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.
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Opinions
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Judge Ben T. Barry
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.
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.
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.
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).
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).