Articles Posted in Bankruptcy

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

The Bankruptcy Appellate Panel affirmed the bankruptcy court's judgement revoking debtor's discharge. The panel held that the bankruptcy court did not clearly err in finding that debtor knowingly and fraudulently failed to surrender his income tax refunds to the trustee. In this case, the bankruptcy court's view that the evidence demonstrated that debtor acted knowingly and fraudulently was permissible, even assuming debtor's view was also permissible. The panel held that debtor's remaining arguments did not persuade it otherwise. View "Velde v. Thiel" on Justia Law

The Bankruptcy Appellate Panel held that it may not consider on appeal the merits of a matter for which there would not have been jurisdiction in the bankruptcy court and thus the panel did not consider the merits of the McDougalls' (defendants) arguments on appeal. In this case, the McDougalls did not bring a counterclaim or cross-claim and could not challenge a judgment in favor of defendant AgCountry and against debtors. The McDougalls only sought to determine whether they held title to a parcel of land free of AgCountry's lien and did not seek anything from the bankruptcy court on behalf of or from debtors or their estate. Therefore, the panel remanded with instruction to dismiss the claim regarding the validity of AgCountry's lien against the Home Quarter. View "McDougall v. Ag Country Farm Credit Services" on Justia Law

The Eighth Circuit affirmed the bankruptcy appellate panel's ruling affirming the bankruptcy court's order determining that Starion Financial was entitled to $83,122.95 in attorney fees and costs incurred to collect on its secured debt in the course of debtors' bankruptcy proceedings. The court held that the parties had an agreement for fees within the meaning of 11 U.S.C. 506(b), and the bankruptcy court did not err in finding that Starion Financial's application for attorney fees, while untimely, was not abusively so. Because no prejudice to debtors resulted, the fee application was properly allowed. View "McCormick v. Starion Financial" on Justia Law

The Committee, which represented more that 400 clergy sexual abuse claimants, appealed the district court's decision affirming the bankruptcy court's denial of the Committee's motion for substantive consolidation of debtor, the Archdiocese, and over 200 affiliated non-profit non-debtors (Targeted Entities). The Eighth Circuit held that the Targeted Entities were entitled to the protections under 11 U.S.C. 303(a), and could not be involuntarily substantively consolidated with the Archdiocese. In this case, the Committee failed to plausibly allege sufficient facts to negate the non-profit non-debtor status of the Targeted Entities. View "The Official Committee of Unsecured Creditors v. The Archdiocese of Saint Paul and Minneapolis" on Justia Law

The Eighth Circuit affirmed the imposition of sanctions on Ross. H. Briggs for contempt of an order and for misleading the bankruptcy court. The court held that the bankruptcy court had authority to enter sanctions for events that occurred while trying to enforce the order compelling turnover and the show-cause orders; the bankruptcy court did not abuse its discretion in holding Briggs in contempt where the bankruptcy court gave Briggs multiple opportunities to comply with the order compelling turnover, specifically outlining methods of compliance; Briggs's contempt was a sufficient basis for the sanctions; not invoking Rule V of the district court's disciplinary-enforcement rules was not a due process violation; and neither Local Rule 2094(B) nor Rule VII provided a basis for the bankruptcy court's chief judge to hear Briggs's reinstatement motion. View "Briggs v. Hon. Charles Rendlen" on Justia Law