08bk10095
Upon the Motion for Entry of an Order (I) Enforcing Confirmation Order; (II) Awarding Damages; and (III) Granting Related Relief, brought by assignee of personal property administered by the liquidating trust in the above-captioned bankruptcy cases, held: The movant has established that it is a party protected by the release in the confirmation order entered in the case and that the claims brought in the state court actions are attempts by the surety to recapture losses stemming from the debtors’ released liability.  The motion is, therefore, GRANTED in part, as set forth in the attached Memorandum Decision.  A separate hearing on damages will follow.

16bk01335, 16ap00141
On cross motions for summary judgment concerning the validity as a matter of law of the debtor/defendant’s lack of authority defense, wherein the debtor/defendant alleged that the plaintiff LLC lacked standing as the authority of the plaintiff’s lender to manage and thus cause the plaintiff to file its complaint had expired under the applicable statute of limitations, held: Statutes of limitations bar specific legal remedies by creating an affirmative defense to a time-barred action, but statutes of limitation are neither self-executing nor dispositive of the parties’ underlying rights.
Further, a security agreement or mortgage is incident to the underlying debt for limitations purposes and the security remains enforceable so long as the debt remains unpaid and enforceable. As such, the lender’s authority to manage the LLC was unaffected and the debtor/defendant’s affirmative defense fails as a matter of law. The debtor/defendant’s motion is, therefore, DENIED and the plaintiff’s motion is GRANTED.

17bk35941
Upon an objection to a chapter 13 plan brought by the standing chapter 13 trustee assigned to the matter, wherein the trustee asserted that the plan’s reduction of payments to secured creditors in order to allow debtor’s counsel fees to be paid earlier in the case both violated the express requirements of the Bankruptcy Code and was not proposed in good faith, held: The plan’s treatment of secured creditors violates the express prohibition in the Bankruptcy Code against such treatment. As a result, the plan is not confirmable. Further, such improper treatment benefits counsel alone and does not treat the debtor or the debtor’s other creditors fairly. As a result, the plan has not been proposed in good faith and is not confirmable. The trustee’s objection is sustained and confirmation of the plan is denied.

15bk33812, 16ap00511
Upon a complaint under 11 U.S.C. § 727, wherein denial of the debtor’s discharge is sought for the debtor making false oaths, namely denial of prior ownership of real property, tools and employment at the meeting under 11 U.S.C. § 341, held: While the plaintiff fails to establish the required elements of 11 U.S.C. § 727 in relation to the tools and employment, the plaintiff has carried his burden regarding the prior ownership of the real property. As a result, the debtor’s discharge is denied.

16bk30240, 17ap00064
Upon the administrator of a decedent estate’s complaint for determination of nondischargeability of debt pursuant to 11 U.S.C. § 523(a)(4) and objection to the debtor’s discharge under alternative grounds in 11 U.S.C. § 727(a)(3), (a)(4)(D), (a)(5) and (a)(6)(A), held: the plaintiff has demonstrated that the debtor breached her fiduciary duty and embezzled funds from the decedent.  The debt due to the plaintiff is, therefore, nondischargeable.  The plaintiff has also proven that the debtor has failed to satisfy her duty to provide records of her financial condition and has failed to satisfactorily explain the loss of the large amount of funds that the debtor received from the decedent’s bank account.  As a result, the debtor will be denied a discharge in her bankruptcy case.  Judgment is entered in favor of the plaintiff on both counts of the complaint.

15bk31790, 16ap00004
Upon the adversary plaintiff’s complaint for determination of nondischargeability of debt pursuant to 11 U.S.C. § 523(a)(2)(A), held: the plaintiff has failed to show by a preponderance of the evidence that the debtor owed a debt to the plaintiff.  The plaintiff also failed to show by a preponderance of the evidence that the alleged debt was obtained through false pretenses, false representation, or actual fraud.  As a result, the debtor will not be denied a discharge of the alleged debt.  Judgment is entered in favor of the debtor on the complaint.

16bk09485
Upon a debtor’s motion for rule to show cause on alleged violations of the automatic stay, held: The debtor has established the requisite grounds for relief arising from the alleged stay violations only as it relates to creditor’s postconversion conduct. The creditor, the debtor’s preconversion bankruptcy counsel, did not violate the automatic stay by attempting to collect on unpaid postpetition fees in another forum during the pendency of the matter prior to conversion. Upon conversion to chapter 13, however, the preconversion fees were treated as prepetition ones and thus the continuation of the collection action violated the automatic stay. The motion is, therefore, GRANTED in part, DENIED in part and CONTINUED in part for a later hearing on additional actual damages.

14bk14023, 16ap00387
Upon the U.S. trustee’s complaint seeking to deny discharge for the debtor under 11 U.S.C. § 727(a)(4)(A), wherein the U.S. trustee alleged that the debtor failed to disclose certain assets on her bankruptcy petition, held: The U.S. trustee has not proven by a preponderance of the evidence that the debtor acted with fraudulent intent when failing to disclose certain assets on her bankruptcy petition. As a result, the debtor will not be denied a discharge on the grounds alleged. Judgment is entered in favor of the debtor.

15bk32968
Upon the adversary defendants’ motion for leave to file counterclaims against the liquidating trustee, held:  The Barton doctrine, which requires a party to seek leave to file claims against a trustee in a bankruptcy case, is inapplicable when the claims are brought in an adversary proceeding in the appointing court.  Therefore, the motion for leave to file counterclaims is DENIED as unnecessary.

15 B 26544
Upon the United States Trustee’s motion for sanctions brought pursuant to 11 U.S.C. § 105, held:  The United States Trustee has shown by a preponderance of the evidence the need to address the circumstances discussed herein in a proceeding under 11 U.S.C. § 105.  The motion is granted and counsel is sanctioned in the matter set forth herein.

17 B 03148
Upon the application for administrative expense brought by prepetition assignee for the benefit of creditors on behalf of its counsel, held: The assignee is entitled to compensation for its counsel under 11 U.S.C. § 503(b)(4), the provision affording administrative expenses for professional services rendered for a superseded custodian. Upon application of the standards relating thereto, the application is, therefore, GRANTED in the manner set forth herein.

16 B 36934
Upon the motion for civil contempt brought by a creditor, alleging that the debtor and debtor’s manager violated bankruptcy court orders by transferring property of the bankruptcy estate without court authority, held: The movant has established under section 105 of the Bankruptcy Code clear and convincing evidence of civil contempt by the debtor and the debtor’s manager by proving that the nonmoving parties knowingly violated court orders. The motion is, therefore, GRANTED.

17 B 18368
Upon the application of the debtor’s counsel under the court’s flat fee agreement, wherein the debtor’s counsel filed a form chapter 13 plan with a modification to the priority distributions of creditors to elevate the priority of counsel’s payments, held:  The debtor’s counsel has violated the rules applicable to disclosure regarding agreements pertaining to its own compensation and, therefore, no longer qualifies to seek the flat fee.  The application is DENIED in part; specifically, counsel’s compensation is reduced as a sanction for failure to disclose the agreement.  The application is also continued with respect to a further determination regarding reasonableness.

17 B 27961
Upon the application of the debtor’s counsel under the court’s flat fee agreement, wherein the debtor’s counsel filed a form chapter 13 plan with a modification to the priority distributions of creditors to elevate the priority of counsel’s payments, held:  The debtor’s counsel has violated the rules applicable to disclosure regarding agreements pertaining to its own compensation and, therefore, no longer qualifies to seek the flat fee.  The application is DENIED in part; specifically, counsel’s compensation is reduced as a sanction for failure to disclose the agreement.  The application is also continued with respect to a further determination regarding reasonableness.

17 B 10230
Upon the application of a state court-appointed receiver for allowance and payment of administrative expenses, held:  The receiver has established that, on the petition date, it was a custodian for the purposes of payment under 11 U.S.C. § 543(c)(2) and priority of payment under 11 U.S.C. § 503(b)(3)(E), and thus is entitled to assert a claim under both provisions.  As the receiver seeks payment from estate assets, the court applies the standard set forth in 11 U.S.C. § 503(b)(3)(E).  However, the receiver has not yet established that its claim meets that statute’s standards.  As a result, the receiver’s application is set for further hearing.

17 B 03148
Upon the application for administrative expense brought by a party to whom a prepetition assignee of the debtor’s assets for the benefit of creditors became obligated, held: while the movant is not entitled to seek reimbursement under the provision affording custodians administrative expenses, the movant is entitled to protection as a party to whom a custodian became obligated.  The court sets such protection as a right to expense reimbursement from the estate with administrative priority under 11 U.S.C. § 503(b).  The application is, therefore, GRANTED.

17 B 10230, 17 A 00401
Upon the motions of two adversary defendants to dismiss the complaint for failure to state a claim, held:  The complaint states a plausible claim for declaratory judgment of the plaintiff’s interest, as prepetition receiver of property of the estate, in such property.  As a result, each motion is DENIED.Upon the motions of two adversary defendants to dismiss the complaint for failure to state a claim, held:  The complaint states a plausible claim for declaratory judgment of the plaintiff’s interest, as prepetition receiver of property of the estate, in such property.  As a result, each motion is DENIED.

17 B 12405
Upon a tax purchaser’s motion for relief from stay in a chapter 13 case, arguing that the expiration of the state-law period for redeeming taxes prior to the debtor filing for bankruptcy case gives cause to modify the stay, held: The tax purchaser has not established the necessary elements of section 362(d)(1) or (d)(2) to be granted relief from stay. Because the tax purchaser has not obtained a tax deed, under Illinois law, the debtor remains the owner of the underlying real property even though the redemption period has expired prior to the commencement of the debtor’s case. The debtor therefore has the right to attempt to treat the tax purchaser’s claim and the debtor’s property in a chapter 13 plan. The existence of that right, under the facts at bar, trumps the tax purchaser’s desire to bolster its claim postpetition by acts proscribed by the automatic stay. The motion for relief from stay is, therefore, DENIED.

15 A 00819, 14 B 17886
Upon the chapter 7 trustee’s complaint under 11 U.S.C. § 363(h) seeking to sell all interests in real property held in a living trust in which the estate also has an interest, held: The trustee has established each element of section 363(h) to sell the real property free of the other interests therein. Therefore, judgment will be rendered in favor of the trustee and the trustee is authorized to sell the property.

17 B 05030
Upon the motion of a debtor statutorily without automatic stay protection to enforce the co-debtor stay, held: The debtor has standing to enforce the co-debtor stay regardless of whether or not she is protected by the automatic stay. As the postpetition judicial sale violated the co-debtor stay, the sale is void. The debtor has, however, failed to demonstrate an entitlement to damages. As a result, the debtor’s motion is GRANTED insofar as it seeks to have the sale and subsequent acts related thereto determined to be void but, in all other respects, is DENIED.