(Bankr. W.D. Ky. July 17, 2017)
The bankruptcy court enters judgment in favor of the lender, holding the debt owed by one of the debtors would not be discharged, pursuant to 11 U.S.C. § 523(a)(6). The debtor disregarded the lender’s security interest in his business’s inventory, using the proceeds of the inventory for personal expenses in violation of the security agreement. The court holds that the lender failed to present sufficient evidence to except the other debtor’s (the first debtor’s spouse) debt from discharge. Opinion below.
Judge: Stout
(6th Cir. B.A.P. May 18, 2017)
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)
(6th Cir. Oct. 3, 2016)
The Sixth Circuit affirms the district court’s dismissal of the pensioners’ challenge to the confirmation order entered in the Chapter 9 bankruptcy case filed by the City of Detroit, Michigan. The pensioners filed the action to challenge the plan’s reduction of their benefits. The Court holds that the doctrine of equitable mootness applies. The pensioners did not obtain a stay, the plan has been substantially consummated, and many actions have been undertaken or completed under the plan. Opinion below.
Judge: Batchelder
(7th Cir. July 27, 2016)
The Seventh Circuit affirms the bankruptcy court’s order finding that the debtor’s prepetition transfer of a farm to the defendant was a fraudulent transfer subject to avoidance. The debtor transferred the farm in exchange for the defendant’s agreement to abandon litigation he had brought against the debtor. The bankruptcy court found that the debtor did not receive reasonably equivalent value in exchange for the farm. Opinion below.
Per Curiam
Defendant: Pro Se
Attorney for Trustee: Brenda L. Zeddun
(E.D. Ky. June 7, 2016)
(Bankr. S.D. Ind. Apr. 8, 2016)
The bankruptcy court rules that the government’s claim for penalties incurred by the debtor for false representations in unemployment benefit applications are not dischargeable. The debtor conceded that the debt for repayment of benefits was not dischargeable but disputed that the penalties imposed were dischargeable. The court finds that the penalties arose out of the fraudulent representations and thus were not dischargeable pursuant to 11 U.S.C. § 523(a)(2). Opinion below.
Judge: Lorch
(Bankr. W.D. Ky. Mar. 8, 2016)
The bankruptcy court sustains the debtors’ objection to the creditor’s claim. The court determines that the creditor failed to establish that the transaction with the debtors was intended as a loan. Instead, the parties had formed a partnership with the creditor making capital contributions, rather than loans. Opinion below.