A confirmation order is not necessarily res judicata as to post-petition and post-confirmation debt. Also, inconsistent arguments may be sufficient bad faith to deny confirmation of a plan.
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Judge Richard D. Taylor
Audrey R. Evans
Order Approving Application to Employ Attorney. Court approved employment of Chapter 11 Debtor-in-possession's proposed counsel James E. Smith and Smith Akins, P.A. pursuant to 11 U.S.C. § 327(a) finding that Smith was disinterested and did not hold or represent an adverse interest to the Debtor-in-possession's estate. Court found that Smith did not represent an adverse interest based on his prepetition representation of the Debtor while certain transfers took place because Smith had valid reasons to counsel Debtor to make the transfers and Smith did not represent those insiders receiving the transfers, even if their interests were adverse to the Debtor. Court also found that Smith's employment was in the best interests of the estate due to his knowledge of the Debtor, its operations, and the extensive litigation involving the Debtor both before and since filing bankruptcy. In re Living Hope Se., LLC, 495 B.R. 866 (Bankr. E.D. Ark. 2012).
Court denied the Debtors’ Motion for Summary Judgment on a cause of action seeking to avoid a creditor’s lien. As part of that ruling, the Court found that the statutory language of 11 U.S.C. § 544(a)(3) grants authority to avoid a lien to the trustee, but not to the debtor. Following Eighth Circuit precedent construing that statutory language narrowly, the Court held that the Debtors lacked standing to avoid the creditor’s lien under § 544(a)(3). The Court also found that the Debtors’ other claims, which were not based on § 544(a)(3), required a trial. Huskey v. Citimortgage, Inc. (In re Huskey), 479 B.R. 827 (Bankr. E.D. Ark. 2012).
Order Approving in Part Application to Employ Attorney. Court found that Chapter 11 Debtor's proposed counsel Chip Welch and Ashley Hudson were disinterested and neither held nor represented an adverse interest to the Debtor's estate, and accordingly, they could be hired to represent the Debtor-in-possession under 11 U.S.C. § 327(a). Court did not grant application to hire applicants nunc pro tunc to the date of Debtor's Chapter 11 filing where an objection was filed and no explanation was provided for the tardiness of the application to employ. In re Living Hope Se., LLC, 495 B.R. 424 (Bankr. E.D. Ark. 2012).
Judge Ben T. Barry
The court combined five objections to claims in three different cases in this opinion and explains burden of proof for claims litigation, the application of judicial estoppel, and the three step process required to determine the rights of creditors holding secured claims.
The debtor entered into an agreement to lease a portable storage building from the creditor approximately four months prior to filing his chapter 13 voluntary petition. The debtor's plan proposed to classify the creditor's claim as a secured claim rather than as a lease, to which the creditor objected, arguing that the agreement was a true lease that the debtor had to assume or reject in his plan. Applying Oklahoma law, the court held that the agreement was a true lease and sustained the creditor's objection to confirmation of the debtor's plan.
The court granted partial summary judgment against one of the debtors based on the doctrine of collateral estoppel and under § 523(a)(2)(A) for fraud. The court denied summary judgment against the other debtor because the state court made no specific findings against that debtor relating to a false representation made with the intent to deceive the plaintiffs.
The court denied the chapter 7 debtors their discharge under 727(a)(2) and (a)(4)(A) because the debtors failed to disclose numerous assets and a significant amount of income in their original schedules and statements and their four subsequent amendments.
James G. Mixon
The two liens in the Chapter 13 Debtor's Toyota automobile were unperfected upon the filing of the bankruptcy petition, with the first lien to attach having priority over the second lien to attach. The Debtor was not allowed to avoid either lien using the trustee avoidance powers as set out in Section 544 of the Bankruptcy Code. Neither creditor was entitled to equitable relief.
The Court found that a tax lien, once assessed and properly filed, attaches to a debtor's personal property regardless of where the debtor moves to.