(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.
(6th Cir. Jan. 27, 2016)
The Sixth Circuit affirms the district court’s finding that the Chapter 11 plan was proposed in bad faith. The plan proposed to pay small claims in full but over a 60-day period. This class of claims was technically impaired due to the delayed payment and it voted to accept the plan. The principle secured lender appealed. The Court finds that the plan was not proposed in good faith, as required by 11 U.S.C. § 1129(a)(3), because it was designed to circumvent § 1129(a)(10)’s requirement for an accepting impaired class of claims. Opinion below.
(Bankr. W.D. Ky. Sep. 28, 2017)
(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. B.A.P. Sep. 30, 2016)
(7th Cir. July 28, 2016)