Debtor's gas utility notified it that a new account had been set up for debtor as of the date its chapter 11 petition was filed, and that debtor must provide a deposit to the utility in order to continue service. Debtor objected to the charging of a deposit, contending that it violated the 11 U.S.C. § 362(a) stay, and further alleged that the utility's deposit requirement discriminated against it for filing bankruptcy, in violation of 11 U.S.C. § 525. The court determined that, although § 362(a)(3) might be read to prohibit utility's deposit demand, such a demand is specifically authorized by 11 U.S.C. § 366(b), and was therefore lawful. The court ruled that it need not address debtor's discrimination claim because, even if utility is assumed to be a governmental unit, acts that are permitted by § 362 are not prohibited by § 525. Next, the court considered what constitutes "adequate assurance of payment" under § 366(b), concluding that it was a fact question that depends on the circumstances of each case. The court found that the administrative expense priority of utility's claim would not be adequate to assure payment, and that a cash deposit was necessary since, even though debtor's unpaid balance when it filed its petition was only $29, its unpaid balance had been as high as $950 a few months earlier. Debtor's claim that utility was adequately protected by guarantees was rejected, as the guarantees were from a corporation whose president was also an officer of debtor, and had not been shown to be reliable. Finally, the court ruled that the maximum cash deposit that may be charged for adequate assurance of payment would be the amount of an average billing period charge. plus an amount to cover services from the end of the billing period to the date on which payment for that period is due.
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Title: In re Santa Clara Circuits W., 27 B.R. 680 (Bankr.D.Utah) | Date: Dec-10-1982 | Status: PUBLISHED (Judge Clark) | Case(s): 82M-2022
Title: In re Wall | Date: Dec-10-1982 | Status: UNPUBLISHED (Judge Clark) | Case(s): 81C-0162
Debtor sought to reopen his closed bankruptcy case in order to use 11 U.S.C. § 522(f) to avoid judicial liens on his residence, and creditor objected. The court indicated that, although § 522(f) did not specify a time limit for avoidance claims, such claims could still be barred by laches. Moreover, as such actions are "related to" the bankruptcy case, the court had jurisdiction under 28 U.S.C. § 1471 to consider them, with or without reopening the case.
Title: In re Colonial Ford, Inc., 24 B.R. 1014 (Bankr.D.Utah) | Date: Nov-29-1982 | Status: PUBLISHED (Judge Mabey) | Case(s): 82M-0778
Debtor was involved in multiple long-term litigations with its creditors prior to entering bankruptcy. Ultimately, creditors and debtor resolved all claims in their pending lawsuits, except a single cross-claim that was based on an agreement whereby creditors reduced their claims and allowed debtor a period of nine months in which to sell or refinance its dealership. If debtor neither sold nor refinanced within that time, a decree of foreclosure would be entered. Debtor did not sell or refinance and, instead, filed a chapter 11 petition. One of the workout creditors filed a motion requesting that the court abstain, pursuant to 11 U.S.C. § 305(a)(1). The court noted that § 305(a)(1) reflects a policy of favoring private, negotiated workouts between creditors and debtors, both inside and outside of bankruptcy cases. In order to encourage such workouts, § 305(a)(1) allows bankruptcy courts to dismiss or suspend a bankruptcy proceeding if the parties' interests would be better served by that action, and a decision under § 305(a)(1) is non-appealable, pursuant to § 305(c). Although § 305(a)(1) does not specify the criteria for dismissal, the court held that they would include speed, economy, and freedom from litigation, as well as fairness, priorities in distribution, capacity to deal with avoidance issues, and importance to debtor of a discharge. The court found, on the facts before it, that all parties' interests would be better served outside of bankruptcy. Because the parties' workout was comprehensive and designed to end the parties' difficult relations, the court opted for dismissal over suspension of the bankruptcy case.
Title: In re Jacobsen | Date: Nov-17-1982 | Status: UNPUBLISHED (Judge Clark) | Case(s): 81C-3502
Chapter 7 debtors, who had been discharged in a no asset case, reopened the case to add an omitted creditor in order to discharge his claim. The court inadvertently reopened debtors' case without considering creditor's objection. However, as the reopening order allowed creditor time to file an objection to discharge, the reopening was allowed to stand. The court also provided creditor with the option to examine debtor pursuant to Rule 205, in order to remedy its lost opportunity to examine debtor at the creditors meeting.
Title: M.W. Kasch Co. v. Styler (In re World of Toys & Hobbies, Inc.) | Date: Oct-15-1982 | Status: UNPUBLISHED (Judge Clark) | Case(s): 81PC-0680
Plaintiff filed an adversary action seeking to have the court determine the validity, priority, and extent of its security interest in debtor's accounts. Trustee moved for summary judgment on the ground that plaintiff had failed to file a proof of claim. The court denied trustee's motion, concluding that 11 U.S.C. § 501(a) did not mandate the filing of a proof of claim, except where creditor seeks to share in a liquidation distribution. Where creditor asserts a lien on estate assets, neither § 501 nor Bankruptcy Rule 302(e) bars its claim.
Title: Conn v. Hall (In re Hall) | Date: Oct-11-1982 | Status: UNPUBLISHED (Judge Clark) | Case(s): 82PC-0048
The court denied plaintiff's motion for summary judgment on a 11 U.S.C. § 523(a)(2)(A) claim, because the mere fact that debtor knew there were insufficient funds in his account to cover a check tendered to plaintiff was not sufficient to prove the required element of intent to deceive.
Title: In re Midwest Serv. & Supply, Inc. | Date: Oct-11-1982 | Status: UNPUBLISHED See 69.pdf (Judge Clark) | Case(s): 82M-0329
The court had found the government in contempt for reducing payments owed to debtor, postpetition, in order to recoup a previous overpayment. However, a new trial was granted due to inadequate notice to government regarding the offset issue.
Title: Gillman v. Preston Family Inv. Co. (In re Richardson), 23 B.R. 434 (Bankr.D.Utah) | Date: Oct-2-1982 | Status: PUBLISHED (Judge Clark) | Case(s): 82PC-0746
Chapter 7 trustee sought to avoid a foreclosure sale of debtors' home that took place one day before debtors filed their petition. On trustee's motion for summary judgment, which was denied, the court considered whether 11 U.S.C. § 544(a)(3), § 544(b), or § 548(a)(2) would allow trustee to avoid the sale, ruling that: (1) § 544(a)(3) does not shield trustee from constructive notice and, therefore, where there is constructive notice of foreclosure, trustee's status as a bona fide purchaser without knowledge will be unavailing; (2) § 544(b) relies on state law that had not yet been interpreted in Utah and, therefore, the court should exercise its discretion and decline to determine trustee's § 544(b) claim based on a motion for summary judgment; and (3) trustee was entitled to partial summary judgment on his § 548(a)(2) claim, to the extent that the following elements had been established: (a) the sale effected a transfer of debtors' interest in the property, (b) within one year of the filing of their petition, and (c) the sale took place either when debtors were insolvent or were made insolvent by the sale. The court further ruled that, should trustee succeed in avoiding the sale at trial, purchaser would be entitled to a lien on the property in the amount of the purchase price and interest on seller's debt from the sale date, but not including purchaser's attorney's fees, as those would not confer a benefit on debtors.
Title: In re Day | Date: Sep-29-1982 | Status: UNPUBLISHED (Judge Clark) | Case(s): 81C-3514
Debtors sought allowance of an exemption in a tax refund that they had orally assigned, prepetition, to a secured creditor. In making its decision, the court identified and resolved the following issues: (1) debtors could not rely on the Utah Exemptions Act, which does not include an exemption for tax refunds; (2) income tax refunds are property of debtors' estates pursuant to 11 U.S.C. § 541; (3) to the extent that assignment of the tax refund was valid, it constituted a security interest under Article 9 of Utah's UCC, it required perfection, but was not perfected. The request was denied.
Title: Senior Corp. v. Terracor (In re Terracor) | Date: Sep-27-1982 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 82PM-0321
In a removed action in which plaintiff claimed that certain officers and directors of debtor had misused funds loaned by plaintiff to debtor, defendants counterclaimed that plaintiff's action against them constituted the tort of wrongful use of civil proceedings, and that defendants were entitled to attorney's fees under Utah Code Ann. § 78-27-56, because plaintiff's action was without merit and had not been asserted in good faith. Concluding that a prerequisite to a wrongful use of civil proceedings claim is termination of plaintiff's action in favor of defendants, the court dismissed defendants' claim, noting that it did not matter to the dismissal whether the claim was based entirely on tort law, or on tort law together with § 78-27-56. The court also considered whether defendants' allegations stated a claim for abuse of process, concluding that they did not since such claims require not just use of process with an ulterior motive, but also misuse of the process, as opposed to use of process in the ordinary course. To the extent defendants' counterclaim asserted an abuse of process claim, that claim was dismissed as well.