(7th Cir. July 18, 2017)

The Seventh Circuit affirms the bankruptcy court’s order sustaining the trustee’s objection to the debtors’ $30,000 exemption in trust assets. The debtors argued the spendthrift provisions in the trust prevented the interest from becoming property of the estate. The court holds that the trust interest fully vested before the debtors filed bankruptcy. An exemption was inappropriate and the interest was property of the estate. Opinion below.

Judge: Sykes

Attorney for Debtors: Julia D. Mannix

Attorney for Trustee: Zane Zielinski

(Bankr. W.D. Ky. May 12, 2017)

The bankruptcy court enters summary judgment against the debtor holding the debt nondischargeable pursuant to 11 U.S.C. § 523(a)(4). The plaintiffs inherited a judgment against the debtor that was based on the debtor’s theft of the decedent’s property. The plaintiffs were the proper parties to bring the claim, as the decedent’s estate assigned the judgment to them, and the requirements of § 523(a)(4) were satisfied. Opinion below.

Judge: Lloyd

Attorneys for Plaintiffs: Crain – Schuette Attorneys, Amanda Lisenby Blakeman

The bankruptcy court denies the defendants’ motion to dismiss, with the exception of one claim for equitable subordination against one of the defendants. The complaint filed by the trustee asserted counts for veil piercing, fraud and fraudulent transfer, preference avoidance, breach of fiduciary duty, and a demand for accounting and turnover. Opinion below.

Judge: Moberly

Attorney for Trustee: Mark A. Warsco

Attorneys for Defendants: Alerding Castor Hewitt LLP, Michael J. Alerding, Julia E. Dimick, Mitchell Alan Greene, Anthony Frederick Roach; Abraham Murphy

(Bankr. W.D. Ky. Feb. 1, 2017)

The bankruptcy court denies the creditor’s request for default rate interest on the secured claim. The value of the real property securing the claim was in excess of the claim amount. Case law establishes that there is a presumption in favor of the contractual rate of interest, but it is subject to rebuttal when evidence establishes the default rate is significantly higher without justification. Here, the default rate doubled the non-default rate and the court finds there was no justification under the evidence presented. Opinion below.

(6th Cir. B.A.P. Nov. 29, 2016)

(Bankr. W.D. Ky. Oct. 3, 2016)

(Bankr. W.D. Ky. Aug. 2, 2016)

(6th Cir. June 6, 2016)

The Sixth Circuit affirms the B.A.P. and dismisses the appeal for lack of jurisdiction. Following the principal creditor’s objection, the bankruptcy court denied the trustee and debtors’ motion to approve a settlement of a legal malpractice claim held by the estate. The debtors appealed. The court finds that the appealed order was not a final order that could be appealed because the debtors were free to propose a new settlement for approval. Opinion below.

Judge: Kethledge

(Sixth Circuit Apr. 7, 2016)

(Bankr. S.D. Ind. Mar 15, 2016)

The bankruptcy court denies the department’s motion to reconsider the judgment finding the debtor was entitled to a discharge of the debt to the department. Opinion below.

Judge: Carr

Attorneys for Department: Office of the Indiana Attorney General, Heather M. Crockett, Maricel E.V. Skiles, Spencer W. Tanner

Attorneys for Debtor: Redman Lugwig, Keith Eirik Gifford