, the plaintiff must establish that the debtor had a duty to disclose a fact, that the undisclosed fact was material and that the debtor knew the undisclosed fact was material. In addition, the plaintiff must establish that the debtor failed to disclose the fact with intent to deceive the creditor, that the creditor relied on the nonexistence on the fact and that the creditor's reliance was justified. Creditors failed to establish any of the elements under § 523(a)(2)(A) and their debt was therefore dischargeable. Creditors' § 727(a)(2) & (5) claims. Held: To prevail on a § 727(a)(2) claim the plaintiff must establish that a transfer was made with actual intent to hinder, delay or defraud creditors. To prevail on a § 727(a)(5) claim the plaintiff must establish that there was a loss or deficiency of debtor's assets. Absent any evidence that a transfer hindered or delayed a creditor, the transfer of an asset with little or no value did not give rise to a § 727(a)(2) or (5) claim. Debtor was granted a discharge.

Blackstone Financial Group Business Trust v. Myler (In re Myler)

(Internal Ref: Opinion 559)




Judge Marker

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Creditor in a closed chapter 7 case filed an untimely complaint under § 727 seeking to revoke the debtors' discharge, or alternatively to obtain a determination that its particular claim was not subject to discharge under § 523. The Debtors moved to dismiss the complaint as impermissibly late, and the creditor asserted that its claims remained viable under the doctrine of equitable tolling because it did not discover the facts alleged in the complaint until well after the debtors received their discharge. Based on the clear language in § 727(e)(1) and (2) and the case law concerning Rule 4007(c), the Court held that the doctrine of equitable tolling did not apply and the motion to dismiss was granted.

In re Fehrenbacker

(Internal Ref: Opinion 558)




Judge Thurman

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In this chapter 7 case, the Creditor filed a motion for relief from stay on the Debtor's real property. The Debtor alleged that the Creditor did not have standing as a party in interest to request relief from stay because the Creditor did not provide evidence that the original promissory note was in the Creditor's possession. The Court relied on In re Thomas, No. 10-17039, 2012 WL 1574418, at *1 (10th Cir. B.A.P. May 7, 2012), which held that while the original note is not required to be placed into evidence, “the bankruptcy court must make a cognizable determination of standing in a contested matter . . . which requires some review of the standing documents, whether they be admitted into evidence or proffered to the court without objection.” In re Thomas, 2012 WL 1574418, at *5 n.32. In this case, the Creditor's attorney represented that the original note was on its way to his office, but could not provide evidence that the Creditor was otherwise in possession of the original note. Moreover, the Court determined that under 11 U.S.C. § 362(c)(1) the motion for relief from the automatic stay was not moot as to property of the estate when the Debtor received a discharge. The Court continued the Creditor's motion without date and ordered the stay remain in place pending further order of the Court.

Richins v. Bank of America Home Loans (In re Richins)

(Internal Ref: Opinion 557)




Judge Thurman

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The Court denied a Debtors' motion for judgment against a creditor who held a wholly unsecured mortgage against their primary residence in a chapter 7 case under 11 U.S.C. § 506(a) and (d). In its examination of Dewsnup v. Timm, 502 U.S. 410 (1992), which disallowed the strip down of a partially unsecured junior lien on a chapter 7 debtor's real property, the Court discerned no reason that the analysis underlying the Dewsnup decision should differ depending on whether the chapter 7 debtor is attempting to strip a partially secured or wholly unsecured lien. Morever, the Court found Nobelman v. American Savings Bank, 508 U.S. 324 (1993) inapplicable, as it was a chapter 13 case dealing with § 1322 that is inapplicable to a chapter 7 case. The Court concluded that while strip off of a wholly unsecured junior lien in a chapter 13 case is generally permissible, the differing purposes and intent of chapter 7 make it distinguishable from a chapter 13 case such that strip off of wholly unsecured junior lien is inappropriate in chapter 7 cases.

In re South Station, LLC

(Internal Ref: Opinion 556)




Judge Thurman

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The Court denied the fee application for the attorneys who represented the Debtor while it was in chapter 11 bankruptcy. The Court found that the attorneys had failed to disclose a significant amount of payments and who had paid them until the fee application hearing that occurred many months after the services were provided. Further, the Court found that the attorneys had received money directly from the principals of the owner of the Debtor. The Court concluded that without proper and complete disclosure, the application could not be approved under the mandates of § 328, § 329, and Fed. R. Bankr. P. 2016. As an additional and alternative basis to its denial of the fee application, the Court concluded that the attorneys were not disinterested due to their acceptance of payments directly from the principals of the owner of the Debtor who were also the principals of the largest unsecured creditors of the estate.

In re Colon

(Internal Ref: Opinion 555)




Judge Thurman

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The Court denied a homeowner's association's (“HOA”) motion for relief from the automatic stay in a chapter 13 case, finding that postpetition HOA assessments were dischargeable under § 1328(a) where the debtors had vacated the property more than one year prior to filing bankruptcy and surrendered the property to the secured lienholder who failed to foreclose after relief from stay was granted. Despite the fact that the debtors were listed on the title to the property, the Court found that they had no consequential interest in the property that measured up to rights to exercise ownership and control. The Court held that postpetition HOA assessments meet the definition of “claim” under § 101(5) and “claims” can be provided for in chapter 13 plans. See In re Turner, 101 B.R. 751 (Bankr. D. Utah 1989). Furthermore, § 523(a)(16), which excepts HOA postpetition assessments from discharge, does not apply to a discharge under § 1328(a).

Rushton v. Bank of Utah (In re C.W. Mining Company)

(Internal Ref: Opinion 554)




Judge Mosier

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Pre-petition, Bank of Utah entered into a letter of credit transaction with the Debtor wherein the Bank issued a letter of credit in the amount of $362,000 secured by funds in the amount of $362,000 deposited with the Bank by the Debtor. In addition to being secured by the funds on deposit, the letter of credit was cross collateralized to other assets of the Debtor. Post-petition, and knowing that the Debtor was in bankruptcy, the Bank declined to renew the letter of credit and applied the proceeds from the certificate of deposit to payoff the indebtedness. The Trustee commenced an adversary proceeding to recover the entire $362,000 plus interest free and clear of any encumbrance in favor of Bank arguing that by avoiding the transfer under § 549, the Trustee could recover the transfer free and clear of the Bank's security interest and that the transfer was void as a violation of the automatic stay and that the Trustee was entitled to turnover of the $362,000 plus interest under § 542. In doing so, the Trustee did not allege that the post-petition actions of the Bank caused any damage to the Debtor. The Court held that a transfer to a fully secured creditor may not be avoided under § 549 without reviving the secured creditor's lien, that the remedies available to a non-individual debtor are subject to the limitations of the Court's § 105 powers, that § 362(a) does not permit the Court to strip a bank's lien, and that although an act committed in violation of the automatic stay is “void,” some acts cannot be undone. The law does not recognize a void act, and that judicial machinery is not available for use to one that acted in violation of the automatic stay.

In re Harward

(Internal Ref: Opinion 553)




Judge Thurman

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The Court denied a motion for sanctions against Key Bank however, the Court did award sanctions against the Debtors for bringing this frivolous motion. The Debtors had alleged that the bank had violated the stay by sending a notice to them after a lift of stay order was entered. The order gave permission to the bank to take appropriate action to insure its rights to a deficiency claim. The Court noted that every notice that is sent by a creditor after a bankruptcy is filed is not a per se violation of the stay. Some degree of reasonableness is needed. Sanctions against the debtors in the amount of the attorneys fees incurred by the bank for defending against the motion were awarded to the bank.

In re JL Building

(Internal Ref: Opinion 552)




Judge Thurman

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On the trustee's motion for a § 363 sale of the debtor's principal asset, the Court reviewed the factors established in In re Medical Software Solutions, 286 B.R. 431 (Bankr. D. Utah 2002), and approved the sale as being an appropriate use of the trustee's business judgment and in the best interest of creditors. Further, the value obtained by the sale was consistent with listing agreements and offers the debtor had made while operating as a debtor in possession, so the former-debtor-in-possession management's objection was overruled. The Court also discussed the ability of former management and/or equity holders to object to a sale. In applying C.W. Mining v. Aquila (In re C.W. Mining), 636 F.3d 1257 (10th Cir. 2011), the Court determined that the trustee was the only party who could cause the debtor to object to the sale and thus former management or equity holders must independently establish their standing to object.

Strong v. Western United Life Assurance Company (In re Tri-Valley Distributing)

(Internal Ref: Opinion 551)




Judge Thurman

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The Court dealt with multiple claims of the Examiner seeking to reclaim property transferred from the Debtor's estate, including claims under 11 U.S.C. §362, 363, and 549, and Utah law. The Court determined that real property transferred by the Debtor postpetition to an affiliate which then transferred a security interest in that property to the Defendant could not be brought back into the estate because the Defendant successfully invoked the good faith defense under Utah law and under the Bankruptcy Code. In addition, the Examiner could not establish that the Defendant had not given reasonably equivalent value under Utah law or present fair equivalent value under § 549 for the transfer because the Court did not see it proper to collapse two separate loans into one. Finally, insufficient evidence prevented the Court from finding that the transferor (the Debtor's affiliate) was insolvent at the time of the transfer. On the other causes of action, the Court found that § 549 was the proper mechanism to attempt to avoid the initial transfer from the Debtor, rather than §362 or 363.

In re Hargis

(Internal Ref: Opinion 550)




Judge Marker

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Chapter 13 Debtors with above-median income attempted to deduct $200 in “additional operating expenses” on Line 27A of Form 22C for each of two older and high-mileage vehicles, which would have reduced the return to general unsecured creditors by $24,000 over the 60-month duration of the plan. The Debtors argued that the claimed additional operating expenses, which arise from a section of the Internal Revenue Manual dealing with offers in compromise, should be allowed as standardized deductions under § 707(b)(2)(A)(ii)(I) and the IRS Local Standards. The Chapter 13 Trustee and the Assistant U.S. Trustee argued that additional operating expenses may be allowed in appropriate circumstances but that parties in interest should be able to review the claimed expenses and object to them if appropriate. Based on the language of the statute and the Supreme Court's recent guidance in Hamilton v. Lanning and Ransom v. FIA Card Services, N.A., the Court held that above-median chapter 13 debtors are not automatically entitled to a $200 additional operating expense deduction on Line 27A of Form 22C for each vehicle over six years old or with more than 75,000 miles. But above-median chapter 13 debtors may claim additional operating expenses that they actually incur on Line 60 of Form 22C up to $200 per vehicle subject to review and objection by the Chapter 13 Trustee and holders of allowed unsecured claims.

Cyprus Credit Union v. Dehlin (In re Dehlin)

(Internal Ref: Opinion 547)




Judge Mosier

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In deciding the dischargeability of a debt arising from a "stated income loan" under 11 U.S.C. § 523(a)(2)(B), the Court found that the evidence presented confirmed the Debtors' statements that their income listed on the loan application was correct and the creditor failed to carry its burden of proof. Further, an inadvertent mistake on a confusing form was not sufficient to prove the Debtors had an intent to deceive the creditor. Finally, a debtor's representation cannot be the sole basis upon which a creditor can reasonably rely because a creditor has a duty to ensure some basis exists for relying upon the debtor's representations. Self-developed procedures that excuse reasonable reliance cannot insulate a creditor's claim from discharge.

Rushton v. Bevan (In re D.E.I. Systems)

(Internal Ref: Opinion 548)




Judge Mosier

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In defending a fraudulent transfer action, the defendants attempted to rely on 11 U.S.C. § 546(e), but adopting the proposed reading would have produced an absurd result. The protection of § 546(e) cannot be extended to include transactions related to a purchase or sale of securities simply because the parties utilize the banking industry to effect the transaction. The Court looked to congressional intent as explained in Kaiser Steel Corp. v. Charles Schwab & Co., Inc. (Kaiser I), 913 F.2d 846 (10th Cir. 1990) and Kaiser Steel Corp. v. Pearl Brewing Co. (In re Kaiser) (Kaiser II), 952 F.2d 1230 (10th Cir. 1991) to grant summary judgment for the trustee and deny summary judgment for the defendants as to this defense.

In re Dennett

(Internal Ref: Opinion 549)




Judge Thurman

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The Court ruled upon the requirements for a Trustee to meet in connection with a contested motion to approve a compromise and settlement under Federal Rule of Bankruptcy Procedure 9019. Here, the Trustee sought to compromise the claims that the Debtor had initiated in state court by settling with the Defendants for $25,000. The Debtor sought an order of abandonment so he could pursue the claims. The Court ruled that the Trustee had met the standard of Kopp v. All Am. Life Ins. Co. (In re Kopexa Realty Venture Co.), 213 B.R. 1020 (10th Cir. B.A.P. 1997), and thus approved the compromise. The Court commented on whether an auction procedure was required as held in the 5th Circuit case of Cadle Co. v. Mims (In re Moore), 608 F.3d 253 (5th Cir. 2010), where the trustee in that case attempted to compromise a claim in litigation with the defendants and a creditor offered more than the proposed settlement. In the appropriate case, an auction procedure under § 363 may be required for settlements but not here.

In re Childs

(Internal Ref: Opinion 545)




Judge Thurman

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Under the BAPCPA, chapter 11 debtors may be categorized as small business debtors depending on their type of business and amount of debt. Debtors may not voluntarily elect to be a small business, but must disclose their existence as a small business if they qualify. In this case, a designation by Debtors to be considered small business debtors was erroneous because Debtors did not qualify under 11 U.S.C. § 101(51D)(A). Upon a subsequent objection by Debtors to their designation as small business debtors under Federal Rule of Bankruptcy Procedure 1020(b), the Court entered an order finding the original designation incorrect. Such a finding and order made the designation void ab initio. Thus, although Debtors had failed to present and confirm a plan within the deadlines that pertain to a small business debtor, because Debtors were not small business debtors, those deadlines no longer applied and Debtors could continue their efforts toward confirmation.

In re Skougard

(Internal Ref: Opinion 546)




Judge Thurman

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Yearly tax refunds are property of the chapter 13 estate. However, refunds up to $2,000 may be retained by below median chapter 13 debtors in Utah if the debtors are receiving Earned Income Credit or Additional Child Tax Credit. The principles of In re Lawson previously decided by this Court still apply and factor into the determination of the amount of refund allowed to be retained.

In re Woolsey

(Internal Ref: Opinion 539)




Judge Thurman

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A plan proposed by chapter 13 debtors did not contain language permitting the retention of a wholly unsecured creditor's lien or requiring the reinstatement of the lien in the event of dismissal or conversion to a chapter 7 case. The Court found that Dewsnup v. Timm, 502 U.S. 410 (1992), prohibited avoiding the lien under 11 U.S.C. § 506(d) as argued by the debtors. Although the only collateral for the loan was the debtors' principal residence, because the loan was wholly unsecured, modification was not prohibited by 11 U.S.C. § 1322(b)(2). See Griffey v. U.S. Bank (In re Griffey), 335 B.R. 166 (10th Cir. B.A.P. 2005); Pierce v. Beneficial Mortgage Co. (In re Pierce), 282 B.R. 26 (Bankr. D. Utah 2002). Thus the rights of the creditor could be modified under 11 U.S.C. § 1322(b)(2) as long as the debtors' plan complied with the provisions of 11 U.S.C. § 1325(a)(5). The Court found further support for its position in the statistics showing the number of cases commenced under chapter 13 that are either dismissed or converted that could become a source of easily disguised bad faith filings.

Rushton v. Woodbury & Kelser, P.C. (In re C.W. Mining Company)

(Internal Ref: Opinion 541)




Judge Mosier

PDF icon 541.pdf

Attorneys representing the debtor in an involuntary chapter 11 case during the "gap" period may not be compensated if they are not employed under § 327. If attorneys representing the debtor in an involuntary chapter 11 case during the "gap" period represent an interest adverse to the estate or are not disinterested they may be denied compensation under § 328 and/or § 330. If attorneys representing a debtor in an involuntary chapter 11 case during the "gap"period fail to comply with § 329 they may be denied compensation and may be ordered to disgorge fees they have been paid.

In re Bowen

(Internal Ref: Opinion 421)




Judge Thurman

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Creditor in Chapter 7 case filed a motion for relief from this Court's sanctions order pursuant to Fed. R. Bankr. P. 9024 and Fed. R. Civ. P. 60(b) or, alternatively, to alter or amend the order or grant a new hearing pursuant to Fed. R. Bankr. P. 9023 and Fed. R. Civ. P. 59. Although creditor's motion was timely filed under Rule 59, the facts germane to the motion, the arguments of counsel and the testimony at the hearing on the motion first required analysis under Rule 60. Creditor argued that its paralegal mishandled debtors' motion for sanctions and, as a result, the matter was not given the attention it required. Balancing the circumstances surrounding creditor's failure to respond to debtors' sanctions motion, the Court concluded that this mishandling constituted excusable neglect for the purpose of Rule 60(b). The Court also concluded that creditor's timely filed Rule 59 motion raised concerns requiring a new hearing on debtors' motion.