In this case, the court held that insurance proceeds paid as a result of a post-confirmation accident between the debtors’ minivan and a deer belonged to the creditor/lien holder even though the creditor’s allowed secured claim had been paid in full under the debtors’ confirmed plan. The court’s conclusion was based on a BAPCPA amendment to § 1325(a)(5)(B). That section now states unequivocally that a holder of an allowed secured claim retains its lien until the payment of the underlying debt as determined under nonbankruptcy law or the debtor receives a discharge.
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Judge Ben T. Barry
In this PACA claim case, the court held that the supplier/creditor did not provide notice as required under 7 USC 499a et seq. and, therefore, did not preserve its PACA rights. Without proper notice, the supplier/creditor's argument that it had substantially complied with the statute also failed.
In a two-part finding, the Court denied the debtors' motion to dismiss a creditor's adversary complaint. The Court found that the creditor may proceed on a timely-filed complaint seeking a determination of dischargeability of a debt under 11 U.S.C. 523(a)(2), (a)(4), and (a)(6) notwithstanding terms in the debtors' confirmed chapter 11 plan that state that part of the debt shall be discharged. In addition, the Court found that it has jurisdiction to hear the adversary proceeding based on a retention of jurisdiction provision in the debtors' confirmed plan.
The court held that deferral of the payment of the adversary proceeding filing fee was not warranted when the chapter 7 trustee had funds available in the estate.
In this opinion, Judge Barry denied the creditor’s complaint under § 523(a)(2) and (a)(6). Under (a)(2), the court found that subsequent exchanges of collateral that occurred between the debtor and creditor did not induce the creditor to either loan money or provide for the extension, renewal, or refinancing of the obligation. Under (a)(6), although the court found the potential for injury, it could not identify a specific “willful” injury or any resultant harm from the injury. The court also was not able to find that the debtor’s conduct was targeted at the creditor such that the conduct was “malicious” as required under (a)(6).
In this case, the court found that two mortgages that were filed for record and contained only the street address of the subject property provided the requisite “key” to identify the property and that the mortgages constituted constructive notice to the trustee under Arkansas law. Because the mortgages contained constructively noticed facts, the court found that constructive inquiry notice (as opposed to actual inquiry notice) was applicable in this instance and the trustee had a duty to investigate “everything to which the inquiry might lead.” Based on the evidence presented at trial, that inquiry would have identified specifically the legal description of the property subject to the creditor’s interest. Accordingly, the court denied the trustee’s motion to avoid the creditor’s liens under 11 U.S.C. § 544(a)(3).
Audrey R. Evans
The Court granted creditor’s motion for administrative expenses pursuant to 11 U.S.C. § 503(b)(3)(D) and (b)(4) with respect to those expenses associated with the creditor’s efforts to have a Chapter 11 Trustee appointed because the Court found those expenses were actual and necessary and provided a substantial contribution to the Debtor’s estate. The Court found that other claimed expenses did not provide a substantial contribution in this case because they were incurred in furtherance of the creditor’s own interests and did not benefit the estate. In re Living Hope Se., LLC, 509 B.R. 649 (Bankr. E.D. Ark. 2014).
Fee application of Debtor-in-possession’s counsel approved pursuant to 11 U.S.C. § 330(a). The Court overruled objections raised by the Debtor’s 99% member and a creditor questioning whether counsel’s services were beneficial to the estate. The Court further found that the Debtor’s principals did not have the unfettered right to terminate the Chapter 11 Debtor’s counsel without court approval, particularly when such actions were taken for the principals’ benefit and not for the benefit of the estate. In re Living Hope Se., LLC, 509 B.R. 629 (Bankr. E.D. Ark. 2014).
Relief from stay to proceed with litigation against the Chapter 11 Debtor in State Court denied. Due to the Chapter 11 Trustee's current efforts to find a buyer for the Debtor and establish its value, the Court found that the estate faced greater harm if relief from stay were granted than the moving creditor would face if relief from stay were denied. Forcing the Debtor to defend State Court litigation would impede the sale process and result in increased and possibly wholly unnecessary administrative fees. In re Living Hope Se., LLC, 505 B.R. 237 (Bankr. E.D. Ark. 2014). On appeal to the Eastern District of Arkansas.
James G. Mixon
The Bankruptcy Court declined to approve a settlement between the Trustee, the Debtor, and the trustee of two trusts benefitting the Debtor because the settlement would result in a disproportionately small distribution to creditors, and also because there was a strong likelihood that the Trustee would prevail if he litigated several causes of action that would ultimately net valuable assets for the estate.