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Judge Deborah L. Thorne

In re George Peake
August 15, 2018

18 B 16544

Judge Jacqueline P. Cox

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.

Judge Jack B. Schmetterer

 17 B 19689

Judge Timothy A. Barnes

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.

Judge Janet S. Baer

15 B 35985, 17 A 00192
Plaintiff David R. Brown (the “Trustee”) filed an adversary complaint against Robert J. Ferrari (the “Debtor”), seeking a denial of the Debtor’s discharge pursuant to 11 U.S.C. §§ 727(a)(2)(A), (a)(3), and (a)(5).  The Trustee argued that the Debtor was not entitled to a discharge because: (1) he transferred or removed equity in his home within one year of filing his bankruptcy petition with intent to hinder, delay, or defraud creditors by executing a junior mortgage on the home in favor of his friend; (2) he failed to keep or preserve books and records from which his financial condition could be ascertained; and (3) he failed to satisfactorily explain the loss or disposition of almost $250,000 that he allegedly borrowed from his friend.  After conducting an evidentiary hearing, the Court found that, given the documentary evidence and testimony at trial, the Debtor’s records were inadequate to allow the Court, the Trustee, and the Debtor’s creditors to trace his financial dealings with any kind of accuracy and that the Debtor did not offer any reasonable justification for his failure to keep or preserve financial records.  Thus, the Court held that that failure supported denial of the Debtor’s discharge under § 727(a)(3).  The Court further found that the Debtor failed to provide a satisfactory explanation for the disposition of both the equity in his home and the loan proceeds from his friend.  Accordingly, the Court also held that the Debtor was not entitled to a discharge pursuant to § 727(a)(5).  Although the Court found that the removal of equity from the Debtor’s home was a transfer for purposes of § 727(a)(2)(A), the evidence did not sufficiently establish that the Debtor actually intended to defraud his creditors.  As such, the Court did not find in the Trustee’s favor on the § 727(a)(2)(A) count of the complaint and, thus, that count was dismissed.

15 B 17676, 16 A 00020
Plaintiff City of Chicago (the “City”) filed an adversary complaint against debtor Ronald Spielman (“Spielman”), seeking a determination that a debt owed to it by Spielman by virtue of a federal district court default judgment was not dischargeable pursuant to §§ 523(a)(2)(A) and (a)(7).  The City subsequently filed a motion for summary judgment on both counts of its complaint.  No material facts were in dispute.  The City contended that the district court’s order for default judgment against Spielman under the City’s False Claims Ordinance precluded relitigation of the claims in the adversary proceeding due to principles of collateral estoppel.  Spielman argued that because a default judgment was entered, the claims were not actually litigated and that, thus, collateral estoppel could not be applied against him.  The Court found that the district court’s default judgment precluded further litigation of the claims because the district court made findings of fact, Spielman had a full and fair opportunity to litigate the claims, and, in fact, he did litigate the City’s final motion for default judgment, which was decided on its merits.  Accordingly, the Court granted the City’s motion on both counts of the complaint and entered judgment in favor of the City.

Judge A. Benjamin Goldgar

Judge LaShonda A. Hunt

Debtor-company has been sued by consumers who allegedly ingested contaminated nut-alternative products.  The Chapter 7 Trustee seeks to resolve those tort claims with a global settlement that channels the proceeds from commercial liability policies issued by two insurers into a fund for distribution to the injured parties and enjoins any further claims under the policies.  Several vendors (who are additional insureds) objected to the breadth of the injunction, as impairing their contractual rights to pursue claims against the insurer.  The court holds that the proposed injunction cannot be approved.