Ag Law Case Annotations :: Bankruptcy

In re Landgrebe, et ux., No. 08-26271 (Bankr. D. Colo. Sept. 23, 2009)(non-refundable child tax credit is not exempt property under Colorado law; debtor's claimed exemption for child tax credit disallowed and debtor ordered to turn over prepetition portion of 2008 income tax refund to bankruptcy estate).

In re Bourguignon, No. 09-00766-TLM, 2009 Bankr. LEXIS 2994 (Bankr. D. Idaho Sept. 23, 2009)(debtors (married couple) opened Section 529 Education Savings Plan for daughter and deposited $14,500 into account; daughter's mother later added $40,000 to account with debtors filing Chapter 7 bankruptcy two weeks later; debtors did not list the account in Schedule B or on their exemptions; debtors held to have a legal interest in account as of petition date and account was property of bankruptcy estate and not excluded under 11 U.S.C. Sec. 541(c)(2) because that exception concerns restrictions on transfer "of a beneficial interest of the debtor in a trust" and there was inadequate proof of a qualifying trust interest of debtors; even if debtors had a contingent interest in the account due to potentially becoming a beneficiary, account does not contain requisite anti-alienation and anti-assignment provisions required under non-bankruptcy law that is recognized by 11 U.S.C. Sec. 541(c)(2); account also not excluded under 11 U.S.C. Sec. 541(b)(6); because that provision only excludes Sec. 529 accounts on a sliding scale - contribututions made more than 720 before filing are excluded and contributions made between 365 and 720 days before filing are excluded to extent below $5,475, and any amounts contributed within one year are not excluded; $40,000 contributed by daughter's mother also estate property - exclusion from estate for certain Sec. 529 funds based on timing of contribution rather than source of contribution).

Knudsen, et al. v. IRS, Nos. 08-2820, 08-3627, 2009 U.S. App. LEXIS 20625 (8th Cir. Sept. 16, 2009)(even though Chapter 12 does not create a bankruptcy estate separate from the debtor, Chapter 12 debtor may treat postpetition income taxes triggered during pendency of case as administrative expense under 11 U.S.C. Sec. 503; debtors' pre-petition sale of slaughter hogs constitute sale of a "farm asset" that is "used in the debtor's farming operation under 11 U.S.C. Sec. 1222(a)(2)(A) - dissenting opinion on this point based on plain language of the statute and that 11 U.S.C. Sec. 1222(a)(2)(A) better analyzed by Internal Revenue Code capital gain provision than by Bankruptcy Code provision that operates in different context; marginal method is the correct method to determine the allocation of taxes between priority and non-priority claims under 11 U.S.C. Sec. 1222(a)(2)(A) - dissent on this point noted that U.S. Supreme Court has rejected the notion that the Bankruptcy Code is a "remedial statute" that should be construed liberally in favor of debtors).

American Express Bank FSB v. Cook, et ux., No. 08-07077 (Bankr. W.D. Va. Aug. 28, 2009)(plaintiff granted partial summary judgment in adversary proceeding against debtor for amount debtor charged on credit card to pay employment taxes and penalties owed by his business; debt incurred to pay a nondischargeable tax debt).

In re Washburn, No. 08-2023/08-2024 (8th Cir. Aug. 28, 2009)(plain language of 11 U.S.C. Sec. 707(b)(2)(A)(ii)(I) permits a debtor with above-median income to claim a vehicle-ownership expense for a vehicle that the debtor owns outright and without encumbrance; court joins Fifth and Seventh Circuits).

In re DFI Proceeds, No. 08-1226, 2009 Bankr. LEXIS 2199 (Bankr. N.D. Ind. Aug. 21, 2009)(unsecured creditors' committee seeks to avoid, as a transfer made for less than reasonably equivalent value, an alleged disproportionate allocation of proceeds of the sale of the debtor's assets; motion denied because there was no transfer before petition date, but merely an agreement to transfer multiple properties owned by different entities and allocate purchase price).

Lyons State Bank v. Bracht Feedyards, Inc., et al., No. 09-4060, 2009 U.S. Dist. LEXIS 74478 (D. Kan. Aug. 21, 2009)(plaintiff, Kansas bank, had banking relationship with a Kansas feedyard that went bankrupt; plaintiff alleged tort of conversion against two Nebraska cattle feeding operations who engaged in cattle transactions with Kansas feedyard; defendant moved to dismiss or transfer venue due to lack of personal jurisdiction; motion denied because defendants had minimum contacts with Kansas via continuing business relationship with Kansas feedyard).

In re Worldcom, Inc., et al., No. 07-cv-7414, 2009 U.S. Dist. LEXIS 69364 (S.D. N.Y. Aug. 7, 2009)(IRS tax claim for telecommunications excise tax under I.R.C. Sec. 4251, et seq., with respect to central office based remote access upheld; bankruptcy court reversed).

In re Willis, No. 07-11010 (Bankr. S.D. Fla. Aug. 6, 2009)(debtor's IRA not exempt asset and is reachable by creditors; debtor had previously (and many years in the past) engaged in prohibited transactions with the IRA (related to borrowing from the IRA and improper distributions and contributions).

In re Glenn, No. 09-40979-659, 2009 Bankr. LEXIS 2120 (Bankr. E.D. Mo. Aug. 3, 2009)(Sec. 706(a) of Bankruptcy Code does not give debtor an absolute right to convert a Chapter 7 to a Chapter 13 (or any other Chapter), but merely a right to file a motion for conversion; debtor's motion to convert denied because debtor will not be able to make all payments under the plan).

In re Kasparek, No. 07-13019, 2009 Bankr. LEXIS 2140 (D. Kan. Jul. 29, 2009)(bankruptcy trustee brought adversary action to sell 80 acres of farmland in which debtor was a joint tenant with his brother and their father; father's funds were used to buy the land and sons' names put on deed as surviving joint tenants merely for estate planning purposes; court held that debtor's bankruptcy estate has no interest in the land for purposes of 11 U.S.C. Sec. 363(h) and that 11 U.S.C. Sec. 541(d) limits estate's interest to debtor's bare legal title; strong-arm powers of 11 U.S.C. Sec. 544(a)(3) are limited to recovery of transfers made by a debtor and do not include recovery of an equitable interest in real property held by debtor's father as joint tenant; even assuming 11 U.S.C. Sec. 544(a) would allow the avoidance of equitable interests, trustee has notice of father's equitable interest and is not a bona fide purchaser for value who could purchase debtor's interest in the land free of the father's interest).

In re Poe, No. 08-906, 2009 Bankr. LEXIS 2068 (Bankr. N.D. W.V. Jul. 29, 2009)(debtors not eligible for Chapter 12 bankruptcy; part of debtors' business involving raising of horses constitutes "farming operation" but portion of business involving horse boarding/training services does not constitute "farming operation"; income from horse raising activity only constituted approximately 12 percent of debtors' gross income during applicable timeframe). 

In re Miller, No. 08-13711ELF, 2009 Bankr. LEXIS 1916 (E.D. Pa. Jul. 22, 2009)(debtor failed to meet undue hardship test of 11 U.S.C. Sec. 523(a)(8) to have student loan indebtedness discharged; debtor had sufficient income to maintain a minimal standard of living and pay the student loan debt).

In re Zilka, 407 B.R. 684 (Bankr. W.D. Pa. 2009)(debts owed to creditor not discharged merely because creditor issued account statements indicating zero balances on loans which were charged off and issued tax forms (1099-Cs) to report the cancellation of indebtedness; issuance of account statements indicating zero balance not legal equivalent of discharging liability on the debt, and issuance of tax forms did not discharge the debts, but just an informational filing that didn't, by themselves, satisfy state law for discharging debt).

Barrows v. Christians, No. 09-6003 (8th Cir. B.A.P. Jul. 10, 2009)(debtors acted in bad faith upon failing to disclose in bankruptcy filings their borrowing of $17,000 from 401K account and depositing the sum in their checking account; fact that debtors could have exempted the funds if they had accurately reported the loan does not change the conclusion that they acted in bad faith and bankruptcy court did not abuse discretion in disallowing debtors' attempt to amend their exemptions because of the bad faith).

In re Nealen, No. 09-70307JAD, 2009 Bankr. LEXIS 1799 (Bankr. W.D. Penn. Jul. 9, 2009)(debtor's bankruptcy case dismissed; debtor failed to obtain credit counseling, failed to file schedules or a plan, and failed to show that any plan could be proposed or confirmed and had only sporadic income from occasional sales of farm animals)

Geiger v. Internal Revenue Service, No. 1:08-cv-01340 (C.D. Ill. Jun. 14, 2009)(plaintiff's pre-petition tax liabilities not dischargeable because plaintiff willfully attempted to evade or defeat payment of taxes).

Cleaver v. Warford, No. 08-6052 (8th Cir. B.A.P. Jun. 11, 2009)(debtors who exempted a motor vehicle under state (Iowa) exemption statute are entitled to prove that vehicle is tool of the trade under 11 U.S.C. §522(f)(1)(B)(ii) in attempt to avoid nonpurchase-money security interest in the vehicle; bankruptcy court's determination that debtors could not exempt truck as tool of trade under state law and could not avoid lien under Bankruptcy Code lien avoidance provisions in error).

Fee v. Eccles, No. 08-6028 (8th Cir. Jun. 8, 2009)(bankruptcy court did not err in concluding that debt in question had been incurred as a result of actual fraud and, therefore, was not dischargeable under 11 U.S.C. Sec. 523(a)(2)(A); 11 U.S.C. Sec. 523 (a)(2)(A) does not require the creditor to prove that its reliance on debtor's misrepresentation was reasonable, but only that such reliance was justifiable - which does not require an investigation on the creditor's part).

In re Gateway Ethanol, L.L.C., No. 08-22579, 2009 Bankr. LEXIS 1731 (Bankr. D. Kan. Jun. 5, 2009)(thermal oxidizer provided to debtor under an "Agreement"; "Agreement" determined to be true lease that bankruptcy trustee could assume or reject under 11 U.S.C. Sec. 365).

In re Sunbelt Grain WKS, LLC, 406 B.R. 918 (Bankr. D. Kan. 2009)(lender's perfected security interest in debtor's grain "inventory, accounts and proceeds thereof" took priority over ownership claims of grain purchaser who had prepaid for certain quantity of grain; no documents of title showing purchaser's ownership of grain and any course of dealing ineffective to alter terms of delivery contract for future goods; no showing that debtor had sufficient grain at time of prepayment to satisfy contract requirements and lender's security interest attached to grain when grain acquired by debtor and before delivery to purchaser).  

 In re Breezy Ridge Farms, Inc., No. 08-12038, 2009 Bankr. LEXIS 1396 (Bankr. M.D. Ga. May 29, 2009)(type of debts defined in 11 U.S.C. Sec. 523(a) excludible in Chapter 12 porceeding regardless of whether debtor a corporation or individual; even though Sec. 523(a) could not be harmonized with Sec. 1228, Sec. 1228 controlling because it was more specific, applicable only in Chapter 12, than Sec. 523(a) which applies regardless of chapter).

In re Smith, No. 08-6050, 2009 Bankr. LEXIS 455 (8th Cir. Mar. 17, 2009)(bankruptcy court did not err in ordering debtor to turn over to bankruptcy trustee commissions earned in connection with farm real estate sale contracts that were entered into pre-petiiton; commissions earned post-petition and became property of bankruptcy estate).

In re Dawes, No. 06-11237-12 (D. Kan. Mar. 12, 2009)(11 U.S.C. Sec. 1222(a)(2)(A) applies to post-petition tax claims, and such claims can be treated as an administrative expense in the bankruptcy estate).

In re Costas, No. 06-16520 (B.A.P. 9th Cir. Feb. 6, 2009)(debtor's pre-petition disclaimer as trust beneficiary of $34,000 interest in family trust does not qualify as a "transfer of an interest of the debtor in property" under the federal fraudulent conveyance provision in the Bankruptcy Code).

In re Uhrenholdt, No. BK06-40787-TLS, 2009 Bankr. LEXIS 144 (Bankr. D. Neb. Jan. 26, 2009)(post-petition taxes triggered on sale of corn eligible for non-priority treatment under BAPCPA provision because corn sold to debtor’s custom cattle feeding operation and not to third party buyer).

In re Gartner, No. BK06-40422-TLS, 2008 Bankr. LEXIS 3525 (Bankr. D. Neb. Dec. 29, 2008)(post-petition taxes triggered by sale of real estate eligible for non-priority treatment under BAPCPA provision).

Clark v. Wilmoth, No. 08-6022 (8th Cir. B.A.P. Dec. 9, 2008)(debtors had no intent to hinder, delay or defraud creditors upon converting non-exempt assets on the eve of bankruptcy filing to increase the value of their homestead exemption to its fullest; while some badges of fraud present, no extrinsic evidence present of intent to hinder, delay or defraud).

In re Frederickson, No. 07-3391 (8th Cir. Oct. 27, 2008)(above-median Chapter 13 debtor's plan must extend for five years; bankruptcy court erred by confirming debtor's plan as a four-year plan; court's holding is opposite the holding in In re Kagenveama, 541 F.3d 868 (9th Cir. 2008)).

Velde v. Kirsch, No. 07-2017, 2008 U.S. App. LEXIS 20151 (8th Cir. Sept. 24, 2008)(bankruptcy trustee claimed that check received by farmer from debtor in replacement of dishonored check constituted payment made within 90-day period before bankruptcy filing and, thus, was prohibited preference under 11 U.S.C. §547(b); court held that because replacement check resulted in release of farmer’s security interest in collateral, it was a contemporaneous exchange for new value falling within exception to trustee’s avoidance powers).

In re Rosson, No. 06-35724, 2008 U.S. App. LEXIS 20233 (9th Cir. Sept. 24, 2008)(bankruptcy debtor’s right to voluntarily dismiss a Chapter 13 case under 11 U.S.C. §1307(b) is not absolute, but is qualified by an implied exception for bad-faith conduct or abuse of the bankruptcy process; bankruptcy court did not err in finding bad faith conduct in present case, and even though court failed to provide debtor with adequate notice and hearing before converting Chapter 13 case to Chapter 7, debtor failed to show prejudice).

In re Schilke, No. 4:07CV3283, 2008 U.S. Dist. LEXIS 68176 (D. Neb. Sept. 9, 2008)(11 U.S.C. §1222(a)(2)(A) applies to taxes triggered post- petition in a Chapter 12 case with result that government's claim is an unsecured claim; affirming 379 B.R. 899 (Bankr. D. Neb. 2007)).

Milavetz, Gallop & Milavetz, P.A. v. United States, No. 07-2405, 2008 U.S. App. LEXIS 18821(8th Cir. Sept. 4, 2008)(under plain reading of BAPCPA, attorneys who provide bankruptcy assistance to "assisted persons" are included in definition of debt relief agencies; but, 11 U.S.C. § 526(a)(4) which prevents debt relief agencies from advising debtors to incur debt is unconstitutionally overbroad as applied to attorneys; advertising disclosure requirements of 11 U.S.C.§ 528 are constitutional as a means of preventing deceptive advertising).

In re Ghere, No. 06-43542-DRD, 2008 Bankr. LEXIS 2240 (Bankr. W.D. Mo. Aug. 29, 2008)(Chapter 7 farm debtor’s debt non-dischargeable  under 11 U.S.C. §523(a)(2) and discharge denied pursuant to 11 U.S.C. §727(a)(5); credit received based on  submission of false financial information). 

In re Matter of Burival, No. BK07042271-TLS, 2008 Bankr. LEXIS 1960 (Bankr. D. Neb. Jul. 9, 2008)(debtors entered into lease of cropland and hay ground with landlord’s conservator with annual rent payable in April and December; debtors filed bankruptcy in November, and the following March rejected the lease; conservator requested full amount of December rent be treated as administrative expense and court held that rent due post-petition and pre-rejec tion could be allowed as an administrative expense only for the time of the debtor’s post-petition use of the premises with interest at 12 percent per annum (as provided for in lease for unpaid rent).

In Re Hampton, No. 07-40605, 2008 Bankr. LEXIS 1943 (Bankr. D. Kan. Jun. 27, 2008)(plaintiffs lost money in livestock venture and failed to prove existence and amount of debt owed to plaintiffs by debtor; debtor’s poor management of venture and lack of communication insufficient basis for debt to be excepted from discharge).

In re Knudsen, No. C07-3011-MWB, 2008 U. S. Dist. LEXIS 46275 (N.D. Iowa Jun. 12, 2008)(Chapter 12 bankruptcy case - income tax liability incurred from debtors' pre-petition sale of slaughter hogs entitled to non-priority claim treatment; "marginal method" is correct method to determine allocation of taxes between priority and non-priority claims; taxes incurred post-petition may be treated as administrative expenses payable by the estate).  

In re Hilgers, No. 07-3233 (10th Cir. May 20, 2008)(11 U.S.C. §541(c)(2) which excludes from the bankruptcy estate a debtor’s beneficial interest in a spendthrift trust held inapplicable to debtor’s one-fourth distributional share of assets in parents’ spendthrift revocable trusts; trusts terminated upon death of surviving parent under Kansas law).

Rechtzigel v. Fidelity National Title Insurance Company of New York, No. A07-0645, 2008 Minn. App. LEXIS 220 (Minn. Ct. App. May 6, 2008)(title insurance does not cover monetary losses incurred by insured arising out of bankruptcy of qualified intermediary used in I.R.C. §1031 exchange absent claims asserting threat to marketability of title; thus, unless bankruptcy trustee’s preference action against insured does not implicate marketability of title or other risks specified in policy, title insurer has no duty to defend under policy).

In re Houston, No. 07-01798, 2008 Bankr. LEXIS 874 (Bankr. N.D. Iowa Apr. 2, 2008)(debtor’s transfer of one-half interest in farmland to mother within five months of filing bankruptcy does not constitute actual fraud under11 U.S.C. §548(a)(1)(A), but is constructive fraud under 11 U.S.C. §548(a)(1) (B); debtor had interest in the land, voluntarily transferred it to his mother within a year of filing bankruptcy, received less that equivalent value for the deed and became insolvent as a result of the transfer; bankruptcy trustee entitled to sell the farmland to pay mother for her interest and also entitled to debtor’s share of CRP payments related to the farmland).

Coop v. Lasowski, No. 07-6063 (8th Cir. Mar. 31, 2008)(bankruptcy debtor may only deduct the actual amounts necessary to repay 401(k) loans when calculating disposable income, and once the loans are repaid, the debtor must redirect the funds used to repay the loans to unsecured creditors; bankruptcy court erred in allowing debtor to keep the funds).

In re Acceptance Insurance Companies, Inc. v. Granite Reinsurance Company, Ltd., No. 07-6027/6029, 2008 Bankr. LEXIS 542 (Bankr. D. Neb. Mar. 12, 2008)(reinsurer sought unpaid premium for reinsurance of crop loss insurance issued by subsidiary of bankrupt debtor, and debtor sought return of premium amounts previously paid; court determined that it was clear that parties intended and understood the contract to provide reinsurance coverage and be supported by consideration; although subsidiary did not sign reinsurance contract, contract defined reinsurance to include both debtor and its subsidiary and debtor signed contract on subsidiary’s behalf; reinsurer entitled to full premium amount).

In re Zeitler, No. 06-00034-lmj, 2008 Bankr. LEXIS 554 (Bankr. S.D. Iowa Feb. 29, 2008)(spendthrift trust containing farm property invalid under Iowa law; debtor retained enough control over trust corpus such that trust property included in bankruptcy estate).

In re Fischer, No. BK08-40125-TJM, 2008 Bankr. LEXIS 581 (Bankr. D. Neb. Feb. 28, 2008)(debtor’s motion for permission to sell calves and milo and use proceeds plus additional proceeds from earlier milo sales to pay crop insurance premium, with balance used in farm operation granted; bank adequately protected and debtor could not obtain crop insurance for 2008 crop unless premium paid for 2007 crop year).

In re Hicks, No. 06-50297, 2008 Bankr. LEXIS 372 (Bankr. N.D. Tex. Feb. 20, 2008) (portion of farmer’s debts held not non-dischargeable under 11 U.S.C. §§523(a)(2)(A) or 523(a)(4); evidence unclear as to whether debtor made misrepresentations).