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New Cases For the Week of July 2, 2001 - July 6, 2001
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- The Source for Business Bankruptcy Information on the Internet
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July 6, 2001
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Case
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Court
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Holding
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Warsco
v. Preferred Technical Group
(DBN Subscription Required) |
7th
Cir. |
When
a prepetition asset purchase transaction from a debtor was
structured so that the buyer: (i) paid cash for assets and
(ii) paid separate cash to an unsecured creditor of the debtor
for a purchase of the creditor's note (each transaction being
conditioned upon the other), the payment to the unsecured
creditor was not, as a matter of law, immune from preference
avoidance.
When a third party pays a creditor of the
debtor after having purchased the debtor's assets, the
fundamental question in determining whether that payment was
property of the debtor is whether the funds used to make the
payment were part of the purchase price for the assets.
If the funds the third party used to pay the creditor were
consideration for the debtor's sale of its assets, then those
funds would have been part of the debtor's estate and would
have been available for distribution had they not been
transferred to the creditor. On the other hand, if the funds
used to pay the creditor were not part of the sale price for
the debtor's assets, then it is unlikely that the payment
diminished the debtor's estate. Instead, the transaction
between the third party and the creditor likely was an
independent transaction that did not affect the property in
the debtor's estate available for distribution. |
In
re Haworth
(DBN Subscription Required) |
10th
Cir. |
The
lower courts did not err in finding that a "Monad
Trust" into which the debtor had transferred real
property prior to bankruptcy was merely a name "without a
legal entity," rendering the transfer a nullity. |
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July 5, 2001
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Case
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Court
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Holding
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In
re Four, Three, Oh, Inc.
(DBN Subscription Required) |
3rd Cir. |
The
Bankruptcy Court did not err in overturning the arbitrary
decision of a zoning board pertaining to real property sold by
a bankruptcy estate. |
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July 3, 2001
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Case
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Court
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Holding
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In
re Regional Building Systems, Inc.
(DBN Subscription Required) |
4th
Cir. |
Although
confirmation of a Chapter 13 plan does not discharge liens not
addressed by the plan, the corollary is not true in Chapter
11. Where a creditor which had asserted an unsecured
proof of claim attempted to amend the proof of claim to a
secured proof of claim postconfirmation (and after creation of
a settlement fund to which the putative lien could attach),
the court did not err in denying the amendment.
Confirmation of a Chapter 11 plan revests all of the property
of the debtor free and clear of liens, except as stated in the
plan. Since the plan made no provision for the lien
(which had not been asserted at the time of confirmation), the
debtor's property was free and clear of that interest.
In Chapter 13, the debtor's property revests
free and clear of liens which are "provided for" in
the plan. In contrast, in Chapter 11, property revests free
and clear of liens if the property (as opposed to the liens)
is "dealt with" by the plan. |
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