You are here

Judge Timothy A. Barnes - Opinions

Description Date Issued
Steege v. Johnsson (In re Margaret Ann Johnsson)

11 B 38307, 14 A 00106
Upon the Chapter 7 Trustee’s adversary complaint under 11 U.S.C. §§ 727(d)(1) and (2), wherein the Chapter 7 Trustee seeks to revoke the debtor’s discharge as a result of, respectively, alleged failures to disclose a prepetition property interest and to disclose and turnover to the Trustee property of the estate acquired by the Debtor postpetition, held: Given the timing of the Complaint, the court lacks subject matter jurisdiction to determine the Chapter 7 Trustee’s 11 U.S.C. § 727(d)(1) prepetition property claim.  As to the 11 U.S.C. § 727(d)(2) postpetition property claim, the debtor acquired property of the estate within the applicable postpetition period but failed to both report and surrender all of that property to the Trustee.  The debtor’s discharge must, therefore, be revoked pursuant to 11 U.S.C. § 727(d)(2).

06/02/2016
In re Ramon Aguirre and Bertha Aguirre

14 B 24420
Upon the third party tax purchaser’s motion for relief from the automatic stay, contending that the Debtors’ default under the provisions of the confirmed plan requiring payment to purchaser in full of its claim by a certain date was cause to lift the automatic stay, and the Debtors’ competing motion to modify the confirmed plan, seeking to extend the date under the plan to pay the tax purchaser, held: (i) the default under the confirmed plan constitutes cause to lift the automatic stay; and (ii) the Debtors’ proposed amendment is infeasible and inequitable. The tax purchaser’s motion for relief from stay is, therefore, granted and the Debtors’ motion to modify plan is denied.

04/18/2016
In re Lake Michigan Beach Pottawattamie Resort LLC

15 B 42427
Upon a creditor’s motion seeking to dismiss a chapter 11 case, wherein the creditor alleged that the debtor filed its bankruptcy petition in bad faith because the case was filed on the eve of foreclosure and without the consent of the creditor, as a voting member of the debtor, held:  The creditor has not proved by a preponderance of the evidence that there is cause under 11 U.S.C. § 1112(b) to dismiss the case.  The amendment to the debtor’s operating agreement that required the creditor’s consent to file bankruptcy was void as against public policy.

04/05/2016
Glenn v. Cavalry Investments, LLC (In re Darryl Glenn)

14 B 31070, 15 A 00560
Upon the defendant’s motion to dismiss the debtor’s adversary complaint for failure to state a claim upon which relief may be granted, held: By predicating his claim against the defendant solely on the filing of a proof of claim but asserting no other indicia of deceptive behavior within the gambit of the Fair Debt Collection Practices Act or fraudulent intent, the debtor has failed to state a claim upon which relief may be granted under the Fair Debt Collection Practices Act. The filing of a proof of claim on a time-barred debt is not deceptive per se. The defendant is owed a debt that gives rise to a claim within the meaning of the Bankruptcy Code and is entitled to assert that claim. The court will not create a per se rule that potentially denies the defendant the due process built into the Bankruptcy Code and guaranteed by the Fifth Amendment to the United States Constitution. For similar reasons, the filing of a proof of claim on account of a time-barred debt is not a fraud on the court. The defendant’s motion to dismiss is GRANTED, without prejudice to the debtor’s ability to bring an action based on actual deceptive behavior, should such behavior exist.

01/05/2016
Hassan Muhammad v. Joseph Sneed (In re Joseph Sneed)

14 B 01361, 14 A 00098
Upon creditor’s adversary complaint seeking a determination that debts allegedly owed by the debtor are nondischargeable under 11 U.S.C. § 523(a)(2)(A), wherein the creditor alleged that the debtor obtained construction services through false pretenses, false representation or actual fraud, held: While the debtor appears to be obligated on the debts, the creditor did not prove by a preponderance of the evidence that the debts were incurred by false pretenses, false representations or actual fraud. As a result, the debts are dischargeable. Judgment is entered in favor of the debtor.

12/30/2015
Hassan A. Muhammad v. Byron F. Reed (In re Byron F. Reed)

13 B 30975, 13 A 01294
Upon a creditor’s complaint seeking a determination that a debt allegedly owed by the debtor to the creditor is nondischargeable under 11 U.S.C. § 523(a)(2) and (a)(6), wherein the creditor alleged that the debtor withheld monies from the creditor through false pretenses, false representations or actual fraud and that the debt was the result of willful and malicious injury by the debtor, and seeking a denial of the debtor’s discharge under 11 U.S.C. § 727(a)(4) and (a)(5), wherein the creditor alleged that the debtor failed to disclose all income in his bankruptcy petition and failed to account for a loss or deficiency of assets, held: The creditor has not proved by a preponderance of the evidence that a debt was incurred by false pretenses, false representation, or actual fraud or was the result of willful and malicious injury by the debtor as is required under 11 U.S.C. § 523(a)(2) and (a)(6). As a result, the debt is dischargeable. Likewise, the creditor has failed to prove by a preponderance of the evidence that the debtor knowingly and fraudulently concealed income or assets on his bankruptcy petition, elements of 11 U.S.C. § 727(a)(4). The creditor also failed to prove by a preponderance of the evidence that the debtor’s explanation as to any loss of assets or deficiency of assets to meet the debtor’s liabilities is unsatisfactory, pursuant to 11 U.S.C. § 727(a)(5). As a result, the debtor will not be denied a discharge on the grounds alleged. Judgment is entered in favor of the debtor on all counts.

12/30/2015
In re David J. Hardesty

14 B 42906
Upon the chapter 7 Trustee’s objections to the Debtor’s claimed exemptions in (1) installment payments under a personal injury settlement agreement and (2) proceeds from a life insurance policy received post-petition following the death of the Debtor’s step-father, held: Under the terms of the marital settlement agreement, entered into by and between the Debtor and his ex-wife and incorporated into the state court divorce decree, the Debtor’s limited interest in and control over the installment payments is insufficient to bring the installment payments into the estate, therefore, the Trustee’s objection to the Debtor’s exemption in the personal injury settlement is OVERRULED. With respect to the life insurance proceeds, however, the Debtor has failed to establish that he is “dependent upon the insured” for the purposes of 735 ILCS 5/12-1001(f) and, therefore, cannot claim an exemption in the life insurance proceeds, thus, the Trustee’s objection to the Debtor’s exemption in the life insurance proceeds is SUSTAINED.

08/07/2015
In re Mesha E. Ware

15B03414
Upon an objection to confirmation of the debtor’s chapter 13 plan, wherein a creditor alleged that the debtor could not comply with the requirements of “surrender” in section 1325(a)(5)(C) of the United States Bankruptcy Code as the debtor proposed to surrender a vehicle that had been previously stolen and that, therefore, could not be delivered to the creditor, held: “Surrender” in section 1325(a)(5)(C) does not always require the debtor to physically deliver the vehicle.  Because the Debtor proposes surrender in good faith, physical delivery is not required.  As a result, the creditor’s objection is overruled.

07/17/2015
In re Kelco Metals, Inc.

10 B 51428
Upon the creditor’s motion to allow claim under Federal Rule of Bankruptcy Procedure 9006, wherein the creditor sought to have the court allow its claim as a timely general unsecured claim when the claim was allegedly delivered directly to the office of the clerk of court rather than electronically filed and, despite being tendered to the clerk’s office prior to the claims deadline, not entered on the claims register until almost 4 years after the claims deadline, and where creditor sought to have the court enter an order amending the chapter 7 trustee’s previously approved final report, held:  Rule 9006 does not apply to the deadline to file claims in a chapter 7 case.  The claim was filed for purposes of Rule 3002 when the claim was entered on the claims register, almost 4 years after the claims deadline.  As a result, the claim is a tardily filed unsecured claim which would receive zero distribution even if the final report were to be amended and, thus, the creditor’s motion is denied.

07/13/2015
Muhammad v. Reed (In re Byron F. Reed)

13 B 30975,  13 A 01294
Upon the Defendant’s amended motion to dismiss the Plaintiff’s adversary complaint objecting to discharge of debt owed to A&H Caring Connections, Inc. (“A&H”) pursuant to 11 U.S.C. § 523(a)(2)(A) and (a)(6) and 11 U.S.C. § 727(a), the underlying interest having been assigned to the Plaintiff by A&H and the Defendant seeking dismissal of the complaint for failure to state a claim upon which relief can be granted on the grounds that the underlying assignment is void as a matter of public policy and in violation of Illinois law, held: For purposes of testing the sufficiency of the complaint under Federal Rule of Civil Procedure 12(b)(6), the Defendant has failed to satisfy his burden of showing the complaint is insufficient. The amended motion to dismiss is DENIED.

06/22/2015
Schaumburg Bank & Trust Company, N.A. v. Thomas Hartford (In re Thomas Hartford )

13 B 37655, 14 A 00100
Upon the creditor’s adversary complaint objecting to the Debtor’s discharge under 11 U.S.C. § 727(a)(7), wherein the creditor alleged that the Debtor violated 11 U.S.C. §§ 727(a)(2), (3) and (4)  in the bankruptcy case of the company of which the Debtor was sole member and president by permitting checks made out to the company to be deposited into the Debtor’s father’s account, by failing to secure the company’s books and records and by making false oaths for failing to list the same checks and other payments to the Debtor’s father on the company’s bankruptcy documents, held:  The creditor failed to prove the Debtor’s requisite intent, elements of 11 U.S.C. §§ 727(a)(2) and (4), by a preponderance of the evidence.  The creditor also failed to prove that the disappearance of the Debtor’s business records due to a break-in caused the trustee in the company’s bankruptcy case to be unable to ascertain the company’s financial condition, or that the destruction was unjustified under the circumstances of the case, elements of 11 U.S.C. § 727(a)(3).  As a result, judgment is entered in favor of the Debtor.

 

03/02/2015
Ebner v. Kaiser, et al. (In re Jordan Kaiser)

11 B 41555, 13 A 01243
Upon certain defendants’ motions to dismiss the Trustee’s fraudulent conveyance adversary complaint on statute of limitations grounds, the Trustee argues that it may rely on such longer statute of limitations as may be applicable to the IRS as an actual prepetition creditor of the bankruptcy estate.  In response, a limited number of the moving defendants jointly move for an order disallowing the IRS’s claim.
 
In considering the foregoing, held:  With respect to the motion to disallow the claim, adversary defendants qua adversary defendants lack standing to object to claims.  As such, the joint motion to disallow is DENIED.
 
With respect to the motions to dismiss, for the purposes of testing the sufficiency of the complaint under Federal Rule of Civil Procedure 12(b)(6), transfers occurring more than 2 years prior to the petition date are time-barred under section 548 of the Bankruptcy Code and the motions to dismiss will be GRANTED in this respect.  As to the remaining grounds, the court accepts the allegations in the complaint as true, wherein the Trustee has alleged that the IRS is a prepetition creditor of the bankruptcy estate.  That allegation is supported by the actual claim on file by the IRS at the commencement of the adversary.  As the trustee may act within the statute of limitations applicable to any creditor of the estate, including such longer statutes as apply to the IRS, and as the transfers sought to be avoided by the Trustee appear to fall within those longer periods, the court finds for these purposes that the Trustee’s actions are not conclusively time-barred.  The motions to dismiss are therefore DENIED in this respect.  The legal and factual predicates of the defendants’ statute of limitations affirmative defense, including, but not limited to, whether the IRS had an allowable claim against the estate on the petition date, remain issues to be determined on summary judgment or at trial, not in the limited scope of a motion to dismiss, and such arguments are preserved.
 

12/31/2014
Attorneys’ Title Guaranty Fund, Inc. v. Stephen A. Wolf (In re Stephen A. Wolf)

11 B 00701, 11 A 00966
Upon the Creditor’s commenced adversary complaint against Debtor seeking a determination that a debt allegedly owed by the Debtor to the Creditor is nondischargeable under 11 U.S.C. § 523(a)(2)(A) and (a)(6), wherein the Creditor alleged that the debtor obtained title insurance policies through false pretenses, false representation and/or actual fraud, and that the underlying loan from the bank, which debt was assigned to the Creditor, was also obtained through false pretenses, false representation and/or actual fraud, held: The Debtor is obligated on both debts to the Creditor, and the Creditor proved by a preponderance of the evidence that the debts were incurred by false pretenses, false representations and actual fraud. As a result, the debts are nondischargeable.

10/15/2014
In re Violeta Jakovljevic-Ostojic

13 B 27271
Upon the court’s issuance, sua sponte, of an order to show cause as to why the bankruptcy case of debtor Violeta Jakovljevic-Ostojic should not be dismissed for cause pursuant to 11 U.S.C. § 707(a), held: the Debtor’s actions demonstrate a lack of good faith in filing this case and have resulted in an unreasonable delay that is prejudicial to creditors. The court therefore dismisses this case pursuant to 11 U.S.C. § 707(a).

09/17/2014
Susan K. Cervac v. Kimberly A. Littman (In re Kimberly A. Littman)

11 B 38875, 12 A 00155

Upon the Debtor’s motion to vacate the court’s summary judgment order, held:  The Debtor failed to establish sufficient grounds under Federal Rule of Civil Procedure 59 or 60 to set aside or modify this court’s previous grant of summary judgment based, in part, on a state court judgment.  Further, the Debtor failed to show that a transfer of personal property made in alleged satisfaction of the state court judgment, but made prior to the Debtor entering into the judgment, satisfied the judgment for purposes of Federal Rule of Civil Procedure 60(b)(5).  The court therefore denies the Debtor’s motion to vacate.

09/11/2014
In re Kent Allen Woods

13 B 39194
Upon the Motion of Leticia Zaragoza for Relief from the Automatic Stay Pending Arbitration, brought by Leticia Zaragoza (the “Movant”), held:  The Movant has failed to demonstrate cause for relief from stay under 11 U.S.C. § 362(d).  The Movant’s assertion that the Chicago Board of Trade (the “CBOT”) is better suited to determine the Movant’s claim against the bankruptcy estate is not supported by the arguments of the parties.  Further, the Movant’s assertion that a claim against the Debtor arising out of a pending arbitration matter before the CBOT is outside this court’s constitutional authority under the reasoning of Stern v. Marshall is inapposite to the actual holding of Stern and is not well taken.  Nothing within Stern’s holding stands for the proposition that this court may not determine the propriety of a claim asserted against the bankruptcy estate.  Such a function lies at the heart of bankruptcy jurisdiction, and is squarely within this court’s authority.  The court therefore denies the Movant’s request, without prejudice to the Movant’s ability to reassert the request, if appropriate, should the circumstances underlying the request have changed materially.

 

08/18/2014
In re Elk Grove Village Petroleum, et al.

12 B 49658
Upon the Motion for Allowance of Secured Claim and Turnover of Collateral Proceeds, brought by United Central Bank (“UCB”), and the Cross Motion for Partial Turnover of Proceeds of Sales, brought by the Illinois Department of Revenue (“IDOR”), to determine the higher priority claim in the proceeds from a section 363 sale, held: UCB is entitled to a claim secured in the entire amount of the proceeds of the sale.  IDOR has secured, priority unsecured and general unsecured claims, all of which are lower in priority to UCB’s secured claim.  IDOR’s right to assert transferee liability is an “interest” for purposes of a section 363(f) sale, potentially entitling IDOR to adequate protection under section 363(e).  As IDOR’s interest is, however, subordinate to that of UCB’s secured claim and IDOR’s claim is therefore “out of the money,” there is no harm from which IDOR is entitled to protection.  The court therefore grants UCB’s request for allowance of secured claims and turnover of collateral proceeds and denies the IDOR’s request for partial turnover.

05/21/2014
In re Chicago Construction Specialties, Inc.

13 B 31265
Upon the Construction and General Laborers’ District Council of Chicago and Vicinity’s and the Laborers’ Pension and Welfare Funds’ objection to the Debtor’s application pursuant to 11 U.S.C. § 1113 to reject all collective bargaining agreements to which it was a party, held:  The Debtor, having sold substantially all of its assets prior to commencing bankruptcy, has demonstrated sufficiently that rejection of all collective bargaining agreements is necessary for a valid “reorganization,” as that term must be interpreted in section 1113 in a liquidating chapter 11 case.  The court therefore grants the Debtor’s motion to reject  its collective bargaining agreements.

05/08/2014
In re Richard J. Klarchek; The Klarchek Family Trust and Richard J. Mason v. John Costello, James Eliades and John Loguidice

10 B 44866, 13 A 01048
Petitioners, as trustees for a family trust created by the debtor, move for abstention or remand of an Illinois state court proceeding to dissolve the family trust that had been previously removed to this court by the chapter 7 trustee. The chapter 7 trustee, in turn, seeks a determination from this court that the state court proceeding is void, as the proceeding was commenced after the commencement of the bankruptcy case and without relief from the automatic stay. Held: While the dissolution of a trust against which an estate has a claim may not violate the automatic stay, per se, under the facts of this case, a stay violation did occur. While the state court, not this court, is the proper tribunal with authority to order the dissolution of the family trust, the state court proceeding is invalid as having been commenced in violation of the automatic stay and the request for abstention or remand is therefore moot.

04/10/2014
In re Richard J. Klarchek; Richard J. Mason, Chapter 7 Trustee v. RJK Investors

10 B 44866, 13 A 00631
After the trustee filed a motion for default judgment against one of multiple adversary defendants for failure to file a timely answer in response to an amended complaint, the defendant filed two answers; one to the original complaint and another one to the amended complaint. The trustee moved for the court to strike both answers as untimely and filed without leave or excuse. The bankruptcy court held that: (i) the defendant failed to file an answer within the prescribed time period; (ii) the defendant failed to challenge service in its first responsive pleading and thus has waived the defense of insufficient service; (iii) the defendant failed to show that its untimely answer is excusable pursuant to Federal Rule of Bankruptcy Procedure 9006(b)(1); (iv) the answers will therefore be stricken; (v) service of the motion for default judgment satisfies the due process requirement; and (vi) after having held three hearings on the motion for default judgment and having stricken the answers, it is proper to enter a default judgment against the defendant. Accordingly, the court grants both of the trustee’s motions.

04/03/2014

Pages