When a case is dismissed without a confirmed plan, the standing chapter 13 trustee may remit funds on hand to the debtor and insist that attorneys comply with section 503(b) before deducting any outstanding fees
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Judge Richard D. Taylor
Judge Ben T. Barry
The Court granted the debtor's oral Rule 15(b) motion made at trial and, upon consideration of the debtor's additional ground for objection to the creditor's PACA claim, sustained that objection by finding that the creditor had failed to preserve its PACA trust rights under 7 U.S.C. 499e(c)(3) when it did not include the payment terms in its invoices.
The court found that property a chapter 13 debtor received as a result of a Missouri beneficiary deed when her mother died was not property of the estate in the debtor's converted chapter 7 case pursuant to § 348(f).
The Court sustained the debtor's objection to a creditor's 503(b)(9) claim for administrative expenses on the basis that the creditor did not file a claim by the Court-ordered deadline. The Court found that the creditor did not prove excusable neglect under Rule 9006, was not entitled to amendment of its PACA claim to reflect the administrative expense, and had not established an informal proof of claim through its PACA claim and correspondence with the debtor.
The court overruled the debtor’s objection to the creditor’s PACA claim finding that the creditor was not an agent of the debtor when the parties agreed that the creditor would provide shipping; the agreement changed the parties alleged FOB contract to an FOB sale at delivered price contract. The court also recognized that state law controlled as to the amount of interest the creditor could charge.
In this chapter 9 case, the Court found that a regional solid waste district created pursuant to Arkansas Code Annotated 8-6-701 was not specifically authorized by the state of Arkansas to be a debtor as required by 109(c)(2). Because the district was not eligible to be a debtor under 109, the Court dismissed the case under 921(c). As a second basis for dismissal, the Court found that the district had not filed the case in good faith because it had opted not to collect a statutorily authorized service fee that would have generated revenue for the district.
The court overruled the debtor’s objection to the creditor’s PACA claim finding that freight and fuel surcharges were sums owing in connection with the parties’ produce transaction and, therefore, covered under the PACA trust. The court also found that the portion of the federal regulation purporting to give guidance to what charges could be included as a “sums owing” under the statute was contradictory to the statute. Finally, the court found that interest on the pre-petition claim was also a “sums owing” related to the PACA transaction and covered under the PACA trust, but recognized that state law controlled as to the amount of interest the creditor could charge.
Upon the objection of a creditor, the Court denied the debtor's Amended Application for Order for Employment of Attorneys based on a potential conflict of interest. The conflict of interest resulted from the attorney's prior representation of the creditor in a matter against the debtor, in combination with the attorney's current representation of the creditor in an unrelated matter.
In this chapter 7 case, the Court denied the debtor's discharge under 727(a)(2)(A), (a)(2)(B), (a)(3), and (a)(4), avoided the debtor's fraudulent transfers under 548 and the Arkansas Fraudulent Transfer Act, and sustained the trustee's objection to the debtor's exemptions. The debtor had purchased real property in Arkansas with funds to which his ex-wife was entitled pursuant to a Minnesota court order. The debtor had orchestrated a series of transfers of the real property between his friends and employees in order to conceal the property from his ex-wife and other creditors. The debtor also failed to disclose his true interest in the property in his bankruptcy schedules, intentionally concealed or destroyed tax returns and other documents relating to his property and financial affairs, and claimed exemptions in real and personal property in bad faith.
Audrey R. Evans
The Court granted the Debtors’ motion to disgorge the standing Chapter 13 trustee’s percentage fee when the Debtors’ case had been dismissed prior to the confirmation of a plan. The Court found that 28 U.S.C. § 586(e) does not unambiguously provide for the retention of percentage fees in such cases. Section 586(e) specifies how the percentage fee is to be collected and it must be read in conjunction with 11 U.S.C. § 1326(a), the provision governing the circumstances under which the percentage fee must be returned to the debtor. In re Dickens, 513 B.R. 906 (Bankr. E.D. Ark. 2014).