In this short order, the court distinguishes between criminal and civil contempt and finds that the state court order that sentenced the debtor to spend time in jail was criminal contempt because it carried an unconditional penalty and the jail time could not be purged.
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Judge Ben T. Barry
The court found that, under Arkansas law, the debtor was not entitled to claim a homestead in property that was purchased with funds that were fraudulently transferred from a trust (of which the debtor was trustee) to the debtor's individual account. As a result, the debtor could not avoid a creditor's lien as impairing an exemption in the property.
The court found that the debtors’ joint case consisted of two separate debtors with two separate estates being jointly administered. As such, the debtors were only able to claim the exemptions to which they would be entitled individually. The court disagreed with the debtors’ argument that Arkansas marital dissolution laws establish the wife’s equitable interest in her husband’s property. However, the court did find that, under Arkansas law and the facts presented, the wife had an equitable interest in a vehicle that was titled solely in her husband’s name.
The debtors initially filed a voluntary chapter 7 case, then converted the case to a chapter 13 case, then converted the case to a small business chapter 11 case. In accord with § 348(a), the court found that the requirement under § 1121(e) for a debtor to file a plan and disclosure statement within 300 days in a small business case runs from the date the initial petition was filed, not the date the case was converted to a small business chapter 11 case. Because this case was filed more than 300 days earlier, the court granted the UST’s motion to dismiss or convert.
The court found that in accordance with §§ 365(d)(1) and 502(g)(1), the debtor’s unpaid post-petition rent was treated as a pre-petition claim for the period of time between the filing of the petition and the trustee’s rejection of the lease that occurred statutorily 60 days after the date the petition was filed. However, because the debtor remained in the premises after the trustee rejected the lease and the lease was no longer property of the estate, any further damages as a result of the breach of the lease would be the debtor’s personal obligation outside the confines of her bankruptcy case.
Audrey R. Evans
Addendum to: Order Granting Motions to Appoint Trustee. This Addendum, to be read in conjunction with the Order Granting Motions to Appoint Trustee, contains facts and testimony regarding the various individuals and entities involved, the Debtor, the Debtor’s Chapter 11 filing, and the series of events that led to the Motions to Appoint a Trustee. Although the Court does not repeat its reasoning for finding that the appointment of a trustee was necessary and appropriate in this case, additional findings are made.
The Court denied the defendant’s request for a jury trial in the debtors’ § 362(k)(1) action for a willful violation of the automatic stay. The Court applied the Seventh Amendment right to trial by jury analysis set forth by the Supreme Court in Granfinanciera, S.A. v. Nordberg and concluded that the defendant was not constitutionally entitled to a jury trial because a § 362(k)(1) action asserts a “public right.” Calderon v. Bank of Am. Corp. (In re Calderon), 497 B.R. 558 (Bankr. E.D. Ark. 2013).
James G. Mixon
The Plaintiffs' objection to the dischargeability of the debts pursuant to 11 USC 523(a)(2) was denied because they could not prove by a preponderance all of the necessary elements regarding each allegation. However, the Debtor's discharge was denied pursuant to 11 USC 727(a)(2)(A) because the Plaintiffs proved by a preponderance that the transfer of the Debtors ownership interest in his company was made with the fraudulent intent to defraud the Plaintiffs within one year of the petition date.
The Debtor was receiving social security disability benefits and had the duty to notify the SSA of any employment. The Debtor made a false representation with the knowledge of its falsity for the purpose of deceiving the SSA by not reporting his employment; the failure to report caused the overpayment which led to the Plaintiff's damage. Accordingly, the debt owed to the United States for overpayment of social security disability benefits in the sum of $49,517.70 was determined to be nondischargeable pursuant to 11 USC 523(a)(2)(A).
Judge Richard D. Taylor
Coercive application for contempt to collect a prepetition judgment constitutes a willful violation of the stay. Further, the debtor did not propose a plan consistent with the Code's treatment of domestic support obligations.