Articles Posted in Bankruptcy

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The Bankruptcy Appellate Panel affirmed the bankruptcy court's order holding that CRP holds a judicial lien against the real property of debtor and avoiding that lien under Bankruptcy Code 522(f)(1). The panel held that CRP's recording of its judgment fastened an existing, but presently unenforceable lien on the property. Furthermore, the fact that an unenforceable lien exists was buttressed by CRP's belief that upon the death of debtor's wife, it will have an enforceable lien that will survive the bankruptcy. View "CRP Holdings v. O'Sullivan" on Justia Law

Posted in: Bankruptcy

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The Bankruptcy Appellate Panel affirmed the bankruptcy court's judgment denying debtor a discharge of his debts. The panel held that the bankruptcy court's finding that debtor failed to make timely installment payments was based on his procrastination, rather than the inclement weather, was not clearly erroneous; debtor's argument under Article 2 of Iowa's uniform commercial code failed because the parties' agreement was not subject to it; even if the parties' agreement were subject to Article 2, the settlement agreement's default provision was not a liquidated damages clause; and the panel rejected debtor's remaining issues that were not raised before the bankruptcy court. View "Charles Gabus Motors, Inc. v. Tirrell" on Justia Law

Posted in: Bankruptcy

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After debtors filed for Chapter 13 bankruptcy, MDSS filed a proof of claim for an unsecured domestic support obligation (DSO) to pay spousal and child support arrears to one of the debtor's prior spouses. MDSS then filed an amended proof of claim in a higher amount and debtors objected. The Eighth Circuit held that the BAP correctly ruled that the disallowed portion of MDSS's DSO claim was not subject to the discharge injunction imposed when the bankruptcy court granted debtors a discharge. The court explained that that ruling eliminated the basis for the bankruptcy court's sanctions order. The court also held that the district court did not abuse its discretion by declining to address the bankruptcy court's contempt order sanctions. Finally, the court declined to render an advisory opinion on the additional issues raised in MDSS's cross-appeal. View "Missouri v. Spencer" on Justia Law

Posted in: Bankruptcy

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The Bankruptcy Appellate Panel affirmed the bankruptcy court's order granting defendants' motion to dismiss plaintiffs' complaint. The panel held that the bankruptcy court was correct in concluding it had "arising in" jurisdiction; the bankruptcy court had, at minimum, "related to" jurisdiction; and plaintiffs have consented to the authority of the bankruptcy court. The panel also held that the bankruptcy court had continuing jurisdiction notwithstanding the closing of the case; plaintiffs' complaint was barred by res judicata; and the bankruptcy court did not err in finding the shareholders standing rule prevented plaintiffs from asserting the claims. View "Sears v. Sears" on Justia Law

Posted in: Bankruptcy

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A case becomes moot when the court can no longer grant any effectual relief to a prevailing party due to a change in circumstances. The Eighth Circuit dismissed as moot James Gretter's appeal of the district court's dismissal of his appeal from a bankruptcy court decision denying debtors' motion to assume and assign certain car-dealership agreements. The court held that the case was moot in the ordinary sense because no court, in reversing the bankruptcy court's order denying the motions to assume and assign, would order the sale of Edwards Auto Plaza to proceed. View "Gretter v. Gretter Autoland, Inc." on Justia Law

Posted in: Bankruptcy

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The Eighth Circuit affirmed an order denying a discharge on the grounds that debtor concealed his property in interest in a fishing boat and trailer, and made a false oath about the boat. The court rejected debtor's several procedural objections to the bankruptcy court's order denying the discharge and held that the bankruptcy court did not clearly err in finding the requisite intent. Therefore, the bankruptcy court properly denied the discharge under 8 U.S.C. 727(a)(2). The court need not address the bankruptcy court's alternative determination. View "Sears v. Sears" on Justia Law

Posted in: Bankruptcy

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The Eighth Circuit affirmed the grant of summary judgment in favor of several creditors in this Chapter 11 debtor-in-possession case. The court held that the judgment allowed proofs of claim totaling over $5.2 million and there was no merit to debtor's several objections. In this case, the sale agreement was not executory; none of debtor's contractual defenses have merit because all of the challenged conduct occurred after debtor filed for bankruptcy; and the court rejected debtor's procedural arguments. View "Sears v. Sears" on Justia Law

Posted in: Bankruptcy

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The Eighth Circuit affirmed the district court's decision affirming the bankruptcy court's sustaining of debtors' objection to the proof of claim. The court held that 8 U.S.C. 502 does not preempt Arizona Revised Statute section 33-814, which sets a 90-day limit for commencing or continuing a civil action in Arizona state court. In this case, the 90-day limit had not expired before debtors filed their Chapter 11 petition. The court also held that, because creditor's state court action was dismissed shortly after the trustee's sale for failure to perfect service on defendants, it was not "maintained" within the meaning of Valley Nat'l Bank of Ariz. v. Kohlhase, 897 P.2d 738, 741 (Ariz. Ct. App. 1995). In Kohlhase, the court adopted an Arizona district court's holding that an action on the debt qualified as a deficiency action under A.R.S. section 33-814 even though the creditor filed the action before the trustee's sale and did not amend the complaint to allege a deficiency after the trustee's sale. View "Melikian Enterprises, LLLP v. McCormick" on Justia Law

Posted in: Bankruptcy

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Mello appealed the bankruptcy court's order confirming debtors' second amended plan without a hearing. The Bankruptcy Appellate Panel held that the bankruptcy court was in the best position to determine when an evidentiary hearing on the issue of good faith was necessary. The panel also held that the bankruptcy court did not err in overruling Mello's objections and confirming debtors' second amended plan. View "Mello v. Wojciechowski" on Justia Law

Posted in: Bankruptcy

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Agriprocessors wired funds covering overdrafts at Luana Savings Bank in the 90 days before the company filed for bankruptcy. After the bankruptcy court found that the bankruptcy trustee could recover some deposits, the trustee and the bank cross-appealed. The Eighth Circuit held that the true overdrafts were debt because the bank made an unsecured loan and/or extension of credit to Agriprocessors and thus Agriprocessors was legally obligated to the bank for the amount of the overdrafts. Therefore, the district court correctly found that the trustee could recover Agriprocessors' true-overdraft-covering deposits from the bank. Furthermore, the payments did not qualify as contemporaneous exchanges for new value, debts and transfers in the ordinary course of business, nor transfers creating security interests. The court affirmed the bankruptcy court's decision to base the bank's liability on the uncorrected balances; the bankruptcy court did not err in finding a netting agreement; and the transfer was not for or on account of an antecedent debt owed by the debtor before such transfer was made, and thus not voidable; View "Sarachek v. Luana Savings Bank" on Justia Law

Posted in: Bankruptcy