The Court found that the debtor's student loans are nondischargeable under 11 U.S.C. 523(a)(8) because the debtor did not prove by a preponderance of the evidence that those loans impose an undue hardship upon her.
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Opinions
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Judge Ben T. Barry
In this opinion, the Court found that the chapter 11 debtor and four of his debtor companies had neither timely nor fully performed their obligations under a settlement agreement with their largest secured creditor. Because the settlement agreement conditioned the creditor's performance upon the debtors first timely and fully performing their obligations under the agreement, the Court granted the chapter 11 trustee's motion to enforce the settlement agreement but denied the trustee's request to compel the creditor to perform its obligations under the settlement agreement. The Court further found that the application of the doctrine of substantial performance was inappropriate in this case because the creditor had bargained for the debtors' strict compliance with the provisions of the agreement that required their timely and full performance and the Court cannot rewrite an agreement for sophisticated parties that bargained at arms' length.
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.
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.
Audrey R. Evans
Pursuant to 28 U.S.C. § 1334(c)(1), the Court exercised its discretion and entered an order abstaining from hearing the adversary proceeding commenced by the Plaintiffs. The Court found the protracted process associated with obtaining a final judgment in this noncore proceeding outweighed any other consideration. The Court granted the Plaintiffs relief from the stay to proceed in another forum with their litigation. Weaver v. Everhome Mortgage Co. (In re Weaver), 2014 WL 1872096 (Bankr. E.D. Ark. Apr. 23, 2014).
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).
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.