Opinions

The District of Northern Illinois offers a database of opinions for the years 1999 to 2013, listed by year and judge. For a more detailed search, enter the keyword or case number in the search box above.

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Judge Timothy A. Barnes

08 B 10095, 10 A 00998
Upon the Defendant’s motion for summary judgment in the adversary proceeding brought by the Chapter 11 Liquidation Trustee to avoid and recover fraudulent and preferential transfers and disallow claims, held: (i) without evidence supporting an implied contract theory, the Liquidation Trustee could not establish that the transfer was on account of an antecedent debt, an element of the preference avoidance claim; but (ii) for many of the same reasons that the preference avoidance claim fails, genuine factual disputes exists as to whether an indirect benefit defense exists as to the fraudulent transfer avoidance claim.  Motion for summary judgment granted in part and denied in part.

08 B 10095, 10 A 00824
Upon the Defendant’s motion to dismiss the Chapter 11 Liquidation Trustee’s adversary proceeding to avoid alleged fraudulent or preferential transfers, citing Stern-challenges to constitutional grounds and failure to state cause of action on which relief could be granted, held: (i) bankruptcy court, even as non-Article-III court, had constitutional authority to enter final decision on preference avoidance claims; (ii) court also had authority to finally decide fraudulent transfer claims, regardless of whether claims were asserted under bankruptcy fraudulent transfer statute or pursuant to state law in exercise of powers accorded under strong-arm statute; and (iii) allegations in the Liquidation Trustee’s complaint stated plausible claim for relief.  Motion to dismiss denied.

Judge Jack B. Schmetterer

11 B 33575

Judge Eugene R. Wedoff

In re: Brenda J. Payton
November 5, 2012

12 B 29448

Judge Jacqueline P. Cox

12 B 08807

In this Chapter 13 proceeding, the Court sustained Creditors’ objection to confirmation of Debtors’ Plan, holding that the Debtors’ obligations under a Settlement Agreement with a former employer (including a non-compete clause) were non-monetary in nature, and therefore were not a "claim" for bankruptcy purposes. Only claims for money can be discharged. The Settlement Agreement included language that the non-monetary provisions of Articles 3 and 4 were the essence of the agreement and that should the Debtors fail to perform the duties prescribed in those provisions, injunctive relief would be appropriate to require the Debtors to perform the duties. The Court also noted that the provision governing attorney’s fees was not a compensation remedy, but was designed to make the prevailing party whole after the resolution of disputes.

11 B 42873, 11 A 02278

4100 West Grand LLC, debtor in possession, filed this adversary proceeding against defendant, TY Grand LLC, to avoid and recover a transfer alleged to be fraudulent pursuant to 11 U.S.C. §§ 544, 548 and 740 ILL. COMP. STAT. §§ 160/5 and 160/6. As a threshold matter, the Court relied on the Stern v. Marshalldecision and its progeny in determining that the Court had authority to enter a final judgment in the adversary, as the proofs of claim filed by the defendant made clear that their resolution depended on the outcome of the debtor’s fraudulent conveyance claims. Proof of claim no. 3-5 provided that if TY Grand did not prevail in the litigation, its secured claim would be $2,722,170.34. If TY Grand prevailed, it would have no claim against the Debtor. Because the fraudulent conveyance cause of action was resolved in the process of ruling on the proofs of claim, the bankruptcy court has authority to enter a final order herein. Stern v. Marshall, —U.S.—, 131 S.Ct. 2594, 2620 (2011). In the alternative, should a reviewing court find that this court lacked authority to enter a final order, the Court held that its memorandum opinion may serve as its proposed findings of fact and conclusions of law under section 157(c)1. This adversary proceeding was initiated after TY Grand LLC recorded a deed in lieu of foreclosure for Property valued at $1.115 million after 4100 West Grand LLC defaulted under the terms of the parties’ Forbearance Agreement. During the forbearance period, TY Grand also received cash payments in the amount $485,000. Pursuant to the terms of the agreement, after the recording of the deed, TY Grand LLC waived its right to sue for non-monetary defaults under the agreement, as well as the deficiency amount of $2,510,123.90. The Court entered judgment in favor of TY Grand, holding that 4100 West Grand LLC received reasonably equivalent value in exchange for the transfer. The Court determined that TY Grand LLC received value in the amount of $2,310,000, which amount represents the value of the Property transferred ($1.115 million); $485,000 in cash payments; and a claim under the Forbearance Agreement worth approximately $710,000; whereas the Debtor received a release of a $2.5 million debt

Judge A. Benjamin Goldgar

10 B 36039, 10 A 02174

Judge Pamela S. Hollis

Private equity fund Sun Capital purchased a 100+ year old family-owned retailer, financed the purchase through an LBO, ended up as the secured lender, and put the company in Chapter 11 less than 18 months later. After Sun obtained a covenant not to be sued, Debtor filed suit against its former shareholders, three siblings. Debtor sought avoidance of the sale and recovery of sale proceeds, alleging that the LBO was a fraudulent conveyance that rendered the Debtor insolvent or undercapitalized. After several days of trial and review of two expert valuation reports as well as thousands of pages of deposition testimony and other exhibits, the court entered judgment for the Defendants. The court declined to collapse the LBO, which would have been enough to end the lawsuit. The court then analyzed the expert reports, determining that it was not the sale that left the company insolvent or undercapitalized.

Judge Janet S. Baer

11 B 45378

In re Nekessa Danyelle Johnson The debtor filed a motion to vacate the Court’s order of March 27, 2012, which disallowed her exemption in an adoption tax credit provided by the Internal Revenue Code (the “I.R.C.”) on the basis of the general “public assistance benefit” exemption in 735 Ill. Comp. Stat. 5/12-1001(g)(1). The issue of whether the adoption tax credit is a public assistance benefit for purposes of the Illinois exemption statute is one of first impression in this jurisdiction. The Court noted that because the debtor filed her petition and taxes and claimed the credit in tax year 2011, section 36C of the I.R.C., which was in effect for that tax year, governed the matter. Explaining that the adoption tax credit was enacted as a financial incentive to defray the high costs associated with the adoption process, the Court noted that the Patient Protection and Affordable Care Act, which amended the I.R.C. for tax years 2010 and 2011, made the adoption tax credit refundable, allowing lower-income adoptive families to receive, for the first time, a cash refund from the government for their adoption expenses. Because the credit was refundable for the tax year at issue and because the Seventh Circuit has instructed that an exemption statute should be liberally construed in favor of the debtor, the Court granted the debtor’s motion to vacate the order that had disallowed her exemption in the adoption tax credit and overruled the trustee’s objection to the exemption.

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