Chapter 13 debtor filed his state tax return, which indicated a refund owed, prior to filing his petition. While awaiting his tax refund, debtor signed a wage assignment with ORS to cover his child support debt. ORS later received debtor's tax refund from the state and applied it to debtor's support debt, and debtor applied for an order to show cause against it. In response, ORS admitted that it had violated the automatic stay by accepting and offsetting debtor's tax refund, and tendered a check to debtor for the full amount of the refund. The court then deemed the turnover issue to be moot, and considered only the issues of civil contempt and recovery. ORS asserted it was not in contempt, as its actions did not involve gross misconduct, bad faith, or willful and malicious intent, The court rejected that assertion, explaining that civil contempt is remedial and, therefore, the defendant's intent is irrelevant. ORS was found in contempt and was ordered to pay debtor's costs and attorney's fees.
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Title: In re Ashby, 36 B.R. 976 (Bankr.D.Utah) | Date: Jan-25-1984 | Status: PUBLISHED (Judge Clark) | Case(s): 83C-1156
Title: In re Burrow, 36 B.R. 960 (Bankr.D.Utah) | Date: Jan-25-1984 | Status: PUBLISHED See 113.pdf (Judge Clark) | Case(s): 81A-2636
The court held here, as it did in 113.pdf, that the IRS violated the automatic stay in debtors' chapter 13 case by freezing their account, and that it was liable for that violation as civil contempt. The court ordered the IRS to release debtors' tax refund and to pay the costs and fees debtors incurred in attempting to obtain that refund from the IRS.
Title: In re John Clay & Co., Inc. | Date: Jan-23-1984 | Status: UNPUBLISHED See 131.pdf (Judge Clark) | Case(s): 83A-1323
Debtor, as a buyer and seller of sheep, was considered a "market agency" under the Packers and Stockyards Act, which provides that payments by livestock buyers to market agencies on commission be held in trust for the livestock producers. As such, while debtor may hold legal title to payments it receives for sales, the beneficial interest in those payments belongs to the sheep producers, and is therefore not estate property. The court ordered that any such payments being held by trustee must be disbursed to the sheep producers who had not yet been paid. This decision was withdrawn by the court in 131.pdf.
Title: In re United Roberts Corp.In re Panelera Corp.In re Panelera Utah, Inc.In re Panelera Mfg. Corp. | Date: Jan-21-1984 | Status: UNPUBLISHED (Judge Clark) | Case(s): 82C-2454, -2456, -2457, and -2548
Secured creditor asserted a security interest in debtors' postpetition accounts receivable, based on both its prepetition security interest in debtors' inventory and a previous court order allowing debtors' use of cash collateral upon certain conditions. The court ruled that its cash collateral order had not granted creditor a security interest in postpetition accounts receivable, and that creditor's lien only extended to postpetition accounts receivable that were proceeds from sale of prepetition inventory. Specifically, creditor's lien did not extend to proceeds from sales of inventory that debtors had acquired postpetition.
Title: Davies v. Rosenberg (In re Practical Concepts Inc.) | Date: Jan-10-1984 | Status: UNPUBLISHED (Judge Allen) | Case(s): 83-0659 83P-0659
Defendant in a removed civil action filed a motion for change of venue, seeking transfer of the removed case to the jurisdiction where the chapter 11 case was pending. The court considered Bankruptcy Rule 5005(a), which requires that all papers in a chapter 11 case, including adversary complaints, be filed in the district where the bankruptcy case is pending, unless filing in another district is authorized by 28 U.S.C. § 1473. The court considered the factors applicable to venue determinations, as outlined in In re Cole Assoc., 7 B.R. 154 (Bankr. D. Utah 1980), and concluded that economic administration of the estate required transfer to the jurisdiction where the chapter 11 case was located. Defendant's motion was granted.
Title: In re Siebert | Date: Dec-27-1983 | Status: UNPUBLISHED (Judge Allen) | Case(s): 83A-0736 and -0810
Chapter 7 trustee moved the court for a change of venue based on the interests of justice and the convenience of the parties. The court held that the party seeking to change venue bears the burden of establishing grounds for such change by a preponderance of the evidence. The court further held that a debtor's choice of forum, though a factor to consider, does not control the decision, and that economic and efficient administrative of the estate is the most important factor. Given that these debtors' only potential asset, the majority of their creditors, and their major business ventures were all located in Oregon, the court granted trustee's motion and transferred debtors' cases to that forum.
Title: In re Ayala, 35 B.R. 651 (Bankr.D.Utah) | Date: Dec-13-1983 | Status: PUBLISHED (Judge Clark) | Case(s): 82C-0198
County filed proof of claim for garbage fees in debtor's chapter 7 bankruptcy, asserting unsecured tax priority under 11 U.S.C. § 507(a)(6) for the period prior to the claim's certification to the County Assessor, and treatment as a secured claim thereafter. By state statute, the provider service-district may certify unpaid fees to the assessor, which then become liens on real property. County did not specify when its claim was certified. The court held that § 507(a)(6) only extends priority status to "taxes" that fall within one of its subsections. Concluding that the fees portion of County's claim was "in the nature of a property tax," the court held that the fees were entitled to priority treatment under § 507(a)(6)(B). However, the "penalty," "fee rate," and "interest" portions of County's claim did not satisfy § 507(a)(6)(G), and were therefore unsecured, non-priority claims.
Title: In re Loveridge Mach. & Tool Co., Inc., 36 B.R. 159 (Bankr.D.Utah) | Date: Dec-13-1983 | Status: PUBLISHED (Judge Clark) | Case(s): 83C-0071, -0238, -0312, -0313, and -0315
Chapter 11 debtors sought confirmation of their plan, which proposed applying the statutory interest rate provided by 28 U.S.C. § 1961(a) (which was 8.75% when the petition was filed) on deferred cash payments to oversecured creditor, rather than the parties' contract rate of 19%. Creditor objected. The court held that, under 11 U.S.C. § 506(b), the contract rate applies when there is a contract, from the petition filing date to the effective date of debtors' plan. Therefore, creditor was entitled to 19% annual interest on its claim during that period. With respect to post-effective date interest, the court found that the statutory rate, which changes on a monthly basis, would be impossible to determine, especially since the "effective date" of an as-yet unconfirmed plan is also uncertain. The court concluded that use of the statutory rate to determine present value under 11 U.S.C. § 1129(b)(2)(A)(i)(2) "would be ill advised and erroneous as a matter of law" since, although the statutory rate may be helpful in determining a risk-free interest rate for a one-year loan, a chapter 11 plan is neither risk-free nor limited to a period of one year. Interest rates that satisfy § 1129(b) should compensate for risks imposed on secured creditors by the plan. Since debtors' proposed interest rate did not do so, the plan would not be confirmed over creditor's objection. The court refused to determine an appropriate post-effective date interest rate, concluding that such a determination would be dictum.
Title: In re Johnson, 36 B.R. 958 (Bankr.D.Utah) | Date: Dec-12-1983 | Status: PUBLISHED (Judge Clark) | Case(s): 80A-2416
In 1981, debtors' chapter 13 plan, which did not provide for husband's post-petition child support, was confirmed. Subsequently, ORS obtained a judgment against husband for post-petition child support and, in June 1983, attached debtors' IRS refund, from overpayment of their 1982 taxes, in payment of that judgment. At debtors' request, the court issued an order to show cause to the IRS and ORS for possibly violating the automatic stay. However, the court held that, under 11 U.S.C. § 1327(b), all property of debtors' estate that was not dedicated to their plan became debtors' property upon confirmation. Therefore, debtors' tax refund belonged solely to them when it was attached by ORS, even though debtors' case remained open. Therefore, the order to show cause was dismissed.
Title: In re Sweetwater | Date: Nov-16-1983 | Status: UNPUBLISHED (Judge Allen) | Case(s): 83A-2582
Purchaser's committee, officially appointed under 11 U.S.C. § 1102, sought approval to employ an investigator for the committee. The court determined that, in making such a request, the committee must explain the necessity for the employment, among other things. Since 11 U.S.C. § 1103(d) requires a meeting between the committee and the trustee/debtor-in-possession "as soon as practicable" after the committee's appointment, and the committee had not shown that debtor was unwilling to cooperate with it, the court denied the application on the ground that the information the committee wanted might very well be provided by debtor at that meeting.