(plaintiff was trustee of trust established for himself and his siblings by his father which contained father's life insurance policy; plaintiff borrowed from trust on three occasions (as authorized by trust terms) and repaid loans with interest; plaintiff's siblings later sued for breach of fiduciary duty based on self-dealing and obtained judgment with court imposing constructive trust on plaintiff's interest in trust with defendant serving as trustee; after inability to obtain funds to pay court-ordered payment, plaintiff filed bankruptcy and sought discharge of state-court imposed debts to trust; defendant opposed discharge and prevailed at bankruptcy court on basis that debts were within 11 U.S.C. Sec. 523(a)(4) exception to discharge for debts that are a "defalcation" while acting in a fiduciary capacity; appellate court (7th Cir.) affirmed; issue presented was whether "defalcation" requires finding of ill intent or scienter and, if so, what kind of scienter required; Court holds that "defalcation" requires positive fraud, or fraud in fact, involving moral turpitude or intentional wrong or conscious disregard to substantial and unjustifiable risk to known fiduciary duty; appellate court applied standard of "objective recklessness"; appellate court opinion vacated and case remanded).
(Chapter 12 case in which debtor motioned to hold bank in contempt for violating automatic stay in attempting to foreclose on property; bank argued that because title to property vested in debtors upon plan confirmation, no stay was in effect; under 11 U.S.C. Sec. 362, stay terminates when discharge is granted or denied; in Chapter 12 case, however, debtor does not receive discharge until all payments under plan have been completed rather than when plan confirmed (as is case in Chapter 11); debtor had not received discharge because all plan payments not completed; automatic stay remained in effect and bank's filing of foreclosure violated automatic stay).
(district court had held that inherited IRA funds exempt from debtor’s bankruptcy estate under 11 U.S.C. Sec. 522(b)(3)(C) because they are “retirement funds” that are tax-exempt under I.R.C. §408; decedent died about a year after establishing account which named daughter as beneficiary; daughter had own IRA and had balance of decedent’s IRA rolled into hers and then took monthly distributions from it before retiring; over nine years later daughter and husband filed Chapter 7; bankruptcy court (450 B.R. 858 (Bankr. W.D. Wis. 2011)) ruled IRA not exempt on basis that inherited IRA funds were not "retirement funds" in the hands of the debtor and, therefore, not exempt; on review, district court (466 B.R. 135 (W.D. Wis. 2012)) determined that IRA account funds need not be “retirement” funds of the debtor to qualify for exemption; district court followed majority view that direct transfers of retirement funds from tax-exempt account qualify for exemption, and immaterial that there are differences between traditional IRAs and inherited IRAs due to I.R.C. §408(e)(1); question of whether inherited IRA should be exempt up to the Congress to change the statute; on further review, circuit court reversed on basis that inherited IRAs represent opportunity for current consumption in hands of debtor and are not a fund of retirement savings; court analogized situation to that of debtor inheriting home - home only exempt if debtor lived in it, and is not exempt merely based on how prior owner used the property; court's opinion contrary to Fifth Circuit in In re Chilton, 674 F.3d 486 (5th Cir. 2012)).
(debtor was real estate "flipper" that entered into option contract that gave debtor right to buy property from another party; mortgage on property was facing foreclosure; parties also signed short sale agreement under which debtor was to use reasonable efforts to negotiate short sale with holder of mortgage from which debtor would profit, otherwise property would proceed to foreclosure; mortgage released for $130,000; post-petition, debtor entered into sales contract to sell property for $179,000; debtor then exercised option and bought property for $130,000 and then sold it and received $30,839.13 in cash at closing; trustee sought proceeds of sale and bankruptcy court granted trustee's motion for summary judgment on grounds that sales proceeds were property of debtor's bankruptcy estate; district court affirmed, and appellate court also affirmed).
(debtor's Chapter 11 plan for farming operation denied confirmation and debtor given 30 days to file modified plan; plan failed to specify name of any creditor and class to which creditor assigned, did not provide any treatment for some claims, did not provide any treatment for current crop production loan, contained contradictory description of treatment for certain secured claim, provided reorganization plan that was impossible to perform, plan was not proposed in good faith and does not propose to actually pay the Class VII debtors anything).
(trustee sought to recover payments as postpetition transfers from the bank account of one of debtor’s unrelated entities to an adult entertainment entity, which is protected by the good faith defense; trustee’s argument that the entity should be deemed the alter ego of debtor rejected by court for same reasons as stated in In re Duckworth, No. 10-83603, 2012 Bankr. LEXIS 4379 (Bankr. S.D. Ill. Sept. 21, 2012)).
(grain operator debtor and the company- also a debtor- stored grain for grain dealer; dealer discovered debtor was selling its grain and removed its grain from debtor’s possession after discovering the theft but before bankruptcy filed; trustee alleged grain seized by dealer was commingled with grain owned by debtor and constituted property of bankruptcy estate; court held because grain was seized by dealer was not in debtor’s possession during bankruptcy and dealer need not account for grain or its value; court also held that dealer was not insider because debtor had stolen more than one million bushels of grain from dealer so there should be no avoidance of a preferential transfer; for similar reasons, court held dealer’s removal of its grain was also not fraudulent; dealer’s motion to dismiss trustee’s complaint allowed).
(Chapter 12 case; debtor and brother formed co-equal farm partnership in 1993 that owned livestock and machinery used in farming; partnership dissolved in late 2010 and debtor continued farming a smaller farming operation; debtor then filed Chapter 12; both IRS and state (IA) Dept. of Rev. (IDOR) filed priority claim for pre-petition taxes arising from partnership dissolution which they treated as sale of "partnership interest" rather than sale of "farm assets" which, therefore, would not be entitled to non-priority treatment in accordance with 11 U.S.C. Sec. 1222(A)(2)(a); debtor's expert witness attempted to characterize debtor's partnership as not a partnership for tax purposes due to the small partnership exception of I.R.C. Sec. 6231(a)(1)(B) and, thus, partnership is treated as non-existent and debtor's income arose from sale of personal interest in farm partnership rather than capital interest in partnership; court rejected testimony of defendant's expert witness as irrelevant and stated, "...the decision here will not rely in any way on his testimony."; court noted that small partnership exception enacted in 1982 as part of TEFRA was enacted to implement unified audit examination and litigation provisions which centralized treatment of partnership taxation issues and ensured equal treatment of partners by uniformly adjusting tax liability of partners; while court noted that some statutory language may be supportive of position of debtor's expert, expert's position was not dispositive of the issue, given much case law and legislative language contrary to such position including judicial opinions noting the effect of TEFRA and small partnership exception was to keep the old rules in place for small partnerships rather than create new ones; ultimately, court determined that 11 U.S.C. Sec. 1222(A)(2)(a) applied to sale of farm assets in general, including capital assets used in farming; because underlying assets that were sold were farm assets, they are covered by 11 U.S.C. Sec. 1222(A)(2)(a) as determined by Eighth Circuit inKnudsen, et al. v IRS, 581 F.3d 696 (8th Cir. 2009); U.S. Supreme Court decision in Hall v. United States, 132 S. Ct. 1882 (2012) did not overrule Knudsen on issue of definition of "farm assets" for purposes of 11 U.S.C. Sec. 1222(A)(2)(a); debtor's farm partnership interest was "used in" the farm partnership farming operation - debtor farmed by using farm partnership interest; 11 U.S.C. 1222(A)(2)(a) not limited in application to farming operation under the reorganization plan; debtor meets all other requirements for Chapter 12 bankruptcy; defendants' objections to debtor's confirmed Chapter 12 plan overruled).
(debtor sought appeal of bankruptcy ruling from prison while serving time for bankruptcy fraud; sought appeal of bankruptcy court’s denial to add exhibits and amend schedules due to attorney’s error; attorney had settled matter with bankruptcy trustee on conspiracy and fraud allegations relating to debtor’s bankruptcy petition; appellate court held bankruptcy court’s conclusion that debtor acted in bad faith in waiting eight years to disclose assets was not clearly erroneous).
(trustee filed adversary complaint against debtor in Chapter 7 bankruptcy alleging concealment of assets and information; after trial court held debtor’s discharge should be denied; debtor hid assets by concealing his interest in a business titled in debtor’s wife’s name; debtor intentionally concealed his interest in the business from creditors and concealed his interest post-petition; court convinced debtor played a significant role in wife’s business particularly because wife gave birth to second child during time company farmed 700 acres and debtor supposedly watched tv and went fishing; funds from business were often transferred to wife’s account and used to support family expenses; because of debtor’s contributions and benefits from business, court held debtor had equitable interest in business and debtor hid this interest from his creditors and the trustee with intent to hinder, delay, or defraud his creditors; discharge denied).
(Chapter 12 debtors second amended confirmation plan denied by court because property distributed less than allowed amount of creditor’s claim; dispute regarding extent of creditor’s claim to property; questions still to be addressed regarding whether debtor has sufficient income to fund a confirmable plan; debtor given opportunity to amend plan to conform with decision, but if future amended plan is denied, case to be dismissed without further hearing).
(creditor claims that debtor willfully and maliciously sold collateral at auction and failed to remit proceeds to creditor and, as such, debtor's debt not eligible for discharge under 11 U.S.C. Sec. 523(a)(6); FDIC took over initial creditor that had properly perfected security interest in collateral; FDIC then transferred security interest to second creditor who then transferred it to third creditor; debtor failed to make required annual payment and then learned of inability to lease large amount of land that debtor had previously leased; debtor sold collateral at public auction without creditor's approval and paid off another creditor's lien with net proceeds paid to debtor to pay living and miscellaneous expenses; court determined that while third creditor entitled to net proceeds of sale, such failure to remit by debtor not willful nor malicious - purpose of sale was to reduce debt to a creditor, sale not hidden, debtor honestly never considered third creditor having an interest in the collateral at issue, third creditor's subordination agreement confusing; debtor's conduct merely a technical conversion and not willful nor malicious; debtor entitled to discharge).
(debtor borrowed money from lender and pledged dairy cattle as collateral; lender secured interest in cattle; debtor borrowed additional money from lender pledging crops, farm products and livestock as collateral with security interest containing dragnet clause; lender secured interest; debtor later entered into "Dairy Cow Lease" with third party to allow for expansion of herd; lessor perfected its interest in the leased cattle; debtor filed bankruptcy and court determined that lease arrangement actually created a security interest rather than a true lease - lease not terminable by debtor and lease for longer than economic life of dairy cows, lessor never provided any credible evidence of ownership of cows, parties did not strictly adhere to lease terms; lender filed first and has priority to proceeds from dairy cows; lender's prior perfected security interest attaches to all cows on debtor's farm and to all milk produced post-petition and milk proceeds under 11 U.S.C. Sec. 552(b)).
(debtor filed Chapter 7 and creditor filed for relief under 11 U.S.C. Sec. 362(d) to foreclose against debtor’s real estate (house and 10 acres); debtor moved to convert case to Chapter 12; case converted and debtor proposed reorganization plan with payment of debt over 30 years at 4 percent interest; court granted debtor relief because debtor lacked sufficient income to repay creditor while simultaneously paying taxes and other maintenance costs associated with real estate; debtor’s claim that sufficient income could be generated by farming adjacent real estate not valid because debtor did not own adjacent tract; debtor could not provide creditor adequate protection via 11 U.S.C. Sec. 1205(b)).
(debtor filed Chapter 12 and plaintiff objected to plan confirmation on basis that plan was not feasible, did not provide plaintiff with as much as plaintiff would receive under liquidation and was not fair and equitable to plaintiff; bankruptcy court determined that debtor's plan did project that all disposable income under the plan would be applied to payments, and confirmed plan; plaintiff claims on appeal that record insufficient to support such finding and debtor claims no proper objection made before bankruptcy court; on appeal, court determined that plaintiff's objection sufficient to put debtor on notice that debtor had to demonstrate compliance with 11 U.S.C. Sec. 1225(b)(1) that plan was fair and equitable to debtor; bankruptcy court record insufficient to explain $15,500 discrepancy in disposable income; bankruptcy court's order confirming plan reversed and case remanded).
(Chapter 7 bankruptcy debtor and real estate agent sought to exclude her Mercedes automobile, which was collateral for a non-purchase money lien, from her bankruptcy estate under California’s exemption to exclude up $18,350 in any property; appellate court held that “any” means “any” even if it is a fancy car; real estate agent also sought to exclude the lien on the vehicle as a tool of her trade; appellate court held that this is possible and remanded to bankruptcy court to determine whether debtor’s car qualified as a tool of her trade).
(chicken contract growers’ claims in bankruptcy denied – promissory estoppel claims lacked legal merit; in spite of contact language indicating otherwise, growers' claimed recovery from debtor for investment in chicken houses based on oral statements made to growers by debtors’ employees that each grower “would receive chickens as long as he met the company’s requirement” and that debtor was “here for the long haul” (debtor terminated production contracts with growers and filed bankruptcy due to downturn in poultry industry); as such, growers' claimed statements meant that contracts would remain in effect for a time period long enough for each grower to earn enough income under the contract to cover their cost of rendering performance under each contract; however, subject of statements must have been express elements of contracts; contracts specific and complete and specify that type of damages growers’ claim based on alleged oral promises not recoverable because contracts specified that either party could terminate the contract without cause between flocks (4-9 weeks), and debtor could terminate contract at any time for cause or economic necessity).
(debtor's Chapter 12 plan not confirmable; various properties undervalued and debtor not able to pay total value as determined by court plus interest at fair market rate; debtor disregarded previous court order and diverted $450,000 that was potentially subject to creditor's lien to plant and harvest 2010 crop, direct payments to creditor not allowed so as to bypass trustee's statutory fee; debtor's separate corporation "alter ego" of debtor and impacts liquidation analysis and makes such analysis inadequate and incomprehensible).
(Chapter 12 bankruptcy debtors who owned a timber business filed numerous pro se documents despite representation by counsel challenging the legitimacy of the creditors’ secured loans; despite numerous pro se filings, debtors failed to file notice of insurance policy on secured property or proposed Chapter 12 plan; court held hearing on confirmation of plan creditors’ motion to dismiss Chapter 12 filing and to impose 2 year moratorium on debtors’ filing chapter 12 action or request for adequate protection of property and debtors’ counsel’s request to withdraw; after hearing, court denied debtors confirmation plan, ordered dismissal of case with two year ban on filing by debtors, allowed withdrawal of counsel, and deemed moot remaining issues; debtors filed motion to reconsider arguing court erred in failing to allow evidence of securitization and standing issues related to creditors; motion was denied and debtors appealed; on appeal, court held that debtors never filed a valid objection to creditors’ claims because pro se filings occurred while represented by counsel and debtors objected to withdrawal of counsel; because courts do not have to give validity to pro se filings when parties represented, the court did not err in failing to set for hearing debtors’ pro se arguments against creditors’ standing; appellate court also held that bankruptcy court did not err in refusing debtors’ evidentiary requests because these were premised on request to proceed as “private attorney general” and debtors acknowledged they had no license to practice law; court also affirmed denial of confirmation plan as inadequate because they failed to include any farming expenses and historical earnings presented at varied times were wildly inconsistent; court also affirmed dismissal of the case with prejudice for a period of two years based on “bad faith”; court affirmed denial of motion to reconsider).
(court held debtor’s third bankruptcy filing (two under Chapter 12 and one under Chapter 11) was made in bad-faith and to frustrate secured creditors from foreclosing on over-leveraged farm; owner also filed individual Chapter 12 bankruptcy which delayed foreclosure action approved in second Chapter 12 bankruptcy; court held confirmation of reorganization plan in third filing likely futile; debtor failed to present evidence of change of circumstances suggesting debtor could reorganize and successfully emerge from bankruptcy; court dismissed Chapter 11 case and vacated automatic stay on farmland and granted in rem relief to creditors to conduct foreclosure sale; court further held that farm would not be included in any voluntary or involuntary future bankruptcy estates).
(court denied confirmation of Chapter 11 plan; court held debtor’s plan unfeasible as plan calls for payments of $90,000 per month by partnership leasing equipment which is majority of debtor’s projected monthly income, but debtor has no written contract with partnership and previous payments were only 60% of current projected amount; further partners in partnership were also in bankruptcy proceedings, so continued funding of partnership seemed unlikely; court also held plan was not fair and equitable to creditor; equipment securing debt was sold or transferred without creditor’s consent, additional equipment was missing, and plan failed to properly account for depreciation of equipment value; court held debtor’s plan failed to satisfy requirements of § 1129; debtor entitled to file amended plan).
(Chapter 13 bankruptcy; question before court was whether debtor had reasonable period of time to sell farm and equipment; record did not include employment of realtor despite testimony that farm was listed for sale and listing price; court denied confirmation of debtors’ plan, but debtor could amend within 14 days to provide application to employ a realtor as required by 11 U.S.C. §327).
(appeal from a Chapter 12 bankruptcy order allowing lifting of automatic stay on two parcels of land because debtors had no equitable interest in property; debtors entered into contract for deed with creditors whereby creditors paid off debtors' $170,000 bank loan in exchange for a warranty deed to property; debtors were to make yearly payments to creditor to buy back property; after a few years, debtors were delinquent in payments and creditor sent notice of default; under contract if default was not cured within 30 days, contract terminated and all payments treated as rent; debtors made rental payments for a time, but eventually stopped paying rent; debtors filed bankruptcy and included property as part of the estate; appellate court affirmed because contract for deed was terminated 2 years prior to commencement of bankruptcy when default was not cured, so debtors had no legal interest in property; court also held forfeiture should not be set aside for principles of equity because creditors attempted to help debtors avoid forfeiture with favorable repayment terms and debtors still defaulted; order affirmed).
(debtor filed Chapter 13; case converted to Chapter 7; legal issue in case involves question of what Bankruptcy Code requires Chapter 13 trustee to do with undistributed funds received pursuant to confirmed Chapter 13 plan when case is converted to Chapter 7; in affirming bankruptcy court decision, court notes that debtor’s plan became infeasible and debtor exercised right to convert case to Chapter 7 and sought return of post-petition earnings in trustee’s possession; no evidence of bad faith present and post-petition earnings belong to debtor in accordance with 11 U.S.C. Sec. 348(f) and are not to be distributed to creditors).
(debtors, sweet potato farmers borrowed funds from bank to plant sweet potato crops for 2007-2009 and executed promissory note granting bank security interest in crops and equipment; 2009 crop was complete failure resulting in debtors having inability to repay bank loan; bank discontinued lending agreement but did not foreclose on debtors’ assets; bank extended maturity date of loan twice; debtors planted and harvested 2010 crop with funds received from disaster payment, another corporation debtors owned, liquidation of IRAs and son’s college fund, and crop loan from another lender secured by lien on 2010 crop; debtors satisfied other lender’s lien, paid expenses and retained 2010 crop net proceeds of $410,347; debtors then filed Chapter 12 petition; bank claimed priority against buyer of 2010 crops, but buyer claimed that bank’s lacked security interest in 2010 crop due to language in financing statement; both parties moved for summary judgment; summary judgment denied for both parties – bank made whole via court order the debtors improperly retained net proceeds of 2010 crop and had to pay bank lien with proceeds; whether bank can prove that potatoes owned or grown by debtors that other party purchased for must be resolved by trial on matter, as well as issue of whether potatoes purchased violated bank’s security interest).
(plaintiffs purchased a house from Chapter 7 debtors; sellers disclosure provided as well as house inspection; plaintiffs later had drainage problems and plaintiffs claim debtors knew of the problem but failed to disclose; plaintiffs claim fraud in the house sale, for which damages would not be dischargeable in bankruptcy; court held no evidence presented of any knowledge of or intent to commit fraud in completing the seller disclosure form; plaintiffs also sought rescission of the sales contract; court held plaintiffs failed to prove damages and rescission would deliver a windfall to plaintiffs; based on lack of proof of fraud or damages, court dismissed plaintiffs other claims as well).
(bank brought summary judgment motion in Chapter 11 bankruptcy claiming entitlement to funds paid to another creditor; the security agreement securing a loan from the bank encumbered the debtor’s farm products including livestock; the bank filed a financing statement disclosing its interests; the bank alleges it is entitled to the proceeds of 192 steers in the possession of the court under state UCC; trustee and other creditors disagree; court held Food Security Act (FSA) preempts UCC codes on farm products and requires notice of security interest to buyers; bank argued FSA did not apply because buyer was not buyer in ordinary course because it purchased steers with a dishonored check; court held whether there was a buyer in ordinary course was question of fact and law, so summary judgment denied).
(motion to lift automatic stay for an offset of funds filed against Chapter 12 debtor by Farm Service Agency (FSA) for pre-petition claim arising from farm loans; debtor had enrolled in Direct and Countercyclical Program in 2008, under which farmland was entitled to funds through 2012; to participate, farmers must file an application with FSA each year and control the land for the crop year; debtor owns 10% of land he controls and rents the other 90%; all payments of rents and lease signing was done well after filing Chapter 12; as far as for land owned, the fact that an application was required to be made each year did not characterize the obligation to pay by FSA created in 2008 as postpetition; as far as the leased land, the obligation was created when the leases were signed, which was postpetition, therefore the debt arose postpetition; court held FSA entitled to offset claim against debtor with 10% of funds agency owes for the land debtor owned, but not entitled to offset its claims with payments on leased land).
(following trial on confirmation of Chapter 12 debtor’s second amended plan, court adopted creditor’s valuation prepared by certified appraiser and held creditor well over-secured, so attorney fees allowed; court also held creditor’s loans were short term loans secured by personal property, so debtor’s proposed 20-year repayment terms not appropriate; debtor’s financial projections also held to be unrealistic due to lack of consideration of transportation costs, veterinarian and training costs, and other expected costs for hay sales and horse operation; court sustained objections to plan and ordered debtors to submit amended plan).
(debtor had 1/6th interest in farm business; in exchange for security in financing provided debtor (and other brothers) signed over his interest in farm to his brother providing financing; debtor filed Chapter 7 bankruptcy; court held operating agreement for farm prohibited transfer of membership units, so debtor’s interest in farm was property of bankruptcy estate and trustee sought liquidation of farm from remaining members, which was rejected; trustee sought declaration that operating agreement required dissolution of farm; members argued dissolution not required because members agreed to continue company in accordance with operating agreement; written agreement to continue also stated debtor was dissociated from company; court held agreement invalid because dissociation violates automatic stay and it was untimely; court, however, sua sponteevaluated whether dissolving LLC because member files bankruptcy would contravene federal law; the issue turned on whether an operating agreement is an executory contract and if so, whether 11 U.S.C. §365 governs trustee’s rights; because operating agreement in this situation does not contain any material obligations unperformed by debtor, it is not an executory contract and §365 does not apply; under terms of operating agreement, the farm must dissolve because the debtor filed bankruptcy; 11 U.S.C. §541, however, invalidates the condition requiring dissolution upon filing bankruptcy because this would modify debtor’s economic and non-economic rights so agreement provision is unenforceable; court held trustee could redeem debtor’s interest or appoint receiver to operate company and could seek judicial decree of dissolution under state law, so court’s decision does not leave trustee without remedy).
(petition to deny debtor’s discharge for transferring or converting assets owned by company into exempt property on eve of bankruptcy; debtor sold at auction personal and real property belonging to company; debtors used proceeds from auction to purchase personal exempt homestead, which would be exempt property; court held that debtors remarkable number of errors and omissions in bankruptcy schedule and statements reveal a “calculated scheme” designed to protect their claim of exemption in the homestead; court held purposeful failure to provide sufficient disclosures regarding the purchase of the property and source of money used were material omissions and burden under statutory provision allowing denial of discharge due to making false oath or account in bankruptcy proceeding was met; discharge of debtors denied).
(creditor claimed priority of treatment as “trust claim” under PACA; debtor objected that creditor did not comply with PACA requirements so it did not qualify; creditor was not PACA licensee at time of shipment of produce and no additional notice as non-licensee provided as required under federal law; court held substantial compliance (rather than strict compliance) was sufficient for notice requirements under PACA so creditor qualified for trust).
(debtor was grain farmer who filed Ch. 7 bankruptcy; at creditor’s meeting debtor denied ownership in company at issue in present case; debtor later pled guilty to money laundering and bankruptcy fraud for selling grain out of trust and selling grain from entities established to sell free of liens; current decision regarding trustee’s adversary proceeding against business to avoid 70 payments received from debtor’s company as unauthorized postpetition transfers; business argued it was subsequent transferee with good faith and without knowledge of voidability of transfer; trustee advanced alter ego theory that separate companies operated by debtor to defraud creditors allows avoidance of payments made to good faith transferee; court held alter ego/piercing corporate veil equitable remedy could not be used to void transfers made to good faith transferee).
(debtors filed Chapter 12 in 2010, four years after entering into oil and gas lease with production company; debtors moved to "reject and void" lease under 11 U.S.C. Sec. 365(d)(4) on basis that lease was undervalued; production company objected to effort to reject lease; whether oil and gas lease is a "lease" is a matter of state law, but whether an instrument is an executory contract is a matter of federal law; complicating factor was that, post-petition, pooling agreement recorded; court concluded that debtors were party to unexpired lease; debtor failed to show justification for rejection and provided no authority for avoidance).
(Chapter 7 case in which debtor seeks to hold bank (serving as trustee of family trust of which debtor is a beneficiary) in contempt for alleged violation of discharge injunction by offsetting 2010 trust distribution to debtor in order to satisfy debtor's obligation to trust for interest on a Nov. 7, 1985 note that debtor had failed to make payments on which hampered trustee's ability to make distributions to other beneficiaries; court holds that discharge injunction applies to note, but that the Doctrine of Recoupment applies to except note from discharge; offset authorized under trust law and state (KS) law; debtor's motion for summary judgment for contempt denied; summary judgment granted for other trust beneficiaries).
(Chapter 7 case; after petition filed, debtor purchased cattle feed from creditor to feed cattle used in debtor's dairy business and such expense satisfied 11 U.S.C. Sec. 503(b)(1)(A) as an actual and necessary expense; creditor claimed that purchase amounts still owing were delivered during pendency of Chapter 12 case and involved transactions entered into in the ordinary course of business that qualified as an administrative expense; trustee objected; question of fact remained as to whether amount and extent of payment was consistent with past practice of parties; question of fact also existed concerning the large size of debtor's outstanding feed cost balance was consistent with ordinary course in the industry; as such, evidentiary hearing required on ordinary course of business requirement).
(Chapter 12 case involving issue of debtors' eligibility for Chapter 12; debtors were married couple where husband operated a sole proprietorship horse breeding and raising business, and wife operated an S corp. marketing/consulting business; farm income test of 11 U.S.C. 101(18)(A) to be determined in accordance with IRC definition of "gross income" contained in Sec. 61; gross income of S corporation, as flow-through entity, attributable to debtors; as a result, debtors not eligible for Chapter 12 because less than one-half of their income derived from farming in year preceding year petition filed).
(court upholds bankruptcy court’s issuance of sanctions on debtor for filing Chapter 13 reorganization plan that court had already held was not confirmable; plan treated co-owner of farm as creditor rather than co-owner following partition action).
(debtor filed Chapter 12, but couldn’t confirm Chapter 12 plan until over a year later; under confirmation order, bank allowed two claims with one secured by personal property and one secured by real estate; debtor failed to pay on either claim and bank sought relief from automatic stay and eventually payment was made and court ordered conditional order concerning future defaults; conditional order was bilateral agreement between debtor and bank that conditioned continued effect of stay on debtor curing any default within 30 days or receiving notice of default; conditional order is not post-confirmation modification to plan; no “drop-dead” provision in original plan; conditional order is not a “plan”; conditional order anticipated chance that debtor might amend plan and such amendment would not unravel conditional order; court approved debtor’s amended motion to modify bank’s claim).
(debtor appealed bankruptcy court’s determination she was ineligible to be a Chapter 12 debtor; debtor filed Chapter 7 no-asset bankruptcy in 2010 and was granted a discharge; current action filed four months after receiving discharge; total amount of debt on ranch and other property exceeded Chapter 12 debt limits by more than $4 million; debtor argued only secured portion of debt should be counted because her personal liability had been discharged in Chapter 7 filing; appellate court reviewed only whether Chapter 12 debt limit counts secured debt only up to value of collateral; appellate court held obligations enforceable against debtor’s property but for which there is no personal liability are still “claims” and “debts” within bankruptcy, so debtor is ineligible under Chapter 12).
(Chapter 7 debtor was beneficiary of revocable trusts established by her parents; both trusts had spendthrift provisions; debtor’s mother died within 180 days post-petition; trustee argued debtor’s interest under trusts is property of bankruptcy estate; court held, under state law, trusts were valid inter vivos trusts enforceable according to their terms, so debtor’s beneficial interest was presumptively part of the bankruptcy estate subject to exclusion because of spendthrift provision; court disagreed that debtor’s ability to withdraw assets automatically made trust part of bankruptcy estate because a determination of debtor’s rights and spendthrift provision is determined at time petition is filed; in this case, debtor’s mother was still alive when petition filed, so debtor had no present right to assets or income of either trust at that time; court also disagreed that mother’s death within 180 days of petition filing made bequest part of bankruptcy estate; court held that non-testamentary inter vivos trust is not a “bequest” devise” or “inheritance” under the statute, so it did not defeat exclusion of asset by spendthrift provision; court did advise trustee he could file separate motion for specific relief due to debtor’s failure to disclose beneficial interest and lack of explanation for omission).
(Chapter 11 case; debtors lived on 11 acres on which they also raised livestock and operated trucking business; livestock sold and trucking business still operated at time petition filed; debtors' proposed plan included reduction in interest rate on mortgage on acreage from 7.5 percent to 5 percent and longer payoff date; plan not confirmable because acreage contained debtors' principal residence and creditor (bank) claim only secured by mortgage on acreage (under 11 U.S.C. Sec. 1123(b)(5) specifies that under such situation, plan cannot modify creditor's rights; fact that debtors operated business on property had no impact on creditor's rights).
(Chapter 7 case; debtor's wife died and debtor entered into family settlement agreement with remaining heirs which left cattle ranch to heirs, subject to debtor retaining right to use profit from land and cattle for personal living expenses; after debtor failed to pay creditor for hay, creditor awarded judgment; debtor filed bankruptcy petition and trustee claimed that probate estate and others owed debtor funds for cattle-related expenses and for land rent; bankruptcy court rejected trustee's claim for unjust enrichment under 11 U.S.C. Sec. 542(a) because such claim beyond statute's scope; 11 U.S.C. 542(a) also required that probate estate have present possession, custody or control or property that trustee sought recovery for, and possible possession at end of debtor's life estate did not satisfy statute).
(Chapter 13 case; post-petition tax refunds are generally to be treated as projected disposable income subject to debtor's Chapter 13 plan; no exceptional circumstances present that made it known that it was a certainty that refund would or would not be received).
(debtor, S corporation, paid shareholder taxes and applied payments to shareholder's personal tax returns via agreement; debtor subsequently filed bankruptcy; trustee sought recovery of taxes from IRS on basis that they were fraudulent conveyances made without consideration; court rejected trustee's position on basis that payment did not make unsecured creditors any worse off and bankruptcy estate received an amount reasonably equivalent to what it paid; debtor's taxable income was $1,559,954 and passed through to shareholders; benefit to debtor of S election was significant).
(decedent deeded title to four parcels of farmland to friend from 2000-2004; deeds were not recorded; friend sought to acquire property from estate pursuant to deeds; friend, however, had filed Chapter 13 bankruptcy in 2007 but denied ownership of farmland at that time; hours before probate hearing on deeds, friend sought to reopen bankruptcy proceedings to amend his schedules to reflect ownership of land; probate court went ahead and barred friend from claiming ownership of property based on judicial estoppel; court noted discrepancies in decedent’s will and friend’s ownership claim as well as lack of explanation for denying ownership to bankruptcy court under oath; friend claimed order violated automatic stay; appellate court held automatic stay provision not violated because bankruptcy plan confirmed in 2007; judicial estoppel upheld on appeal due to wholly inconsistent statements asserted to two different courts).
(debtor’s Form 1040 filed after assessment of tax for year at issue failed to qualify as tax return as defined by 11 U.S.C. §523(a)(19) and, consequently, tax debt associated with Form 1040 not dischargeable under 11 U.S.C. §523(a)(1)(B)(i); debtors filed Chapter 7 on Jan. 20, 2011 and initiated adversary proceeding against IRS a month later to determine dischargeability of taxes for years 1998 and 2000-2003; IRS determined no taxes owed for 1998 and agreed that tax debt for 2000, 2002-2003 dischargeable; debtors did not file return for 2001 and IRS issued SNOD and then assessed deficiency in early 2005 for 2001 taxes; debtors filed Form 1040 on Aug. 1, 2006; IRS claimed taxes owed for 2001 were not dischargeable; IRS position upheld).
(Chapter 12 case involving trustee's objection to plan confirmation; while debtor eligible for Chapter 12 by generating sufficient non-farm income to satisfy income test of 11 U.S.C. Sec. 101(18) and owning farm equipment, two cows and a goat; but, debtor failed to establish that plan feasible under 11 U.S.C. Sec. 1225(a)(6) because proposal only speculative and raised significant question as to whether debtor could meet plan specifications; secured creditor entitled to relief from automatic stay due to lack of adequate protection and debtor had no equity in property; plan confirmation denied).
(Chapter 7 case; debtor retired from non-farm job and purchased acreage to build home and create horse farm as a sole proprietorship; horse activity lost money and could no longer pay creditors; trustee sought judgment against debtor’s wife who owned subject property in tenancy-by-the-entirety with debtor, and revocation of discharge; wife not partner in business and did not benefit from portion of loan used to cover farm’s operating losses and was only an accommodation party – trustee’s claim for contribution fails; discharge not revoked).
(Chapter 7 case; trustee moved to sell debtor’s interest in farmland; sale allowed if partition impracticable, value of estate’s interest enhanced if co-owner’s interest sold, estate would benefit by such sale and property not used for electric energy or gas production; but, trustee has not begun to market property and no offer on table so matter not ripe for adjudication).