Articles Posted in Bankruptcy

The Bankruptcy Appellate Panel vacated the bankruptcy court's order allowing Lariat's claim against debtor in the reduced amount of $308,805.00. The panel held that Lariat's predicate claim had been satisfied and Lariat cannot recover any additional amount from debtor's spouse. In this case, there were no preexisting creditor rights left for MINN. STAT. 513.41-513.51 to protect. Therefore, the panel remanded for entry of an order disallowing Lariat's claim in its entirety. View "Lariat Companies, Inc. v. Wigley" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's judgment denying debtors' discharge under Bankruptcy Code 727(a). The panel held that debtors failed to maintain and preserve adequate records, and such failure made it impossible to ascertain their financial condition and material business transactions. Therefore, the trustee met his burden of proving that debtors' discharge should be denied under section 727(a)(3). View "Snyder v. Dykes" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's order dismissing plaintiffs' adversary complaint and an order denying their motion to reconsider the dismissal order. The panel held that plaintiffs failed to state a claim upon which relief can be granted under 11 U.S.C. 523(a)(19). In this case, a prior Consent Order requiring debtor to pay a fine and costs did not result in a debt owed to plaintiffs. Plaintiffs were not a party to or a signatory on the Consent Order and the debt to plaintiffs did not result from the Consent Order. View "Conway v. Heyl" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's order disallowing debtor's claimed exemptions in his ex-wife's Wells Fargo 401K and an IRA account. The panel held that any interest debtor held in the accounts resulted from nothing more than a property settlement and thus they were not retirement funds that qualified as exempt under federal law. View "Lerbakken v. Sieloff and Associates, PA" on Justia Law

The Bankruptcy Appellate Panel vacated the bankruptcy court's decision concerning injunctive and declaratory relief, holding that the bankruptcy court lacked jurisdiction to entertain the claim at issue. In this case, the bankruptcy court held that a debt to AY was not dischargeable due to debtor's fraud and defalcation while he was a director at AY. The panel explained that the outcome of AY's claim for injunctive and declaratory relief could have no effect on debtor or the bankruptcy estate; the relief for the contract claim only affected AY; and the claim involved distributions from two spendthrift trusts, which were not property of the estate. Therefore, the contract claims for injunctive and declaratory relief were neither core proceedings nor non-core related to proceedings. View "AY McDonald Industries Inc. v. McDonald" on Justia Law

After debtor filed for bankruptcy, she sought to exempt a property tax refund of $1,500, asserting that she could exempt the refund as government assistance based on need under Minnesota law. The Eighth Circuit affirmed the bankruptcy appellate panel's decision sustaining the trustee's objection to the amended exemption. The court held that the property tax refund did not fit within the Minnesota Legislature's definition of government assistance based on need and was therefore not exempt. View "Hanson v. Seaver" on Justia Law

A bankruptcy court has no authority under federal law to deny an exemption on a ground not specified in the bankruptcy code. Therefore, the Bankruptcy Appellate Panel affirmed the bankruptcy court's decision overruling the trustee's object to debtor's second amended claim of exemptions. View "Rucker v. Belew" on Justia Law

The Eighth Circuit affirmed the bankruptcy appellate panel's (BAP) decision affirming the bankruptcy court's dismissal of Korley Sears and Robert Sears' claims in a protracted family dispute. The court held that this case, at a minimum, was related to a case under Title 11 and the bankruptcy court had subject matter jurisdiction on this basis. The court also held that plaintiffs impliedly consented to the bankruptcy court's entry of the dismissal order; and the BAP correctly determined that the shareholder standing rule barred plaintiffs' claims because they alleged only injuries that were derivative of debtor AFY. View "Sears v. Sears" on Justia Law

The Bankruptcy Appellate Panel affirmed the bankruptcy court's order denying debtor's request for discharge of her student loan obligations to the DOE. The panel held that the bankruptcy court applied the correct totality of the circumstances standard and properly held that debtor failed to meet her burden of proving an undue hardship under 11 U.S.C. 523(a)(8). In this case, debtor had no problem making (and did make) full student loan payments when she was employed as a full-time bank branch manager, she voluntarily left that employment and chose part time work; no medical evidence was presented to indicate that debtor was unable to work on a full time basis; and debtor's financial restraints were the result of choices she made and were not long term. View "Kemp v. U.S. Department of Education" on Justia Law

The DOL obtained a pre-bankruptcy judgment against debtor, providing that debtor breached his fiduciary duty under the Employee Retirement Income Security Act (ERISA). The DOL filed an adversary proceeding in debtor's Chapter 7 bankruptcy to have that judgment debt declared nondischargeable as a debt for defalcation while acting in a fiduciary capacity under 11 U.S.C. 523(a)(4). The Eighth Circuit affirmed the grant of summary judgment for the DOL. The court held that debtor had fiduciary obligations regarding the funds that had been withheld from wages for payment to HealthPartners. The court also held that the undisputed facts and unchallenged factual findings supported the conclusion that debtor committed defalcation in late March 2009 when he chose to use plan assets to pay himself and other corporate expenses instead of remitting those assets to HealthPartners. View "U.S. Department of Labor v. Harris" on Justia Law