Justia Bankruptcy Opinion Summaries

John R. Stoebner was the trustee for the jointly administered chapter 7 bankruptcy estates of debtors. Stoebner filed a verified motion for authorization to use cash collateral and TLP objected to the motion. The bankruptcy court overruled TLP's objection and allowed Stoebner to use cash collateral, finding the replacement lien offered by Stoebner adequately protected TLP's interest in the cash collateral. TLP timely appealed. The court held that the bankruptcy court's order allowing Stoebner to use cash collateral had ample support in the record evidence, especially in light of TLP's failure to offer any contrary evidence. Under the circumstances, the court could not say that the bankruptcy court's oral finding of adequate protection was clearly erroneous. Accordingly, the judgment was affirmed. View "TLP Services, LLC v. Stoebner" on Justia Law

Debtor appealed from the ruling of the bankruptcy court denying his discharge pursuant to 11 U.S.C. 727(a)(4). The court agreed with the bankruptcy court that even if discovery of debtor's property interests resulted in no recovery for his estate, the omissions he made were directly related to his business and his assets, defining them as material for the purposes of section 727(a)(4)(A). View "Lincoln Savings Bank v. Freese" on Justia Law

Plaintiff, as trustee for a creditors' trust, held a $56 million stipulated judgment against Paul Yarrick, a former officer of Interstate Bakeries. Interstate emerged from a voluntary Chapter 11 bankruptcy reorganization. In the bankruptcy proceedings, the Trust obtained the right to bring the action that later resulted in the judgment against Yarrick. The Trust received this right in exchange for certain concessions, including an agreement to execute only against potentially liable insurers. After the Trust obtained the judgment against Yarrick, the Trust brought the present action against defendants in an attempt to collect against several director and officer policies that named Yarrick as an insured. The court held that, because the Assignment Agreement that transferred to the Trust the limited right to sue Yarrick for insurance proceeds "absolved" Yarrick from "payment," the $56 million judgment was not a "Loss" as required by the plain language of the policy. The court also rejected the abandoned-insurance argument and held that Missouri law did not allow estoppel to extend coverage over otherwise uncovered claims. Accordingly, the judgment of the district court finding no coverage and granting summary judgment in favor of the insurers was affirmed. View "U.S. Bank Nat'l Assoc. v. Federal Insurance Co., et al." on Justia Law

Plaintiff, in these related appeals, was the Trustee in the Chapter 7 bankruptcy cases of LGI Energy Solutions, Inc. and LGI Data Solutions Company, LLC, which were in the business of providing utility-management and billing services to restaurants and other customers. These consolidated appeals involved seven adversary proceedings by the Trustee to avoid payments made by LGI Energy to defendant utilities prior to the bankruptcy. The Trustee contended that such payments were preferential and/or fraudulent transfers under the Bankruptcy Code and applicable state law. The Bankruptcy Court granted summary judgment in favor of defendants based on its conclusion that the payments they received for the utilities were not an asset of either debtor. The court held that the bankruptcy court's ruling was inconsistent with Minnesota law and Eighth Circuit precedent. If a trust or agency relationship was intended to be created by the agreements between LGI Energy and its customers, then defendants were nevertheless required to prove that LGI Energy honored that relationship and treated the funds accordingly. Therefore, the court reversed and remanded. View "Stoebner v. Consumers Energy Company, et al." on Justia Law

Plaintiff sued in state court challenging the validity of both the foreclosure of his home by Chase and the redemption of his home by a junior lienholder, National. The district court subsequently granted Chase's and National's respective motions for summary judgment. Plaintiff contended that Minnesota law required Chase to hold both the mortgage and the promissory note at the time of the foreclosure, and genuine issues of material fact remained as to whether Chase held the note. Plaintiff also contended that National's redemption was invalid because the foreclosure itself was invalid. The court held that Chase was the party entitled to commence a foreclosure by advertisement under Minnesota law, even if the promissory note had been transferred to someone else. Assuming arguendo Minnesota law required Chase to possess the note, the district court correctly granted Chase's motion for summary judgment in any event because plaintiff did not raise any genuine issues of material fact showing Chase was not the holder of the note at the time of the foreclosure. The court declined to address plaintiff's argument regarding redemption because plaintiff never challenged it in the district court. View "Stein v. Chase Home Finance, LLC, et al." on Justia Law

SMF appealed from a bankruptcy court order finding that three payments totaling $54,778.46 received by SMF from IBC in the 90-day preference period preceding IBC's chapter 11 filing were preferential payments under 11 U.S.C. 547(b) and were thus subject to avoidance by U.S. Bank in its capacity as trustee for the IBC Creditors Trust. The court affirmed the order and held that the bankruptcy court did not abuse its discretion by extending the time for service of process.

Defendants appealed from an order and judgment of the bankruptcy court granting summary judgment on plaintiff's complaint to determine dischargeability pursuant to 11 U.S.C. 523(a)(2)(B). The court held that plaintiff failed to show that it was entitled to judgment as a matter of law under the plain language of the statute where plaintiff had not met several statutory requirements. Accordingly, the court reversed and remanded with instructions to enter judgment for defendants.

Appellants in these consolidated appeals were debtors in their respective chapter 7 cases. Creditor objected to debtors' homestead exemption claims and moved for relief from the automatic stay. Debtors then moved to avoid creditor's judicial liens. The bankruptcy court consolidated all of the motions and all three parties moved for summary judgment. The bankruptcy court overruled creditor's objection to debtors' exemption, denied debtors' motions to avoid creditor's judicial liens, and granted creditor relief from the automatic stay to allow it to foreclose its judicial liens. Debtors appealed. Because the court held that creditor's judicial liens were avoidable, the court reversed the bankruptcy court's decision to deny debtors' motion to avoid its liens. Because the bankruptcy court's order granting relief from the automatic stay was moot, the court dismissed the appeal as to that part of the bankruptcy court's order.

In an action for nondischargeability, creditors appealed from the judgment of the Bankruptcy Court finding that they failed to prove that they were damaged as a result of the fraud allegedly committed by debtor. The court held that the Bankruptcy Court erred in finding that creditors failed to prove that they sustained a loss as a proximate result of debtor's alleged misrepresentations. The court reversed and remanded, concluding that plaintiff offered evidence that they would not have invested any money in the first place, or that they would not have continued to invest funds, had they known of debtor's alleged fraud and that the Bankruptcy Court failed to consider whether Missouri's "out of pocket" measure of damages was applicable.

This was an appeal from an order of the bankruptcy court overruling debtors' objection to confirmation of their post-confirmation amended Chapter 13 plan. At issue was the extent to which debtors could modify the payments set forth in a confirmed plan. The court agreed with the trustee that when a confirmed plan was modified to reduce payments under 11 U.S.C. 1329(a) due to a substantial change in financial circumstances, the modification must correlate to the change in circumstances. Debtors' proposed reduction in their plan payment from $1,890.00 per month under their original confirmed plan to $100.00 per month was not reflective of their loss of income in the amount of $1,240.00 per month. Therefore, the court affirmed and held that the bankruptcy court did not abuse its discretion in overruling their objection and confirming the plan.