21 B 06189
The Chapter 7 Trustee objected to the Debtor’s claim of exemption relating to a retirement plan organized under Canadian law. The court interpreted relevant federal and Illinois statutes in sustaining the objection.  Illinois law governs exemption of assets in bankruptcy for its residents who file for bankruptcy protection.  Illinois law provides that retirement plans defined as qualified in the Internal Revenue Code are exempt.  To qualify under the Internal Revenue Code a retirement plan has to be created or organized in the United States.

18 BK 09130
A receiver appointed by a domestic relations judge seeks over $150,000 in administrative expenses for discovering assets that did not bring value to the bankruptcy estate.  The request was denied.

18 BK 09130, 19 AP 00626
The Trustee filed an adversary proceeding against Byline Bank alleging conversion and violation of the automatic stay because the bank cashed cashier’s checks for the Debtor and his sister that the Debtor purchased pre-petition. The sister, an attorney, claimed that the funds represented legal fees she earned representing the Debtor and entities he controlled.
The United States Attorney indicted the Debtor, his sister and others for bankruptcy fraud and other crimes. The court stayed the adversary proceeding to allow the criminal case to proceed first.  The Trustee filed a motion asking that his adversary proceeding proceed immediately.
The court denied the Trustee’s motion ruling, in part, that proceeding on this civil matter first could jeopardize the rights of the defendants in the criminal case to assert their Fifth Amendment right against self-incrimination because Byline Bank wants to depose them in this matter.

09 B 05868, 20 A 00399
This adversary proceeding is Debtor Richard Sharif’s latest attempt to undo a default judgment he caused to be entered in 2010 denying him a discharge and declaring a trust to be his alter ego, making it property of the bankruptcy estate.
He alleges that the Chapter 7 Trustee Horace Fox Jr., his attorneys, a child representative in his divorce case, his estranged wife and her former attorney are civilly liable to him for violating the Racketeer Influenced and Corrupt Organizations Act, conspiracy, breach of fiduciary duty and negligence for taking his trust and other property even though the interests in issue were declared to be property of the bankruptcy estate pursuant to a default judgment entered as a sanction for his failure to comply with his discovery obligations.
The case was filed in the District Court; it was transferred to this court.
The Amended Complaint has been dismissed with prejudice.

16 B 32994
The Debtor’s attorney has been ordered to submit an accounting of $8,300 received in settlement of a Motion for Sanctions.  A creditor refused to release title/lien on a vehicle where the underlying debt had been discharged in a completed chapter 13 case.  Because the Debtor’s attorney (or his firm) had entered into the Court-Approved Retention Agreement to represent the Debtor for a flat $4,000 fee, the attorney is not entitled to receive additional legal fees absent an application to the court for such.  No one has sought additional fees.

20 B 07130
The court denied a Chapter 11 debtor’s Motion Pursuant to Rule 2004 to examine individuals and entities in Ireland and the United Kingdom for two reasons:  (1) he had not served them according to the Hague Service Convention, noting that the rules that allow nationwide service by first class mail do not apply internationally and (2) the pending adversary rule disallows Rule 2004 examinations when a related adversary proceeding is pending.  The civil rules govern discovery once an adversary proceeding is commenced.

 19 B 08032 and 19 B 08037; 19 A 00740 (Consolidated with 19 A 00741)
Debtors Pramod Patel and Ankit Shah worked for several years for Plaintiff M S International, Inc. They left to work for their former employer’s competitor. They were found liable in a civil action in a California federal court for stealing their former employer’s trade secrets, based on their violations of two penal code provisions and fraud and deceit. They filed chapter 7 bankruptcy cases a few months later. M S International filed adversary complaints seeking to have the debts established in the prior litigation excepted from discharge under 11 U.S.C. section 523(a)(2)(A). Collateral estoppel was applied to bar relitigation of the prior court’s factual findings.

Summary judgment was entered by the bankruptcy judge in favor of Plaintiff M S International, Inc. The debts were found to be non-dischargeable actual frauds.

18 B 09130
The Federal Deposit Insurance Company objected to proofs of claim filed by attorneys who represented the Debtor’s spouse in a dissolution of marriage case. The state court awarded fees to the attorneys in connection with establishing support owed to the Debtor’s former spouse and their child. The state court defined the awards to the attorneys as non-dischargeable domestic support obligations. The FDIC argued that they were not domestic support obligations entitled to priority under Section 507 because they were payable to the attorneys, not to the Debtor’s former spouse or child.
The Seventh Circuit and other courts have found attorneys’ fee awards made in connection with dissolution litigation to be in the nature of domestic support obligations, not because a state court says they are domestic support obligations, but after analyzing the language and substance of the judgments in issue, the parties’ financial circumstances and the function served by the obligation.

The FDIC’s objections were overruled. The fee obligations were held to be domestic support obligations entitled to priority under section 507 of the Bankruptcy Code.

19 B 33057
In reliance on a recent ruling in In re Wigfall, 606 B.R. 784, the court avoided the City of Chicago’s lien on the Debtor’s vehicle after finding that it was a judicial lien subject to avoidance under Section 522(f) of the Bankruptcy Code.  The City contended that it was a statutory lien which Section 522(f) did not apply to.  Its lien was authorized by statute but the City cannot immobilize and seize vehicles until it obtains quasi-judicial determinations that its ordinances have been violated.

12 B 49219
The court denied Mar-Bow Value Partners’ motion for leave to reopen these jointly administered cases as an amicus to address McKinsey Recovery & Transformation’s Rule 2014 disclosures which were submitted several years ago to secure court appointment as the Debtors’ turnaround professional.  Mar-Bow contends that a fraud was committed on the court when McKinsey failed to disclose several conflicts of interests and other disqualifying information.  The court denied the requested relief, noting that Mar-Bow is too adversarial to serve as an amicus and that the United States Trustee is the best party to investigate the matters in issue.

18 B 21202, 19 A 00107
The Debtor Karen S. Rose was found liable to Plaintiff Steven Pavletich in state court for $250,000 on a defamation claim.  She published statements on social media that the Plaintiff cheated on his wife.  This adversary trial covered only her defense that the statements in issue were true.  The Debtor’s witnesses did not testify that the Plaintiff cheated on his wife.  They unconvincingly testified that the Plaintiff told them that while drinking in a bar.

Because the state court entered a default judgment against the Debtor for her refusal to cooperate with discovery, the issues were not actually litigated, preventing the application of collateral estoppel – issue preclusion.

Generally, default judgments cannot supply the basis for dischargeability claims.

15 B 29567
A bank obtained a judgment in state court on a loan to two businesses that the Debtor had guaranteed.  One of the Debtor’s co-obligors arranged to have an entity he controlled buy the judgment rather than pay to have the judgment released, thereby allowing the entity to seek full payment from the Debtor.  Had the judgment been released, the Debtor would have also been released; the individual would have a right to seek contribution.

The underlying judgment was entered by confession, without litigation.  This court found that for that reason collateral estoppel, issue preclusion, did not apply and found that the individual who controlled the purchaser was its alter ego, allowing application of the merger doctrine which extinguishes a debt when the person or entity which holds a debt as owner is also an obligor on it.

The entity controlled by the individual filed a proof of claim which has been disallowed on several grounds: alter ego- merger and as a remedy for a continuing discovery violation.

19 B 07692
The court converted the Chapter 11 case filed by Debtor Royalty Properties, LLC to Chapter 7, finding that it was filed in bad faith as a litigation tactic to delay a mortgage foreclosure case filed 10 years ago.  The debt was incurred in 2006 to purchase its main asset, a 400-acre horse farm.  No payments were ever made on the debt. The court also found that the Debtor was using its creditors’ collateral to farm and sell hemp/hemp seeds, a new business for which it had no experience, not to reorganize an existing business. The Debtor and its principals unsuccessfully sued its creditors, including the Forest Preserve District of Cook County, Illinois, in state and federal courts many times before it filed for bankruptcy protection.  After the foreclosure case neared conclusion, two more lawsuits were filed against its creditors this year.

17 B 10161
The Debtor James Thigpen maintained two Social Security numbers and made false statements to obtain Supplemental Security Income ("SSI") benefits he was not entitled to.  He pleaded guilty and was convicted of embezzling money belonging to the United States.  The sentencing district judge required him to pay restitution to the government in the amount of $49,327.17 in increments of 10% of his net, monthly income.
Thigpen eventually qualified for and received Old-Age, Survivors and Disability Insurance ("OASDI") benefits which he received for a period of time. The Social Security Administration, which administers each program under separate statutes, sought to retain 100% of his monthly OASDI benefit to satisfy the SSI overpayment debt.
Thigpen got a chapter 13 plan confirmed that provided payment of $6000 toward the restitution obligation during the plan's term.
The Court ruled that because the debts arose from separate government programs the recoupment doctrine and its exception from the automatic stay did not apply.  The Court ruled that setoff applied.  However, Bankruptcy Code Section 362(a)(7) provides that the automatic stay applies where setoff is available.  Courts have discretion to not permit setoff where it is unfair to do so, which is what the Court ruled in denying the government's motion for relief from the automatic stay to withhold 100% of Thigpen's monthly OASDI benefit to satisfy the SSI overpayment debt.

09-05868
On remand from the district court, after a trial, findings were made regarding an Intervenor's assertion that she had been denied due process when she was not served in an adversary proceeding where trust assets were found to be part of a bankruptcy estate in 2010.  The court found that the Intervenor waived her objection because she waited too long to bring it up and by participating in the litigation through her agents, her brother, Richard Sharif, the Debtor, and her attorney, who she sued for legal malpractice for not asserting certain claims in the underlying matter.

16  B 17113, 17 A 00072
The court ruled in favor of the defendant on allegations that transfers made in satisfaction of merchant cash advance obligations were preferences or constructively fraudulent transfers.

15 B 43653, 16 A 206
The court denied the Debtor a discharge of her student loan debts, finding that she can maintain more than a minimal standard of living if forced to repay them.

17 B 36587, 17 A 00594
The Debtors took out a $2,200,000 loan from America's Wholesale Lender in 2006 to purchase real estate.  They executed both a note and a mortgage in connection therewith.  They failed to make payments starting in 2008.  The lender filed a mortgage foreclosure case against them in 2009 in the Circuit Court of Cook County, Illinois.  In October, 2017 the state court entered a judgment of foreclosure in that case, ruling in favor of the lender on its motion for summary judgment, rejecting the Debtors' claim that because America's Wholesale Lender had not been incorporated before the documents were executed, the note and mortgage were null and void. The Debtors filed this chapter 11 bankruptcy case 7 weeks later on December 11, 2017.

The Debtors filed this adversary proceeding seeking to have the note and mortgage declared invalid for the same reasons asserted without success in state court.

The Lender filed a Motion to Dismiss the Adversary Proceeding which this court has granted with prejudice, applying the Rooker-Feldman doctrine and the court's authority to abstain as explained by the Seventh Circuit Court of Appeals in In re Jepson, 816 F.3d 942 , 948 (2016).

17 B 25141
In this case, the City of Chicago refused to turn over the debtor’s vehicle unless their claim was paid in full. The City’s claim was treated as unsecured in the confirmed plan; the City did not object to this treatment of its claim. The Debtor filed a motion to modify his confirmed plan to pay the City of Chicago in full as a compromise to get the City to release the vehicle. In this opinion, the court denied the motion to modify the plan and sanctioned the City for violating the automatic stay in violation of Thompson v. GMAC.The court ruled that the City did not have a possessory lien as provided for in its ordinance because the ordinance was inconsistent with Illinois law.

16 B 14713 Consolidated with 16 B 23020, 16 A 00707
The court found several debts nondischargeable where the debtor, an attorney, lied about and failed to repay clients' loans from settlement proceeds.