New Cases - Week of January 5, 2003

In re Big Rivers Electric Corp. (DBN Subscription Required)	6th Cir.	The court did not err in ordering disgorgement of all fees paid to a Ch. 11 examiner and his law firm where the examiner sought privately to negotiate a success fee with three of the estate's unsecured creditors, by which they would pay him a percentage of their increased recovery on top of the hourly fee authorized by the bankruptcy court for his services.
In re Armstrong (DBN Subscription Required)	10th Cir. BAP	A person need not have filed a proof of claim in order to be a "party in interest." Nor is a "party in interest" limited to creditors. "Party in interest" means all persons whose pecuniary interests are directly affected by the bankruptcy proceedings and includes anyone who has an interest in the property to be administered and distributed under the plan.
In re Price (DBN Subscription Required)	9th Cir.	A Ch. 7 debtor's ability to fund a Chapter 13 plan will standing alone, justify a section 707(b) dismissal. However, this is not a bright line test. Congress committed the question of what constitutes substantial abuse to the discretion of bankruptcy judges within the context of the Code. Section 707(b) provides that the court "may" dismiss a case "if it finds that the granting of relief would be a substantial abuse of the provisions of this chapter." Put another way, while "debtor's ability to pay his debts will, standing alone, justify a section 707(b) dismissal," the debtor's ability to pay his or her debts does not compel a section 707(b) dismissal of the petition as a matter of law
In re Rosenberg (DBN Subscription Required)	8th Cir. BAP	Although, as a general matter, a Ch. 7 trustee has authority to conduct a Rule 2004 examination of a debtor's former employer to determine whether an employment discrimination claim exists, such authority requires that the potential claim belong to the Chapter 7 estate. Where the parties stipulate that the termination occurred after the conversion of the Ch. 13 case to Ch. 7, the claim belongs to the debtor individually, and there is no authority to conduct a Rule 2004 exam.
In re Carlson (DBN Subscription Required)	10th Cir. BAP	The bankruptcy court erred in concluding that Utah's homestead statute grants an exemption in a mobile home only if the claimant also owns the real property on which the mobile home is situated.
Beightol v. UBS Painewebber Inc. (DBN Subscription Required)	2d Cir.	28 U.S.C. § 1334(d) does not provide an independent basis of appellate jurisdiction over decisions not to abstain under § 1334(c)(2), but rather allows appellate review of such decisions only if they are otherwise reviewable under 28 U.S.C. §§ 158(d), 1291, or 1292.
Bell v. United States (DBN Subscription Required)	6th Cir.	A responsible person is not liable for unpaid trust fund taxes if the debtor's funds are "encumbered" such that the funds are not available to pay the taxes, and the encumbrance has a higher priority than the claims of the IRS. However, corporate funds should not be considered encumbered simply because a contractual obligation with a lender or other creditor impacts a company's ability to use its assets, receivables, or loan advances with complete freedom. Funds are encumbered only when certain legal obligations, such as statutes, regulations, and ordinances, impede the freedom of a company to use its funds to fulfill its trust fund tax debts. Voluntary contractual obligations, such as lock-box arrangements, do not encumber funds so as to prevent a willful failure to pay trust fund taxes.
In re Exide Technologies (DBN Subscription Required)	Bankr. DE	Adjustments to standard valuation methodology to bring a Ch. 11 debtor's estimated enterprise value "in line with current market values" of the debtor are inappropriate since the taint of bankruptcy will cause the market to undervalue the debtor's securities. A Ch. 11 debtor can, in a plan, settle causes of action assigned for prosecution to a creditors committee, even without the creditors' committee's consent. However, such a settlement must be fair and equitable. Where the most relevant factors bearing on the propriety of the settlement were the complexity of the litigation (which supported settlement) and the paramount interests of creditors (who had rejected the plan), the settlement could not be approved. Third party releases in a pan could not be approved where no substantial new value was provided, the unsecured creditors rejected the plan and extraordinary circumstances did not exist. A gifting plan cannot discriminate between classes of unsecured creditors where the court finds that the debtor's enterprise value is in excess of secured claims, thus making the gifting illusory. A plan can however, honor enforceable subordination rights that entitle one unsecured class to better treatment.
In re NorthWestern Corp. (DBN Subscription Required)	Bankr. DE	While a claim by the estate against a third party may be non-core (warranting enforcement of an arbitration provision), a claim by a third party against the estate is clearly a core claim and the Court has discretion to determine how best to resolve the claim (including denial of arbitration).