Order Granting Motions to Appoint Trustee. Court found cause to appoint a Chapter 11 trustee pursuant to 11 U.S.C. § 1104(a)(1), and that the appointment of a trustee was in the best interests of the creditors and the estate pursuant to § 1104(a)(2). Specifically, the Court found that a trustee must be appointed in this case to serve as a neutral fiduciary and the estate’s sole representative due to the distrust created by the various actions of certain insiders and related parties, their disrespect for the Debtor’s fiduciary duties to all its creditors, the acrimony that exists between the Debtor and its creditors, particularly the Southwest Trustee, and the dishonesty and lack of transparency as to who controls this Debtor.
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Audrey R. Evans
James G. Mixon
The individual Chapter 11 plan could not be confirmed because: (1) it failed to comply 11 USC § 1123 and did not specify the name of several of the creditors and the class to which the creditor was assigned and how the creditor would be treated; (2) it failed to comply with 11 USC § 1122 because not all of the claims that were classified together were substantially similar; (3) it was is not proposed in good faith as it cannot do what it proposes to do. Finally, once the claims were properly classified, an impaired class was deemed to have rejected the plan and the plan would have to be crammed down. The Court, adopting the broad view, found that pursuant to 11 USC §§ 1129(b)(2)(B)(ii) and 1115 the absolute priority rule does not apply to an individual Chapter 11.
Recording of the lease between the debtor and city provided constructive notice of debtor's pre-bankruptcy conveyance of property to the city and a repurchase option; state agency's subsequent recording of mortgage in the debtor's equitable interest in the property precluded Chapter 7 trustee from becoming a hypothetical bona fide purchaser entitled to avoid state agency's mortgage lien.
When a Chapter 13 plan has not been confirmed and the case is then dismissed, the court held that the Chapter 13 Trustee is subject to a properly issued writ of garnishment or levy by a judgment creditor or taxing entity. Therefore, the Chapter 13 Trustee's objection to the garnishment was overruled and the Chapter 13 Trustee was ordered to turn over all the sums in his possession to the Plaintiff that were not needed for administrative expenses.
After the Debtors' case was dismissed without plan confirmation, the Court found that the Chapter 13 Trustee was subject to a properly issued writ of garnishment.
Judge Ben T. Barry
A § 526(a)(6) action was brought against the debtor to determine the dischargeability of a debt that arose from a U.S. District Court jury verdict finding that the debtor had used excessive force that resulted in a man's death. Based on the facts entered into evidence, the Court found that the plaintiffs did not meet their burden of proving a willful and malicious injury under § 523(a)(6). Accordingly, the debt is eligible for discharge.
The underlying adversary proceeding is based on an alleged violation of the automatic stay; specifically, the defendant filed a motion for incarceration of the debtor during the pendency of the debtor’s bankruptcy case. The court denied the movant’s motion for summary judgment because there remained questions of fact for the court to determine whether the motion for incarceration was a continuation of a state court civil contempt action or whether the motion changed the nature of the civil contempt action to criminal contempt, either in whole or in part.
The debtor's sons objected to the chapter 7 trustee's motion to sell property, arguing that the property was held in a resulting trust for the benefit of one of the sons and, therefore, the subject property was not property of the estate. The Court found that while a resulting trust had been established, it was later terminated. Accordingly, the Court found that the subject property was property of the estate and granted the trustee's motion to sell.
Payment of rent from an account that was closed six months earlier amounted to a false representation made with the intent to deceive the creditor/landlord. The court found the debt for unpaid rent to be nondischargeable under § 523(a)(2).
Judge Richard D. Taylor
Successful state court action did not satisfactorily translate, on the basis of collateral estoppel, to a denial of discharge or determination of dischargeability. The elements of each discharge-related cause of action were not proven. The underlying judgment related to misappropriation of assets and did not mirror the required elements.