Justia Bankruptcy Opinion Summaries

Defendant-Appellant James Moser was convicted by a jury on several counts of bankruptcy fraud and sentenced to 121 months' imprisonment. He appealed to the Tenth Circuit, arguing that several counts of the indictment were multiplicitous, and that there was insufficient evidence to convict him on one of the counts. Defendant and his wife filed a voluntary Chapter 7 bankruptcy petition. He failed to disclose a lease agreement and the sale of certain tools and collectibles to third parties to the bankruptcy trustee. The attorney who worked with Defendant on his petition testified that at the time of the discharge of his debts, there continued to be confusion regarding Defendant's assets, "partially due to his unwillingness to be forthright." Finding that based on the evidence, a reasonable trier of fact could have found Defendant guilty of bankruptcy fraud, the Tenth Circuit affirmed Defendant's conviction and sentence. View "United States v. Moser" on Justia Law

Plaintiff sued individual defendants and a bank alleging violations of Wisconsin Statute section 134.01, which prohibits conspiracies to willfully or maliciously injure the reputation, trade, business or profession of another. Defendants had caused appointment of a receiver for plaintiff's business and had sued, claiming that plaintiff "looted" the business. A jury verdict against plaintiff was reversed. The receivership is still on appeal. The district court dismissed plaintiff's subsequent suit for failure to state a claim. The Seventh Circuit affirmed. While plaintiff did plead malice adequately to support a claim, the claim was barred by issue preclusion. Plaintiff was attempting to relitigate whether the imposition and ends of the receivership were proper. View "Virnich v. Vorwald" on Justia Law

Debtor filed a petition under Chapter 13 of the Bankruptcy Code and, a month later, filed a Certificate of Credit Counseling stating that the counseling session was completed post-petition. At a hearing Debtor represented that the certificate was incorrect and that he actually completed counseling before he filed his petition. The court issued an order for the Debtor to show cause why his case should not be dismissed pursuant to 11 U.S.C. 109(h) and inviting the Trustee to make inquiries to the credit counseling agency. At a later hearing, the Trustee represented that, although the Debtor completed the online portion of counseling prior to filing, he did not complete the telephone component until later. The bankruptcy court dismissed. The Sixth Circuit affirmed.The requirements of 109(h) are unambiguous and the statutory exemptions were not present, so the court did not have discretion to ignore, modify, or defer the requirements, which are a prerequisite to obtaining relief. View "In re: Ingram" on Justia Law

Brian and Debra Spurlin were convicted of concealment of bankruptcy estate assets, for knowingly and fraudulently withholding their interests in certain properties from their bankruptcy filings, and false oaths and statements in bankruptcy for a false answer they gave on a bankruptcy questionnaire. Mr. Spurlin was also convicted of bankruptcy fraud for filing bankruptcy to effect and conceal a fraudulent scheme whereby he took money he was supposedly holding in escrow for a company with whom he was doing business. Mr. Spurlin did not appeal his conviction of concealment, but the Spurlins appealed all other convictions. The court affirmed the conviction of Mrs. Spurlin on all counts; affirmed Mr. Spurlin's convictions of concealment of bankruptcy estate assets and of bankruptcy fraud; but reversed Mr. Spurlin's conviction of false oaths and statements in bankruptcy for insufficient evidence. Accordingly, the court vacated Mr. Spurlin's sentence and remanded for resentencing. View "United States v. Spurlin, et al." on Justia Law

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

Debtors borrowed $157,291.77, secured by their home and took a second loan for $15,870, using their truck as security. They filed Chapter 7 bankruptcy protection and signed a reaffirmation agreement committing to pay those two debts. They stopped making payments; the truck had been stolen. The bank filed an unsecured claim. The trustee sought to avoid the mortgage as not properly perfected; the matter was resolved by agreement. The bank bought the property at auction, re-sold it at a profit of $33,400 and filed an unsecured claim for the full balance of the mortgage. The bankruptcy court allowed the claim; the bank received a total of about $37,000 in payments as an unsecured creditor on the two loans. The bank then sued the debtors in Kentucky state court, seeking about $89,000 on the real property loan and about $11,500 on the truck loan. The bankruptcy court reopened the case and voided the reaffirmation agreement on the ground of mutual mistake because the parties signed the agreement based on the false assumption that the bank held secured interests in the real property and the truck, which would have allowed debtors (rather than the bankruptcy estate) to retain ownership. The district court and Sixth Circuit affirmed. View "Salyersville Nat'l Bank v. Bailey" on Justia Law

In 1999 Debtor borrowed $75,558.93 secured by a recorded mortgage lien, encumbering real property and all improvements and fixtures. The property contains a manufactured home, with a plate indicating compliance with federal manufactured home standards. The lender's notes indicated that in 1997, the mobile home was gutted and rebuilt as a house. Debtor did not acquire a separate title to the manufactured home; it is unclear whether such a certificate ever issued. In 2009, Debtor filed a petition for chapter 13 relief. He sought to avoid the lien pursuant to 11 U.S.C. 544 because the Bank failed to perfect its lien on the manufactured home pursuant to Kentucky law. The bankruptcy court granted summary judgment to Debtor. The Sixth Circuit affirmed, first holding that Debtor had derivative standing to seek to avoid the lien. Regardless of the issuance of a certificate of title, Debtor has an interest in the home that is part of the bankruptcy estate. Under Kentucky law, a mobile home is personal property; perfection of a lien requires notation on the certificate of title. The mobile home had not been converted to real property and the lender did not perfect a lien on personal property. View "In re: Barbee" on Justia Law

Following a state court judgment of over six million dollars entered against NHF in Texas, NHF filed a voluntary petition in the U.S. Bankruptcy Court, seeking to reorganize under Chapter 11 of the Bankruptcy Code. At issue was were the circumstances under which a bankruptcy court could approve nondebtor release, injunction, and exculpation provisions as part of a final plan of reorganization under Chapter 11. The court held that equitable relief provisions of the type approved in this case were permissible in certain circumstances. A bankruptcy court must, however, find facts sufficient to support its legal conclusion that a particular debtor's circumstances entitled it to such relief. Because the bankruptcy court in this case failed to make such findings, the district court erred in affirming the bankruptcy court's confirmation order. Accordingly, the court vacated the judgment of the district court and remanded for further proceedings. View "Behrmann, et al. v. Nat'l Heritage Foundation, et al." on Justia Law