08 B 10095
Upon the Motion for Entry of an Order (I) Enforcing Confirmation Order; (II) Directing Dismissal of State Court Claims; (III) Awarding Damages; and (IV) Granting Related Relief, brought by successor to the purchaser of assets in the above-captioned bankruptcy cases, held:  The movant has established that the claims brought in the state court actions are precluded by the confirmation order entered in this case.  The motion is, therefore, GRANTED as set forth in the attached Memorandum Decision.  A separate hearing on damages will follow.

15 B 32968
Upon the application from a class of former employees seeking allowance of an administrative expense claim for being terminated by the debtors in the above-captioned chapter 11 cases without notice as required by federal law and the liquidating trustee’s objection thereto, held: Despite the liquidating trustee’s claim that the debtors were liquidating and thus were excepted from the federal notice requirement, notice was required. As a result, the federal termination period applies and the damages relating thereto are postpetition damages. As a result, the application is GRANTED. The terminated employees’ administrative claim is allowed in an amount to be determined at a later hearing.

11 B 38875, 12 A 00155
Upon remand from the District Court for the Northern District of Illinois reinstating the plaintiff’s motion for summary judgment, held:  The plaintiff has established grounds for summary judgment under Federal Rule of Civil Procedure 56.  The debtor’s admissions establish that the debt she owed to the plaintiff arose when she, as trustee for an express trust, misappropriated funds from the trust to the detriment of the plaintiff, a beneficiary of the trust.  Such debt is nondischargeable under 11 U.S.C. § 523(a)(4).  The plaintiff’s motion for summary judgment is, therefore, GRANTED as to the statutory elements of 11 U.S.C. § 523(a)(4) and all alternative counts are mooted thereby.  The court abstains from hearing the only remaining aspect of the complaint—the value of the plaintiff’s claim.

12 B 49658
Upon the partial remand from the District Court for the Northern District of Illinois of the motion of the state taxing authority seeking monetary adequate protection following a sale of the debtors’ assets under 363(f), held:  The District Court directs this court to determine the issues of quantification and recovery of the state taxing authority’s adequate protection claim.  Because the state taxing authority has failed to demonstrate either a realizable claim or a source of recovery, the remaining aspects of the state taxing authority’s motion are DENIED.  In accord, all the remaining aspects of the secured lender’s competing motion are, therefore, GRANTED and the chapter 7 trustee is authorized to pay the remaining proceeds to the secured lender.

15 B 18583, 15 A 00826
Upon a creditor’s amended complaint seeking to deny discharge for the debtor on two counts under 11 U.S.C. § 727(a)(2)(A) and (a)(4)(A), wherein the creditor alleged that the debtor made prohibited prepetition transfers and failed to disclose certain assets on his bankruptcy petition, held: In regard to the 11 U.S.C. § 727(a)(2)(A) count, the creditor has not proven by a preponderance of the evidence that the debtor acted with actual intent to hinder, delay, or defraud creditors with respect to the alleged prepetition transfers. In regard to the 11 U.S.C § 727(a)(4)(A) count, the creditor has not proven by a preponderance of the evidence that the debtor acted with fraudulent intent when failing to disclose certain assets on his 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 on all counts.

15 B 13819
Upon the Amended Motion for Order Granting Protection under 11 U.S.C. § 1522, brought by a creditor in the above-captioned chapter 15 case, held:  The motion raises serious concerns regarding the propriety of actions purportedly taken by the debtor in the chapter 15 case with respect to assets in the United States.  However, the motion is predicated on section 1522 of the Bankruptcy Code, which is inapplicable, and appears to seek no relief other than by declaration of the extent of the law.  As a result, insofar as the Memorandum Decision clarifies the extent of the law, the motion is GRANTED.  Otherwise, the motion is DENIED without prejudice.

16 B 05364
On the motion of creditor and contract counterparty seeking an order of this court compelling the contractual performance of debtor in foreign proceeding under 11 U.S.C. § 365(n)(4), held:  While, pursuant to the terms of the recognition order, 11 U.S.C. § 365 applies in the foreign proceeding, the application of 11 U.S.C. § 365(n)(4) is no different in such circumstances than it would be in a case under another chapter of the Bankruptcy Code.  Such application requires only such performance as provided in the contract, and the relief requested by movant is not provided for in the contract.  The motion is, therefore, DENIED.

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.
 

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.