New Cases - Week of August 16, 2004

August 20, 2004
Case	Court	Holding

In re NTA, LLC
(DBN Subscription Required)

1st Cir.

Because a debtor in bankruptcy does not have greater rights in property than the prepetition debtor, assets placed in escrow prepetition were nt property of the bankruptcy estate.

In re Stations Holding Co., Inc.
(DBN Subscription Required)

Bankr. DE

Although a professional is entitled to compensation for preparing a fee application, it is unreasonable to charge the estate for time spent by the professional negotiating its compensation with the estate.

A professional is not entitled to time spent in preparation for, or in anticipation of, advising a not-yet-formed creditors' committe.

A professional is not entitled to compensation for multiple people performing the same task unless the professional proves the need for such duplication.

Alythough a professional and the estate may have agreed to a flat fee, such an arrangement does not prevent the Court from assessing the reasonableness of the fee through a lodestar comparison. The Court declines to approve a flat fee that would represent an hourly rate recovery of $6,711.49/hour, and instead limits compensation to a flat rate of $700/hour resulting in a diminution of the $1 million flat fee to $104,300.

August 18, 2004
Case	Court	Holding

In re Campbell (DBN Subscription Required)	10th Cir. BAP	The 30-day time period for objecting to a debtor's exemptions recommences upon conversion of a Chapter 13 case to Chapter 7. Once a Chapter 13 plan has been confirmed, the bankruptcy court presiding over the Chapter 13 estate lacks jurisdiction to adjudicate a pending exemption challenge.
Schlossberg v. Barney (DBN Subscription Required)	4th Cir.	The IRS is not a "creditor that extends credit" within the meaning of 11 USC 544(a)(2). Thus a bankruptcy trustee is not entitled to stand in the shoes of a hypothetical IRS in exercising strong arm powers.
Loop Corp. v. United States Trustee (DBN Subscription Required)	8th Cir.	In the context of a debtor who has ceased business operations and liquidated virtually all of its assets, any negative cash flow-including that resulting only from administrative expenses-effectively comes straight from the pockets of the creditors. This is enough to satisfy the first element of § 1112(b)(1). Moreover, a liquidating debtor, by definition cannot demonstrate a reasonable likelihood of rehabilitation (the second prong of § 1112(b)(1). "It is difficult to imagine a liquidating debtor who will not meet the criteria for cause described in § 1112(b)(1)." However, a bankruptcy court does have discretion to deny conversion or dismissal even upon a showing of cause under § 1112(b)(1).

August 17, 2004
Case	Court	Holding

In re Casserino (DBN Subscription Required)	9th Cir.	Oregon debtor's leasehold, prepaid rent, and security deposit came within Oregon's homestead exemption from bankruptcy estate.

August 16, 2004
Case	Court	Holding

Bressner v. Ambroziak (DBN Subscription Required)	7th Cir.	A creditor failed to state a claim for fraudulent transfer when he alleged that a husband/debtor (who received no salary) was the driving force behind a business in his wife's name.