Justia Bankruptcy Opinion Summaries

In 2014, Jackson filed a Chapter 7 Bankruptcy petition. His mortgagee (BOA), sought relief from the stay; abandonment of his residence, a condominium; and in rem relief for two years under 11 U.S.C. 362(d)(4)(B), alleging a substantial arrearage and prior bankruptcy filings that included the Condominium as scheduled property. The court granted the motion. BOA and Jackson entered into a loan modification agreement. The owners’ association (Carlton House) sought a permanent in rem order. The court stated that post-petition amounts were current “and the issue seems to be the desire to move forward with the foreclosure for the outstanding [pre-petition] approximately $5,900.” The court entered a two-year in rem sanction. Jackson received his discharge; the case was closed. Carlton House immediately went to state court to schedule a sheriff’s sale--the final step in a foreclosure action commenced in 2008 by BOA’s predecessor. Carlton House and the lender had obtained a foreclosure decree in 2009. The bankruptcy court reopened the case, concluded that Carlton House violated discharge order by scheduling the sale, awarded monetary sanctions, and enjoined re-scheduling of the sale. The Sixth Circuit Bankruptcy Appellate Panel reversed, noting that Carlton House has statutory obligations to other unit owners. The bankruptcy court effectively imposed an “equity requirement” that is not part of the Ohio foreclosure sale process. View "In re: Jackson" on Justia Law

Debtor filed a chapter 13 bankruptcy petition in July 2014, listing a debt for delinquent property taxes, “oversecured” by a lien, so that 11 U.S.C. 506(b), authorizes payment of interest. Debtor’s plan proposed 12% interest under Tenn. Code 67-5-2010(a)(1) which provides: To the amount of tax due and payable, a penalty of one-half of one percent (0.5%) and interest of one percent (1%) shall be added on March 1, following the tax due date and on the first day of each succeeding month, except as otherwise provided in regard to municipal taxes.” Metro argued that the proper interest rate was 18% under Subsection 67-5-2010(d): For purposes of any claim in a bankruptcy proceeding pertaining to delinquent property taxes, the assessment of penalties determined pursuant to this section constitutes the assessment of interest (effective July 1, 2014) Subsection (d) was a response to an earlier decision that a 6% annual penalty under Subsection (a)(1) was not allowed under 11 U.S.C. 506(b). The bankruptcy court agreed with Debtor’s assertion that the rate should be 12%, holding that Subsection (d) directly conflicted with the bankruptcy statutes and “a well-defined federal policy that post-petition penalties that might otherwise be owed to secured creditors are simply not paid in bankruptcy cases.” The Sixth Circuit Bankruptcy Appellate Panel affirmed, holding that Subsection (d) is not applicable to determine the interest rate under 11 U.S.C. 511, and did not address whether Subsection (d) is constitutional. View "In re: Mildred Bratt" on Justia Law

The Hargers were Jones’ neighbors. Police reports indicate that there were issues between the neighbors for several years. Grad worked for CarMeds, ostensibly owned by Jones’ mother and run by Jones, occasionally visiting Jones’ home. Grad claimed to have been assaulted after such a meeting. At the police station, Grad identified Harger from a photo line-up. Ultimately, charges were dropped. The Hargers sued Grad and Jones, asserting conspiracy to have Harger falsely arrested. Meanwhile, Jones filed a Chapter 7 bankruptcy petition. Hoover, the Hargers’ attorney, moved to modify the automatic stay and filed an adversary complaint, alleging that Jones's debt was non-dischargeable and seeking denial of discharge based on the assertion that Jones lied about the ownership of CarMeds. The bankruptcy court later dismissed the adversary proceeding on the Hargers’ motion, and set a hearing sua sponte, directing the Hargers and Hoover to show that they had reasonable grounds for filing. The court found that Hoover violated Rule 9011 by filing without specific evidence and made intentional misrepresentations in his filings; directed him to pay $26,000 in attorneys’ fees; revoked Hoover’s electronic bankruptcy filing authority; and referred the matter for possible prosecution. The Sixth Circuit Bankruptcy Panel reversed, holding that the bankruptcy court relied on clearly erroneous factual findings ;erred as a matter of law in awarding fees on a sua sponte basis; and abused its discretion in imposing any sanctions. View "In re: Jones" on Justia Law

Village Green owes FNMA $8.6 million under loan agreements executed when it purchased a Memphis apartment building. Village missed its $55,000 payment in December 2009; four months later it filed for Chapter 11 bankruptcy. The bankruptcy court stayed creditor actions, 11 U.S.C. 362(a), preventing FNMA from foreclosing on the building, which is worth $5.4 million and is Village’s only bankruptcy. Village’s only other creditors are its former lawyer and accountant. (minor claims) Village’s proposed reorganization plan called for paying down FNMA’s claim slowly, leaving a balance of $6.6 million after 10 years (foreclosure would reduce its balance to $3.2 million immediately) The plan would strip FNMA of protections in the loan agreements: requirements that Village properly maintain and insure the building. Village would pay the minor claims in full, but in two payments ($1,200 each) over 60 days. That 60-day delay, the court held, meant that those claims were “impaired,” so that the minor claimants’ acceptance would satisfy the requirement that “at least one class of claims that is impaired under the plan has accepted the plan,” 11 U.S.C. 1129(a)(10). The bankruptcy court confirmed the plan. The district court vacated. Following a second remand, the bankruptcy court dismissed the case and lifted the automatic stay. The Sixth Circuit agreed that the plan was an artifice to circumvent the Code requirement and was not proposed in good faith. View "Village Green I, GP v. Fed. Nat'l Mortgage Assoc." on Justia Law

Martin filed a chapter 7 bankruptcy petition on January 28. On April 9, the Pecks sought relief from stay to continue state court litigation against Martin. On April 29, the Pecks filed an adversary proceeding seeking nondischargeability of a debt stemming from the same litigation. The court indicated that it would grant relief from stay, noting that the state court discovery process was further along; additional parties are involved in that case; and the Pecks had requested a jury trial. On July 7, the bankruptcy court granted relief from the stay, holding the adversary proceeding in abeyance. On July 17, Martin timely filed notice of appeal. On July 22, Martin sought a stay pending appeal in the bankruptcy court. The Pecks filed opposition. On October 5, Martin filed his appellate brief. The Pecks filed their brief on November 5. Martin filed his reply brief on November 23, requesting oral argument. On November 19, before obtaining a ruling from the bankruptcy court and before completion of briefing, Martin moved, in the Bankruptcy Appellate Panel, for stay pending appeal. On November 30, the Pecks filed a response and the bankruptcy court denied a stay. On December 11, Martin filed an “Emergency” second motion for stay pending appeal. The Panel declined oral argument and affirmed relief from the automatic stay. View "In re: Daniel Martin, Sr." on Justia Law