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Judge Jacqueline P. Cox

12  B 24676, 14 A 00392
In this Chapter 7 adversary proceeding, the Trustee filed an Amended Adversary Complaint seeking to avoid and recover transfers made in connection with a commercial mortgage-backed securitization transaction. The Defendants moved to dismiss, arguing that certain of the transfers were covered by the safe harbor provision of 11 U.S.C. § 546(e).  In response, the Trustee argued that the safe harbor provision did not apply because the transactions at issue involved a two-tiered commercial mortgage loan transaction. The Trustee also disputed that the recipient was a financial institution.  The Court decided in favor of the Defendants, noting that the transactions at issue fit squarely within the broad definition of a securities contract as defined by § 741(7)(A) and used in § 546(e).

Because the parties did not consent to the Court’s entry of a final order on the fraudulent transfer claims, the Court submitted proposed findings of fact and conclusions of law to the district court pursuant to Federal Rule of Bankruptcy Procedure 9033.  On the preferential transfer claim, the Court determined that it had both statutory and constitutional authority to enter its order dismissing the claim, with prejudice.

The Court recommended dismissal of the actual fraud transfer claims without prejudice, because those claims were not plead with specificity as required by Federal Rule of Civil Procedure 9(b).

11 B 41826
In this post-confirmation Chapter 11 proceeding, the Michael Bahary & Steven Bahary Partnership (“the Reorganized Debtor”) filed a Motion for a Rule to Show Cause requiring Napleton Enterprises, LLC (“Napleton”) and its counsel to show cause why they should not be held in contempt for suing to enforce Napleton’s purported Right of First Refusal as to certain real property (the "Grand Avenue Property") in a state court action regarding transactions that ensued in this bankruptcy case in 2012. The Reorganized Debtor asserted that Napleton’s actions were inconsistent with the terms of the confirmed Amended Plan of Reorganization and the Bankruptcy Code’s discharge injunction.

Pursuant to the Confirmed Plan, the Reorganized Debtor surrendered the Grand Avenue Property to Banco Popular, its mortgagee, by giving it a Deed in Lieu of Foreclosure to satisfy Banco Popular’s secured claim.  Napleton was not scheduled as a creditor in the Reorganized Debtor’s bankruptcy and did not have notice of it.  The Court ruled that the transfer to the mortgagee was not subject to the Right of First Refusal which vested only if the Debtor, as Napleton's transferee, wanted to sell the property to a bona fide third party.  The Debtor did not sell the property in issue; it surrendered collateral to a lienholder.

In the April 1, 2015 Amended Memorandum Opinion, the Court declined to enter findings of contempt against Napleton and its attorney.

Judge Janet S. Baer

In re Sam Callas
April 23, 2015

13 B 43900, 14 A 00719
On the chapter 7 trustee’s motion for authority to turn over certain funds to secured creditor BCL-Capital Funding LLC (“BCL”) as alleged cash collateral proceeds, a creditor (and the Debtor’s former attorney) (“Stern”) objected, arguing that the proceeds were not BCL’s cash collateral and that turnover was, thus, improper.  The trustee contended that he was bound by the terms of a pre-conversion cash collateral order (the “Order”) in which the Debtor and BCL had agreed that certain funds constituted cash collateral.  The Court found that the Order did not, by its terms, foreclose consideration of Stern’s arguments regarding the validity of BCL’s claimed interest in the proceeds because the Order: (1) made no findings regarding whether the funds were cash collateral, and (2) contained broad reservations of rights.  Thus, the Order was found to have no preclusive effect beyond enforcement of the Order itself.  Further, the Court found that, despite an assignment of rents held by BCL, the proceeds were paid to the Debtor before the commencement of the case and while he retained control of the property at issue and that, thus, BCL could assert no interest in the proceeds by virtue of the assignment.  Ultimately, the Court concluded that the proceeds at issue were not BCL’s cash collateral and, accordingly, denied the trustee’s motion.

Judge Jack B. Schmetterer

In re Robert J. Meier
April 3, 2015

14 B 10105

Judge A. Benjamin Goldgar

12 B 19952, 12 A 01195

Judge Carol A. Doyle

In re Gerald Kosinski
March 5, 2015

10 B 28949

Judge Timothy A. Barnes

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.