Judge Jacqueline P. Cox - Opinions / Outlines

Judge Jacqueline P. Cox

09 B 49343

On May 17, 2010 the court denied confirmation of the Debtors' proposed Chapter 13 Plan because it did not provide for retention of the totally unsecured junior mortgage creditor's lien until discharge under 11 U.S.C. Section 1328 or payment under nonbankruptcy law as required by 11 U.S.C. Section 1325(a)(5)(B). The Debtors then asked that the creditor's junior mortgage claim be disallowed because it was unsupported by collateral value, i.e., unsecured due to the operation of 11 U.S.C. Section 506(a). Because the Debtors have not asserted any legal authority in support of their position, the court has overruled the effort to disallow the junior mortgage claim because it is totally unsecured.

09 B 44558

The court granted the U.S. Trustee's Motion to Dismiss the Debtor's chapter 7 case pursuant to 11 U.S.C. section 707(b)(3) because granting the Debtor a chapter 7 discharge would result in substantial abuse of the Bankruptcy Code given the totality of the circumstances. The Trustee asserted that the Debtor and his wife's annual income was nearly double the applicable median family income for a comparable household in Illinois. Additionally, the Trustee argued that the Debtor could pay at least a portion of his unsecured debt through a chapter 13 plan by reducing or eliminating a number of expenses, including expenses in connection with a second home at which the Debtor and his family did not reside. The court also determined that the Debtor would not be allowed to deduct as necessary living expenses funds used to repay a loan from the Debtor's 401(k) plan. The court will dismiss the Debtor's chapter 7 case on July 16, 2010 unless the Debtor moves to convert to a case under chapter 13 within 14 days.

09 B 49343

The court sustained Wells Fargo Bank's Objection to Confirmation of the Debtors' April 12, 2010 chapter 13 plan which proposed to avoid Wells Fargo's wholly unsecured junior lien on a residential property. The court found that while debtors may generally avoid wholly unsecured junior liens in a chapter 13 plan, these particular Debtors were not eligible for such relief because they were not eligible for a discharge because they had received a chapter 7 discharge in 2009. Additionally, the court denied confirmation of the Debtors' April 12, 2010 plan because the plan did not contain the appropriate lien retention language.

07 B 21123, 08 A 00180

This is an amended opinion; the original opinion was signed on March 17, 2010. This case involved a preference action under 11 U.S.C. sec. 547 to recover three payments made to the Defendants during the pre-petition preference period. The court found that the Debtor met its burden under 11 U.S.C. sec. 547 and proved by a preponderance of the evidence that the payments at issue were in fact preferential. The Defendants set forth twelve affirmative defenses, most notably the ordinary course of business defense. The court determined that the Defendants failed to meet their burden with regard to any of the affirmative defenses. The court found that the Defendants' ordinary course of business defense failed because the fraud that the Debtor's officers engaged in pre-petition and during the preference period could not serve as an exception to preference liability because ordinary businesses do not defraud their customers and lenders.

07 B 03856

This is an amended order; the original order was issued on April 1, 2010. The court found that two creditors willfully violated the automatic stay by pursuing a District Court action against several Debtors despite the creditors' knowledge of the ongoing bankruptcy case. The creditors had an opportunity to pursue their grievances in the bankruptcy court but decided to withdraw their proof of claim. At a hearing the creditors argued that the District Court action was based upon facts that were personal and peculiar to the creditors and that the District Court complaint was based upon facts that arose after the bankruptcy petition was filed. The court found that the creditors' claims were not personal and peculiar because they were similar to the other homeowners' claims against the Debtors. The court also determined that the entire District Court complaint was based upon events that occurred prior to the filing of the bankruptcy petition. The creditors' attorney was ordered to show cause why he has not violated Federal Rule of Bankruptcy Procedure 9011(b) by signing a pleading that might not be based upon legally and factually sound representations.

09 B 27094

The court granted the Trustee’s motion for a preliminary injunction staying various lawsuits pending against former directors and officers of the Debtor. The court found that the Trustee was entitled to a preliminary injunction because the pending lawsuits would likely deplete the Debtor’s entire directors and officers insurance policy, leaving nothing for the bankruptcy estate should the Trustee decide to pursue similar claims against former officers and directors. The Trustee also made a successful showing that the creditors' claims were not unique and personal, and that the creditors’ claims overlapped and were based in the same facts and circumstances as the Trustee’s potential claims against former directors and officers of the Debtor.

09 B 27094

The court denied a motion to dismiss the bankruptcy case due to the initial petition being filed by a non-lawyer on behalf of the corporation based upon laches and Federal Rule of Bankruptcy Procedure 1009 after the movants waited three months to file the motion once the preference period had passed.

In re: Tekena USA, LLC
November 19, 2009

09 B 16969

The court dismissed this Chapter 11 case finding that it was not filed in good faith due to the Debtor's involvement in efforts that amounted to abuse of the judicial system.

09 B 20825

In this matter, a judgment creditor moved to dismiss the debtor’s chapter 11 case under 11 U.S.C. § 1112(b) arguing that the bankruptcy was really a two-party dispute between the debtor and the creditor. The Court granted the motion, after determining that the debtor could not propose a confirmable plan since the creditor held over two-thirds of the total amount of claims and would not vote for any plan that would impair his claim.

08 B 28225, 09 A 00413

In this case, the chapter 7 trustee sought to enjoin a lawsuit brought by a group of investors who invested in the Debtors against a third non-debtor party accounting firm. The investors filed suit in Minnesota state court for negligent misrepresentation and professional negligence regarding the accounting firm’s financial reports concerning the Debtors’ financial position. The investors theory is that the accounting firm, with proper due diligence, would have uncovered an alleged Ponzi scheme. The Court agreed with the Trustee’s argument that the suit against the accounting firm was property belonging to the bankruptcy estate that only the Trustee could pursue and stayed the investors’ lawsuit.

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