Attorneys’ Itemized Statement listed three attorneys and three paralegals at the following rates:

David Chami, attorney: $725

Sylvia Bolos, attorney: $650

Landon Maxwell, attorney: $350

Mari Cervantes, paralegal: $150 Charles Fleming, paralegal: $150

Intake, paralegal: $150

* * *

Movants argue that the “relevant legal community” is the community of consumer debtors’ counsel located in the Eastern District of Michigan and, therefore, they object to the fee request because the hourly rates requested are well above the market rate for comparable services in consumer bankruptcy cases in the Eastern District of Michigan. The Court disagrees.

This District and, indeed, this Circuit views the “relevant legal community” as something other than strictly geographical, and this has been a long-standing view. In the case In re Baldwin-United Corp., 36 B.R. 401, 402-403 (Bankr. S.D. Ohio 1984), for example, Judge Newsome recognized that “to limit fees to the rates charged by Cincinnati bankruptcy lawyers, merely because these cases happened to be filed in Cincinnati, would be a position too capricious and parochial to withstand analysis under § 330.” Instead, Judge Newsome applied the reasoning of Judge Bernstein in In re Atlas Automation, Inc., 27 B.R. 820, 822 (Bankr. E.D. Mich. 1983), a case involving a Flint, Michigan company filed in this Court. Judge Bernstein first noted that, with the adoption of the Bankruptcy Code, “notions of economy of the estate in fixing fees are outdated.”

* * *

And while it is true that certain of these hourly rates would be high for the representation of a debtor in a consumer bankruptcy case, the matter before this Court is a civil contempt matter regarding damages incurred by Debtor as a result of a willful violation of the discharge injunction. Because these attorneys’ fees are not being paid out of the estate, there is no concern that an award of fees at higher rates will negatively impact either Debtors or Debtors’ creditors. More importantly, the Court does not find the comparison to admittedly skilled consumer bankruptcy attorneys in this District to be an apt analogy. A more suitable analogy is the rates sophisticated business creditors such as Credit Acceptance Corporation pay their counsel, as it is these business creditors who are paying the fees and damage awards in these types of cases. This Court has previously approved rates as high as $800 per hour for debtor’s counsel in business cases, and other judges in this District have approved rates exceeding $1,000 per hour. The Court is well-aware that such rates or higher are being charged to business creditors by their bankruptcy counsel. By this measure, and after the reductions in hours charged discussed below, the Court finds that the hourly rates charged in this case are reasonable.

Additionally, Plaintiff alleges in these paragraphs that each of the Defendants do business in this district by filing proofs of claims in a bankruptcy case in this district. As the court wrote in section III(A)(1), it may take judicial notice of facts that are not subject to reasonable dispute because they “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” F.R.E. 201(b). The court performed searches for the names “Sacks Glazier Franklin and Lodise,” “Klinedinst” and “Natasha Mayat” in the CM/ECF system for the U.S. Bankruptcy Court for the Northern District of Illinois, a source whose accuracy cannot reasonably be questioned.

The result of those searches was that Plaintiff’s bankruptcy case, this adversary proceeding and another adversary proceeding related to Plaintiff’s case are the only matters in which each of the Defendants appears in this district’s CM/ECF system. In light of these judicially noticed facts, the court finds that paragraphs 9, 10 and 11 are not well-pleaded allegations that should be taken as true in deciding the Motion to Dismiss.

Therefore, the Amended Complaint does not contain any well-pleaded allegations that would support the reasonable inference that the Defendants engage in business the principal purpose of which is debt collection. Neither does the Amended Complaint plead any allegations that would support the reasonable inference that the Defendants regularly collect or attempt to collect debts.

The Reorganized Debtor argues that under the terms of the Letter Agreement, the restructuring of the Fortress and the Juniper debt in the confirmed Plan was not a financing that entitled RFR to a Success Fee under the Letter Agreement. The Reorganized Debtor relies on the last clause of the definition of “Financing” in the Letter Agreement, which states that it includes “any other vehicle by which borrowed money or credit is raised.” Thus, the Reorganized Debtor argues that for a transaction to qualify as a “Financing,” money must be borrowed or credit must be raised. The Reorganized Debtor asserts that money was not borrowed and credit was not raised when Juniper converted its debt to equity or when Fortress amended its credit agreement under the Plan because neither provided any new money or credit to the Reorganized Debtor.

RFR responds that the Letter Agreement’s definition of “Financing” was not limited to borrowing money or raising credit, but instead was exceedingly broad including “refinancing” and “equity or debt, in whatever form.”

* * *

First, the Court rejects the Reorganized Debtor’s assertion that Juniper would have received the same treatment that the Plan provided by foreclosing on its collateral. The testimony of Mr. Wolf himself refutes this argument. He testified that, although Juniper had scheduled a foreclosure sale, it continued that sale several times because the Blank Group threatened to overbid it at the sale, which would have precluded Juniper from obtaining the Debtors’ equity that it ultimately received under the Plan.

Second, the Court rejects the Reorganized Debtor’s interpretation of the Letter Agreement that money must be borrowed, or credit raised, to qualify as a “Financing.” The Court concludes that the last phrase of section 1 (“or any other vehicle by which borrowed money or credit is raised”) on which the Reorganized Debtor relies is merely a catchall provision designed to ensure that any examples not explicitly mentioned, but similar in nature to those mentioned, are still covered under the agreement. A catchall provision cannot be used to eliminate the preceding items specifically listed in an agreement.

The Court concludes that the definition of “Financing” (which includes refinancing) clearly is sufficient to encompass the treatment of Fortress’ secured claim in the Plan, under which Fortress’ credit agreement was modified without any additional infusion of cash from Fortress. A refinancing is commonly understood to include the amendment of the terms of existing secured debt.

In this adversary proceeding, the Trustee is suing Urthbox Inc. (“Urthbox”) principally to avoid and recover alleged prepetition fraudulent transfers of the Debtor’s assets. The parties have engaged in discovery but are mired in a dispute over the adequacy of Urthbox’s response to the Trustee’s Document Requests. The matter before the Court is the Trustee’s motion (the “Motion”) under Rules 26 and 37 of the Federal Rules of Civil Procedure (the “Rules”) for an order of the Court (i) compelling Urthbox to produce tax returns, accounting records, financial statements and archived emails; (ii) setting new definitive date(s) for Trustee’s Rule 30(b)(6) deposition of Urthbox (the “Rule 30(b)(6) Deposition”) following that production; and (iii) imposing sanctions for Urthbox’s alleged failure to respond to the Document Request. The Trustee submitted the declaration of Eric C. Medina, his counsel, in support of the Motion (the “Medina Declaration” or “Medina Decl.”).

Urthbox filed an opposition to the Motion (the “Opposition”),5 supported by the declaration of its counsel, Theodore Geiger (the “Geiger Declaration” or “Geiger Decl.”). The Trustee replied to the Opposition (the “Reply”).7 The Court heard argument on the Motion.

For the reasons set forth herein, the Court grants the Motion in part and denies it in part. The Court directs Urthbox, on or before October 15, 2024, to produce accounting records and financial statements concerning Urthbox’s sales generated through the Customer Accounts, and archived emails, all from or after September 30, 2017 through the present. The Court denies the Trustee’s request to direct Urthbox to produce its tax returns and denies the Trustee’s request for sanctions pursuant to Rule 37. The parties shall confer on the scheduling of the Rule 30(b)(6) Deposition.

This adversary proceeding concerns whether the claims of certain creditors of Northstar Offshore Group, LLC are secured by liens on oil and gas properties Northstar owned when it filed its bankruptcy petition.

The Remaining Defendants are Stallion Offshore Quarters, Inc., Wood Group PSN, Inc., Coastal Crewboats, Inc., Diverse Scaffold Solutions, LLC, and Benton Energy Services Co. Summary Judgment is sought only as to claims held by the Remaining Defendants that are purportedly secured by the Estate’s property located at the locations listed on Exhibit “A” to this opinion (the “Undervalued Properties”).

Each of the liens is statutory only. The statutory liens only provide protection for work done at a specified location.

All Claims held by the Remaining Defendants that relate to work performed at the Undervalued Properties are unsecured.

This adversary proceeding involves a removed state court action in which the Plaintiffs (the “Sureties”) collaterally attacked portions of Fieldwood Energy LLC’s Chapter 11 plan of reorganization. The Sureties had settled their claims as part of the confirmation process. The confirmation order enjoined the actions that the Sureties took when they filed their state-court lawsuit. The confirmation order is now final and non-appealable. The Sureties willfully violated it.

The confirmed plan is complex. But its complexity was well understood by the parties. Importantly, the United States played an integral role in the confirmation process. As the ultimate beneficiary of the decommissioning activities under the confirmed plan, the United States was able to assure that decommissioning activities were to be fully funded. Unlike some plans that seek to limit obligations to the United States, the confirmed plan was designed to assure that decommissioning was successfully completed.

Prior to the petition date, Apache, a prior interest owner in certain Fieldwood oil and gas assets, obtained letters of credit and surety bonds in its favor to assure Fieldwood’s obligation to fund government decommissioning obligations under the terms of a decommissioning agreement between Apache and Fieldwood. During the pendency of Fieldwood’s bankruptcy cases, the Sureties heavily contested the confirmation of Fieldwood’s plan of reorganization. The objections centered on the issue that Apache would inevitably draw on those surety bonds and letters of credit. The arguments made in those objections, as well as any pre-effective date defenses to Apache’s future draws under the bonds, were waived and released as part of a settlement reached between Fieldwood, Apache, and the Sureties. The settlement is incorporated into Fieldwood’s plan and the Court’s confirmation order.

On June 21, 2023, the Sureties sued Apache in Texas state court after Apache began drawing funds pursuant to a trust established to fund decommissioning obligations. The lawsuit sought to discharge the Sureties of their obligations under the bonds and letters of credit and prevent Apache from drawing on them. The Sureties sought and lost a heavily contested temporary injunction in state court. Having prevailed in state court, Apache removed the lawsuit to this Court and moved to enforce the plan and confirmation order. This Court held the state court lawsuit void as a violation of the plan injunction.

Apache moves for leave to assert its counterclaims against the Sureties. In response, the Sureties move for reconsideration of the Court’s order voiding the state court lawsuit. Apache also moves for attorneys’ fees as sanctions against the Sureties for filing the lawsuit. Apache’s motion for leave is granted. It is entitled to attorneys’ fees. The Sureties’ motion for reconsideration is denied.

First, they claim that the trustee’s professionals are not “parties in interest” within the meaning of section 326(a), so disbursements of their compensation and reimbursement are not included when computing the cap. I disagree. “Party in interest” is a broad term. It includes anyone directly affected by a bankruptcy case. . . . A person with a right to payment from the estate is a party in interest, whether that right arose before or after the bankruptcy case was commenced.

* * *

The objectors contend that payments to postpetition trade creditors do not count towards the trustee’s compensation cap because the trade creditors are not parties in interest. This argument makes no sense. Vendors and others who extend credit to a chapter 11 debtor or trustee in the ordinary course of business have administrative claims under section 503(b)(1).

* * *

The objectors contend that payments made by “the Hotel,” the hotel management company retained by the trustee, and the plan disbursing agent are not “moneys disbursed or turned over in the case by the trustee.” I disagree. It should not matter whether the trustee cuts the checks himself or relies on an agent.

The Fifth Circuit has not expressly stated what the exact data points are for permissive timing verses when waiver should be found. As such, Texas state and federal courts have looked outside of Texas and the Fifth Circuit for guidance, and have previously found that “[w]aiver of a motion for disqualification of counsel is proper where the delay in moving for a disqualification is for an extended period of time, or where it is done on the eve of trial.” Here, this disqualification motion was filed five months after CES received notice of Special Counsel’s retention. Looking to the timeline used by other Texas federal and state courts, five months appears to fall within a gray area of being in between a permissible four-month request to disqualify and the impermissible six-month request from receiving notice.

Upon review of the unique factual circumstances of this case and caselaw, the Court finds that waiver is satisfied. For one, CES’s counsel did not file an objection to Special Counsel’s employment application within 21 days. Next, CES’s counsel objected in open court and this Court instructed counsel that he could have filed within the twenty-one-day period permitted under the bankruptcy court for the Western District of Texas’s local rules. Further, counsel could have filed a motion based on the alleged conflict. The case has since become a more and more complex web as further fraud allegations have proliferated and witnesses have become alternatively less available or more verbose.

Even if waiver did not occur, on balance, the “costs and benefits of disqualifying [Special Counsel] disfavor disqualification.” The Court appreciates CES’s concern of a potential conflict of interest, but timeline is not everything. Courts also consider whether disqualification “would impose significant costs in time and money” and whether disqualification “would likely cause significant delays in the case.” . . . Here, no evidence was presented of impropriety or that there is a strong possibility that impropriety will occur. This leaves the Court to consider and give more weight to the public interest consideration. The public interest presents a strong argument in favor of maintaining Special Counsel.

Currently, Special Counsel is performing work on a 40% contingency fee. The Court is concerned that Trustee will struggle to locate and secure new counsel willing to do the kind of complex work this case requires at such a rate. This case is also a uniquely complex web: numerous Shumate entities, concerning allegations of burning evidence and property of the estate, various delays, and only a handful of cooperating witnesses. Disqualifying Special Counsel at this stage would be inequitable towards creditors and disadvantage the estate from being properly and thoroughly investigated. This Court is not alone in placing extra emphasis on cost and time for Trustee to find counsel. A bankruptcy court in the Northern District of Texas previously stated that “disqualification of Trustee’s special counsel at this date would be inequitable because it would be too costly and time-consuming for the Trustee to find new counsel and familiar such counsel within the complex facts of the Adversary Proceeding.”

George Wagner III appeals the district court’s denial of his discharge for bankruptcy pursuant to 11 U.S.C. § 727(a)(4)(A). Section 727(a)(4)(A) of the Bankruptcy Code precludes a bankruptcy court from granting discharge to a debtor who knowingly and fraudulently makes a false oath in a bankruptcy case. When Wagner filed his voluntary bankruptcy petition, he omitted all reference to a show horse he purchased for his daughter several years preceding his bankruptcy case because, according to Wagner, he believed that the horse belonged to his daughter and not to him. Following a bench trial, the bankruptcy court granted judgment in favor of Wagner and fully discharged his debts. The district court vacated the bankruptcy court’s order granting discharge, concluding that Section 727(a)(4)(A) barred Wagner from receiving discharge be-cause he knowingly and fraudulently omitted the horse from his bankruptcy case.

After a thorough review of the record and the parties’ briefs, and with the benefit of oral argument, we reverse the district court’s order and affirm the bankruptcy court’s order of discharge.

* * *

Because “a determination concerning fraudulent intent depends largely upon an assessment of the credibility and demeanor of the debtor, deference to the bankruptcy court’s factual findings is particularly appropriate.” Miller, 39 F.3d at 305 (internal quotation marks and citation omitted). In this case, the bankruptcy court did not clearly err in determining that Wagner was entitled to discharge because he did not knowingly and fraudulently make a false oath in his bankruptcy case.

Bankruptcy is a lesson in leverage. It involves money and to whom it goes. The more advantage (leverage) a party has, the more it influences who gets paid. In a Chapter 11 case, the parties with more leverage control the reorganization, while those with less often must sit on the sidelines and await their fate. The debtors here, able to pay their creditors in full, believe they have the leverage to deny their unsecured noteholders more than a quarter billion dollars of interest they promised to pay pre-bankruptcy, all while giving lower priority equityholders four times that amount. Does the Bankruptcy Code, 11 U.S.C. § 101 et seq.,1 give the debtors enough leverage to do that?

* * *

We determine that the Applicable Premiums [make-whole] must be disallowed under § 502(b)(2), for they fit both the dictionary definition of interest and are its economic equivalent. But we agree with the Noteholders that they have a right to receive contract rate interest and the Applicable Premiums because Hertz was solvent. Thoughtful opinions issued by the Fifth and Ninth Circuits in quite similar cases support the Noteholders. Ultra Petroleum Corp. v. Ad Hoc Comm. of Opco Unsecured Creditors (In re Ultra Petroleum Corp.), 51 F.4th 138 (5th Cir. 2022), cert. denied, 143 S.Ct. 2495 (2023); Ad Hoc Comm. of Holders of Trade Claims v. Pac. Gas & Elec. Co. (In re PG&E Corp.), 46 F.4th 1047 (9th Cir. 2022), cert. denied, 143 S.Ct. 2492 (2023).4 We end as they do, though for us the primary support for that result is in absolute priority, “bankruptcy’s most important and famous rule[.]” Czyzewski v. Jevic Holding Corp., 580 U.S. 451, 465 (2017) (quoting Mark J. Roe & Frederick Tung, Breaking Bankruptcy Priority: How Rent-Seeking Upends the Creditors’ Bargain, 99 Va. L. Rev. 1235, 1236 (2013)). Allowing Hertz to cancel more than a quarter billion dollars of interest otherwise owed to the Noteholders, while distributing a massive gift to the Stockholders, would impermissibly “deviate from the basic priority rules . . . the Code establishes for final distributions of estate value in business bankruptcies.” Jevic, 580 U.S. at 455.

The panel affirmed the Bankruptcy Appellate Panel’s order affirming the bankruptcy court’s order granting summary judgment to the Trustee on the Trustee’s claim seeking to avoid under 11 U.S.C. § 548(a)(1) a fraudulent transfer of Chapter 7 Debtor Debbie O’Gorman’s home.

O’Gorman transferred the property to the Lovering Tubbs Trust for no consideration to stymie foreclosure efforts by Grant Reynolds, an attorney who had performed legal services for O’Gorman in a matter unrelated to this dispute.

Appellants, the Lovering Tubbs Trust and other entities created to facilitate the transfer, argued that the Trustee lacked Article III standing to bring a claim under § 548 because O’Gorman’s creditors were not harmed by the transfer. The panel held that because O’Gorman’s transfer of the property depleted the assets in the estate, the estate suffered an injury-in-fact that is redressable by the avoidance sought here, and the Trustee, who is the representative of the estate, satisfied the requirements of Article III standing.

The panel held that actual harm to creditors is not an element of a fraudulent transfer claim under § 548. Nothing in § 548 requires a trustee to show that a creditor was or could have been harmed by the transfer in order to bring an avoidance action.

The panel held that the bankruptcy court properly granted summary judgment. Rejecting several arguments advanced by Appellants, the panel concluded that (1) the bankruptcy court did not find that proof of fraudulent intent was not required; (2) the bankruptcy court did not overlook direct evidence of Debtor’s legitimate non-fraudulent intentions in transferring the property; (3) Appellants’ procedural objections to the summary judgment order are unavailing; (4) it is undisputed that O’Gorman believed she was indebted to Reynolds and that she acted with the intent to delay or hinder his foreclosure on her property; and (5) the bankruptcy court did not abuse its discretion in denying Appellants’ request for a continuance to conduct discovery.

This case raises the unsettled issue of what cram-down requirements protect equity holders when a plan of reorganization pays creditors in full and seeks to extinguish all equity interests for no consideration. Such a plan satisfies the absolute priority rule, as codified in section 1129(b)(2)(C)(ii) of the Bankruptcy Code, since no junior class of equity receives a distribution. The question before the Court is what additional requirements, if any, are imposed by section 1129(b)(2)’s “fair and equitable” standard. In particular, if the record indicates that the equity being extinguished may have significant value, does this potentially defeat cramdown?

While the case law on this issue is surprisingly sparse, the Court concludes that the language and legislative history of section 1129 compel an affirmative answer to this question. This does not mean that a formal valuation of the equity is required, as may be the case when cramdown under section 1129(b)(2)(C)(i) is invoked. It does mean that, if evidence in the record indicates the equity may have value, the court must determine whether that is in fact the case and, if so, whether the extinguishment of equity for no consideration over the equity class’s objection is fair and equitable.

* * *

The Court held a four-day hearing on confirmation of the Plan in July, followed by posttrial briefing. Based on the record of that hearing, the Court finds that Ms. Liu’s principal objection to the plan—that the Debtor’s equity has value and therefore its extinguishment for no consideration violates section 1129(b)’s fair and equitable requirement—lacks merit. The record makes clear that, when the Debtor is valued on a standalone basis, its equity has no value. Although the Debtor may have more value to an acquiror, only one timely and confirmable offer has been made to acquire the Debtor, and that offer—the Plan—values the equity at zero. Ms. Liu’s plan purports to value the Debtor’s equity at $1 million, but her plan is unacceptably late. In addition, based on the record before the Court, her plan appears to be unconfirmable, and even if not, it may be inferior to Dr. Hu’s plan. Ms. Liu therefore has failed to show that the Debtor’s equity has value or that cause exists to adjourn confirmation to permit formal consideration of her plan. The Court will enter an order confirming the Plan, which satisfies the Bankruptcy Code’s confirmation requirements.

The Motion primarily argues issues of fact as a basis for relief. Because the Court predicated its ruling in the Dismissal Opinion principally on undisputed portions of the record, including sworn testimony, an agreed joint stipulation of facts, TGP’s schedules and statements of financial affairs (both submitted under penalty of perjury), and the plain language of debtor’s proposed plan of reorganization, TGP’s arguments fail to provide a reasonable basis for entry of a stay of the effectiveness of the Dismissal Opinion.

* * *

The likelihood of success on appeal is slim. The Court dismissed TGP’s bankruptcy case under §§ 305(a) and 1112 of the Bankruptcy Code. Because an order dismissing a bankruptcy case under § 305(a) is not reviewable on appeal, the district court will likely uphold dismissal on that basis. And, even if the district court were to determine that application of § 305(a) was improper, the totality of the circumstances still supports dismissal under § 1112(b).

The Defendants argue that venue is improper in these cases based on 28 U.S.C. § 1409(b). The Plaintiff argues that the statute omits preference actions and venue is proper. The Court finds that the plain meaning of the statute is clear, and the omission of preference actions makes venue proper in these cases.

* * *

The Defendants contend that section 28 U.S.C. § 1409(b) bars the Plaintiff from commencing this lawsuit under 11 U.S.C. § 548 because the requested amount for damages in each case is for less than $25,000. The venue statute provides, in part, “…a trustee in a case under title 11 may commence a proceeding arising in or related to such case to recover a money judgment … against a noninsider of less than $25,000, only in the district court for the district in which the defendant resides.” 28 U.S.C. § 1409(b) (emphasis added).

* * *

While the Court appreciates the Defendants’ position, it would be inappropriate for the Court to consider the legislative history when the text of the statute is otherwise clear. The Court cannot supplement its understanding of a statute with what it thinks Congress might have intended. The Supreme Court has stated, “[i]f Congress enacted into law something different from what it intended, then it should amend the statute to conform it to its intent. ‘It is beyond our province to rescue Congress from its drafting errors, and to provide for what we might think ... is the preferred result.’