This court granted summary judgment in favor of Valley Asphalt determining its mechanic's lien to be valid and enforceable. The liquidator appealed the decision to the United States District Court, which issued an order remanding the matter to this court. The order on remand instructs the court, first, to decide who is the owner or real party in interest of the properties liened, which this court finds to be a threshold inquiry and issue. Further, the issues of alter ego and equitable subordination remain before the court. The court finds that the Seven Peaks Resort Entities are alter egos of one another for the limited purpose of considering the validity of the Valley Asphalt lien, that the lien is a valid and enforceable mechanic's lien, and that the SAIC lien claim obtained by the liquidator during chapter 11 proceedings, should be equitably subordinated.
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Title: Wilcox v. CDX Corp. (In re CDX Corp.) | Date: Oct-25-1996 | Status: UNPUBLISHED (Judge Clark) | Case(s): 94PC-2112
Title: In re Rocky Mountain Refractories | Date: Oct-25-1996 | Status: UNPUBLISHED See also 131.pdf (Judge Boulden) | Case(s): 94B-21665
The court considered two issues in this case: Whether interest should be allowed on administrative trade and tax claims incurred by a debtor in possession during a chapter 11 case and, if so, whether the interest claims retain the same priority after conversion of the case to chapter 7. Relying on Nicholas v. United States. 384 U.S. 678 (1966), the court concluded that interest accrued on certain administrative claims during a chapter 11 case should be allowed after conversion of the case to chapter 7, and that the interest on those claims retains the priority of the underlying claims in the chapter 7 case. The court recognized that its decision conflicts with In re John Clay & Co., 43 B.R. 797 (Bankr. D. Utah 1984), but noted that John Clay did not address Nicholas, and that, in Small Bus. Admin. v. Preferred Door Co. (In re Preferred Door Co.), 990 F.2d 547 (10th Cir.1993), the Tenth Circuit indicated, without deciding, that interest is allowable on chapter 11 administrative claims. The court also rejected the chapter 7 trustee's argument that this outcome renders 11 U.S.C. § 726(a)(5) meaningless, noting that Nicholas makes interest on an administrative expense claim incurred during the chapter 11 case to be "an integral part of that claim."
Title: In re CF&I Fabricators of Utah, Inc., 199 B.R. 986 (Bankr.D.Utah) | Date: Sep-5-1996 | Status: PUBLISHED See also 214 B.R. 16; 150 F.3d 1233 (Judge Boulden) | Case(s): 90B-26721
The issue before the court is whether the United States Trustee ("UST") fee, created by amendment of 28 U.S.C. § 1930(a)(6), should apply to cases with substantially consummated liquidating plans allocating all estate assets to creditors, which were confirmed prior to the amendment's January 26, 1996 effective date. Bankruptcy Code § 1127(b) prohibits modification of the confirmed plan advocated by the UST, and it prohibits modification of substantially consummated plans. The court is prevented from ruling that these debtors owe quarterly fees as of January 26, 1996, by application of the presumption against statutory retroactivity articulated in Landgraf v. USI Film Prods., 511 U.S. 244 (1994). The amendment's plain language does not indicate that the fees apply to cases confirmed prior to the date of its enactment, and the legislative history does not clearly support that Congress intended such a result. The court concludes that the amendment is impermissibly retroactive as applied to these cases, and that the UST's fees cannot be assessed and collected in Chapter 11 cases with liquidating plans allocating all estate assets to creditors, which were confirmed and substantially consummated prior to the effective date of the Amendment.
Title: In re Collins | Date: Jul-25-1996 | Status: UNPUBLISHED (Judge Clark) | Case(s): 95C-22607
This matter came before the court on a motion by debtor's attorney to reconsider this court's order denying her application for attorney's fees. The court denied the reconsideration motion based on the attorney's repeated failures to comply with the requirements for chapter 13 fee applications, as set forth in In re Jensen-Farley Pictures, Inc., 47 B.R. 557 (Bankr. D. Utah 1985) and documented in In re Eborn, No. 94B-25640 (Bankr. D. Utah August 10, 1995) (J. Boulden). The court ordered the attorney not to file any application for fees in any case that is currently pending before the court for which she does not have meticulous, contemporaneously maintained, and accurate time records attached. The court further ordered that, upon conversion or dismissal of any of the attorney's unconfirmed cases, the chapter 13 trustee shall return any unadministered funds directly to the debtors unless the attorney has first obtained a court order approving her fee application.
Title: In re Briggs | Date: Jun-28-1996 | Status: UNPUBLISHED (Judge Boulden) | Case(s): 95B-23778
The narrow issue resolved by the court was whether the debtors' chapter 13 plan, which listed unsecured creditors by name and the amounts owed to them, could be considered proofs of claim on the creditors' behalf and, if so, whether the listed claims are allowed unsecured claims that could be eliminated by an amendment to the debtors' plan. The court ruled that, because a chapter 13 plan cannot constitute either a formal debtor-filed proof of claim under Fed. R. Bankr. P. 3004 or an informal proof of claim under Clark v. Valley Fed. Sav. & Loan Assoc. (In re Reliance Equities, Inc.), 966 F.2d 1338 (10th Cir. 1992), unsecured creditors cannot rely on a debtor's chapter 13 plan to ensure payment of their claims, absent a timely filed proof of claim. Because this result is at odds with the prevailing practice in this jurisdiction, the court's ruling will be prospectively applied only to chapter 13 cases filed on or after July 1, 1996. The ruling does not affect any case-specific rulings in cases that were filed before that date.
Title: Utah Outdoor Advertising, Inc., v. CCI, Inc. (In re CCI, Inc.) | Date: Jun-24-1996 | Status: UNPUBLISHED (Judge Clark) | Case(s): 96PC-2044
The chapter 11 plan named a liquidating agent and vested the agent with power to sell or dispose of estate assets. The liquidating agent conducted an auction in October 1995 for the sale of the real property that is the subject matter of this adversary proceeding. Plaintiff participated in the auction as an unsuccessful bidder. At the conclusion of the auction, the liquidating agent reported to the court that Michael Todd was the successful bidder. In December 1995, the plaintiff acquired, by special warranty deed, a claim to the subject property from persons who later testified that they never claimed to own the property. The chapter 11 plan vests all property of the CCI bankruptcy estate in the liquidating agent and expressly does not re-vest the property in the debtor upon confirmation. Because the subject property was still property of the estate until March 12, 1996, it remained under the protection of the automatic stay. Therefore, execution and filing of a special warranty deed that conveyed title of the subject property to plaintiff was void and without effect. It appears from the evidence that the adversary proceeding was filed only to harass, cause unnecessary delay, or needlessly increase the cost of litigation. The adversary proceeding is dismissed and the plaintiff is ordered to pay attorney's fees and damages.
Title: In re Reorganized CF&I Fabricators of Utah, Inc. | Date: Jun-20-1996 | Status: APPEAL 116 S.Ct. 2106 See also 356.pdf & 53 F.3d 1155 (U.S. Supreme Court) | Case(s): 90B-2672 l
Concluding that characterizations in the Internal Revenue Code (IRC) are not dispositive in the bankruptcy context, the Court held that the exaction imposed by § 4971(a) of the IRC on the amount of an accumulated funding deficiency of a pension plan was a penalty, and not an excise tax entitled to seventh priority under § 507(a)(7)(E). The Court found that the exaction imposed by § 4971(a) was imposed for violating a separate federal statute (ERISA) that requires the funding of pension plans, and had an "obviously penal character." Accordingly, the Government's § 4971(a) claim was to be dealt with as an ordinary, unsecured claim in the plan. However, the Court concluded that the Government's § 4971(a) claim could not be subordinated to those of other general unsecured creditors because the "categorical reordering of priorities that takes place at the legislative level of consideration is beyond the scope of judicial authority to order equitable subordination under § 510(c)."
Title: Broitman v. Kirkland (In re Kirkland) | Date: Jun-12-1996 | Status: APPEAL 86 F.3d 172 (10th Cir.) See also 181 B.R. 563 (D. Utah) (Tenth Circuit Court of Appeals) | Case(s): 94PB-2210, 94PB-2209
Plaintiffs failed to show good cause for their failure to timely serve defendant with complaint and summons. The Supreme Court's decision in Pioneer Investment Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380 (1993), does not link the concept of "excusable neglect" contained in Fed. R. Bankr. P. 9006(b)(l) with the concept of "good cause" contained in Fed. R. Civ. P. 4(j), and there are several reasons not to apply the flexible "excusable neglect" concept to the "good cause" standard in Rule 4(j). The plain meaning of the term "neglect" connotes negligence or inadvertence. The plain meaning of the phrase "good cause" has no such connotation. Rule 4(j) does not use the phrase "excusable neglect." Rule 9006's allowance for late filings due to "excusable neglect" serves an equitable purpose in Chapter 11 proceedings. Rule 4(j), by contrast, applies to a wide variety of proceedings and does not have a similar, equitable purpose. Rule 4(j) operates independently from Rule 9006(b)(1), and Rule 9006(b)(1) may actually relieve litigants from the harsh consequences of Rule 4(j). As Putnam v. Morris, 833 F.2d 903 (10th Cir. 1987) explains, the definition of "good cause" appears to require "at least as much as would be required to show excusable neglect."
Title: In re Bonneville Pac. Corp., 196 B.R. 868 (Bankr.D.Utah) | Date: May-22-1996 | Status: PUBLISHED See also 357.pdf and 400.pdf (Judge Allen) | Case(s): 91A-27701
The court considered a motion to alter or amend its December 1992 decision that denied all compensation to counsel for the debtor in possession, Hansen, Jones & Leta and Snell & Wilmer. When representing a debtor in possession, an attorney has a duty to protect the interests of the estate rather than the interests of the debtor's principals, shareholders, officers, or directors. Inability to fulfill the role of independent professional on behalf of the fiduciary of the estate constitutes an impermissible conflict. A bankruptcy attorney who fails in this fiduciary capacity, by failing to remain free of conflicts and failing to refrain from serving a conflicting interest during a case, must be denied all compensation. Professionals who violate their fundamental ethical obligations to the bankruptcy estates they serve have not provided "valuable services" to those estates. Consequently, the motion to alter or amend the court's prior decision was denied. This decision was affirmed in part, and reversed in part in 400.pdf.
Title: In re Home Ctr. Corp. | Date: May-8-1996 | Status: APPEAL Unpublished See also 384.pdf (U.S. District Court, Utah) | Case(s): 95B-22952
The district court agreed with the bankruptcy court's conclusion that law firm's problems, such as a demanding workload, neglect, absence of an employee, and oversight, did not satisfy the standard of "extraordinary circumstances" under a straightforward reading of controlling law. Therefore, law firm's failure to file a timely motion for its appointment as debtor's counsel due to such circumstances cannot be excused as, "extraordinary circumstances" that might justify nunc pro tunc approval of its appointment. Accordingly, there was "no substantial basis for disagreement" with the bankruptcy court's order, and law firm's motion for leave to appeal an interlocutory order was denied.