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New Cases For the Week of February 23,
2004 -
February 27, 2004
Brought to you by BKINFORMATION.COM
- The Source for Business Bankruptcy Information on the Internet
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February
26, 2004
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Case
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Court
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Holding
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In
re Montgomery Ward Holding
Corp.
(DBN Subscription Required) |
Bankr.
DE |
A
365(d)(3) creditor whose
administrative claim was
established postconfirmation
through an appeal to the Court
of Appeals had no right to
payment from the bankruptcy
estate, which had transferred
all of its assets to a new
entity pursuant to a plan
confirmed during the
creditor's appeal. |
In
re Pollard
(DBN Subscription Required) |
Bankr.
Minn. |
An
educational loan creditor's
argument that the debtor could
make some payment toward the
loan after 2011 when her home
mortgage was paid was
"over the top" in an
undue hardship discharge case. |
In
re Conseco, Inc.
(DBN Subscription Required) |
Bankr.
N.D. Ill. |
The
bankruptcy court lacked
related to jurisdiction once
the assets of the estate were
distributed. |
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February
25, 2004
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Case
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Court
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Holding
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In
re Kmart
(DBN Subscription Required) |
7th
Cir. |
A
"critical" vendor's
continued postpetition sales
to a debtor do not render an
appeal of a critical vendor
order equitably moot. Where
the vendor has been paid in
full for the postpetition
goods, there has been no
detrimental reliance.
A
"doctrine of
necessity" is a fancy
name for a power to depart
from the Code.
Although
section 363(b)(1) may allow
critical vendors orders in principle, preferential payments to a class of creditors are proper only if the record shows the prospect of benefit to the other creditors.
To
support preconfirmation
payment of critical vendors
the debtor must to show not
only that the remaining,
unsecured creditors will be as
well off with the critical
vendor payments as with
liquidation and also that the
supposedly critical vendors
would have ceased deliveries
if old debts were left unpaid
while the litigation
continued. |
In
re Yett
(DBN Subscription Required) |
9th
Cir. BAP |
A
chapter 12 plan may be
confirmed over a secured
creditor's objection although
it neither cures an existing
default nor provides for
payment of the contractual
default interest, even if the
underlying obligation matured
prepetition |
In
re Dayton
(DBN Subscription Required) |
Bankr.
N.D. Cal. |
In
calculating a fee-shifting
award under 11 USC 523(d) the
court is not limited by the
fee arrangement between the
debtor and her attorney.
Instead, the court should
calculate the award based upon
the market rate of the
debtor's attorney's services. |
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February
24, 2004
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Case
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Court
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Holding
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In
re Strong
(DBN Subscription Required) |
8th
Cir. BAP |
A
prepetition fine imposed
solely to encourage a
debtor to comply with an
environmental clean up order,
and which was subject to
reduction if the debtor did in
fact comply, was penal in
nature, and was not
dischargeable per 11 USC
523(a)(7). |
In
re Wagner
(DBN Subscription Required) |
8th
Cir. BAP |
The
bankruptcy court erred in
denying a discharge to a
debtor/guarantor who had
transferred property of his
closely held LLC with the
alleged intent to hinder,
delay or defraud a
creditor. Denial of
discharge must be predicated
on a transfer of the property
of the debtor, not a transfer
of the property of a
nondebtor, separate
entity. |
In
re Mayan Networks Corporation
(DBN Subscription Required) |
9th
Cir. BAP |
A
landlord's security deposits
should be applied after the §
502(b)(6) cap, thereby
reducing the unsecured claim
that the landlord may have
against the estate.
Although letters of credit are
not property of the estate,
where a letter of credit
(backed by a cash deposit)
issued to a landlord in
connection with a lease has
the effect of a security
deposit, and diminishes the
amount available to unsecured
creditors, the amount the
landlord receives under the
letter of credit should be
applied to the landlord's
502(b)(6) claim. |
In
re Hawley
(DBN Subscription Required) |
Bankr.
C.D. IL |
Debtor's
interest as beneficiary of
spendthrift trust was property
of bankruptcy estate where
prepetition extensions of
trust were ineffective to
preserve spendthrift status. |
In
re SonicBlue, Incorporated
(DBN Subscription Required) |
Bankr.
N.D. Ca. |
While
the participation of more than
one attorney in a hearing may
be reasonable under the
circumstances, the attendance
by four or six attorneys is
not. |
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February
23, 2004
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Case
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Court
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Holding
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In
re Behlke
(DBN Subscription Required) |
6th
Cir. BAP |
A
decision to dismiss "for
cause" under § 707(a)
will be reversed only for an
abuse of discretion because it
is an equitable determination.
A
court would not be justified
in concluding that a debtor is
needy and worthy of discharge,
where his disposable income
permits liquidation of his
consumer debts with relative
ease
The
bankruptcy court did not err
in including 401(k)
contributions in debtors'
"disposable income"
for the purpose of assessing
whether the debtors' Ch.7
filing was a substantial
abuse. "[I]t would be
unfair to the creditors to
allow the Debtors in the
present case to commit part of
their earnings to the payment
of their own retirement fund
while at the same time paying
their creditors less than a
100% dividend." |
In
re Lusk
(DBN Subscription Required) |
Bankr.
E.D. Tenn. |
Because
the attorney-client
relationship by itself is
insufficient to create the
necessary fiduciary
relationship for purposes of
the defalcation provision of
§ 523(a)(4), an attorney’s
breach of fiduciary duty,
without more, does not
constitute defalcation. Absent
an express or technical trust,
an attorney’s legal
malpractice, like all other
types of professional
malpractice, remains
dischargeable under the
Bankruptcy Code. |
In
re Mulder
(DBN Subscription Required) |
Bankr.
N.D. Ia. |
Absent
evidence of what debtors spent
collateral procceds on, court
had insufficient evidence to
find nondischargeability of
debt based upon conversion of
proceeds. |
In
re Faktor
(DBN Subscription Required) |
Bankr.
N.D. Ia. |
Dischargeability
depends on a debtor's future
ability to pay the entire
student loan obligation. The
court shouldl not consider
that the Department of
Education would accept
payments under a modified
repayment plan that has not
yet been formulated. The court
does not have the authority to
modify the payment terms of a
student loan or to discharge a
partial amount of principal or
accrued interest.
A
debtor who would be 76 years
old when her student loan was
paid off under a 25-year
payment schedule is entitled
to an undue hardship
discharge. |
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