The Court ruled that the Bank's security interest in the Debtor's stock was unperfected because a shareholders' agreement forbid the pledge of the stock by the Debtors to the Bank, the Debtors were parties to the agreement, and the Bank knew about the restriction and failed to acquire requisite shareholder consent. Therefore, the Trustee was entitled to avoid the transfer of the security interest.
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James G. Mixon
The Debtor's statutory exemptions in personal property were in excess of the amount allowed for in the Arkansas Constitution and were therefore disallowed. The Trustee's objection to the Debtor's homestead as being urban is overruled because the evidence was evenly balanced as between whether it was urban or rural. The Trustee is given 30 days to commence an adversary to set aside the deed of trust and then the Court will consider the objection to the claim of homestead pursuant to § 11 U.S.C. 522(g).
Audrey R. Evans
Court held that a Chapter 13 debtor's social security income is included in determining the debtor's projected disposable income for purposes of plan confirmation, and that this below-median-income debtor's $2,800 housing expense was both unreasonable and unnecessary. In re Nicholas, 458 B.R. 516 (Bankr. E.D. Ark. 2011).
Court held that bank was not qualified to conduct non-judicial foreclosures in Arkansas because it failed to comply with the authorized-to-do-business requirement found in Ark. Code Ann. § 18-50-117. Court rejected bank’s argument that it had qualified to use the non-judicial foreclosure process by employing an attorney-in-fact under Ark. Code Ann. § 18-50-102. Court also rejected bank’s arguments that Ark. Code Ann. § 18-50-117 was superseded by Arkansas’ Wingo Act, or preempted by the National Banking Act. As a result, the debtors did not owe the foreclosure fees and costs incurred by the bank. In re Johnson, 460 B.R. 234 (Bankr. E.D. Ark. 2011). rev’d sub nom. JPMorgan Chase Bank, N.A. v. Johnson, 470 B.R. 829 (E.D. Ark. 2012) aff’d, 719 F.3d 1010 (8th Cir. 2013).
Court granted summary judgment on plaintiff's preferential transfer complaint finding that the Debtors had a contractual right to certain payments transferred to a creditor on their behalf within the preference period. The Court further found that the payments enabled the creditor to receive more than it would receive under a hypothetical Chapter 7 case.In re Frankum, 453 B.R. 352 (Bankr. E.D. Ark. 2011).
Judge Ben T. Barry
The court found that a prior order involving divorce-related obligations between the debtor and the debtor’s ex-spouse did not inure to the benefit of third-party creditor sufficient to deny the dischargeability of the debtor’s obligation to the creditor.
After granting the debtor’s motion for reconsideration, the court granted the creditor’s motion for summary judgment. The debtor argued that it could use § 544 to avoid the transfer of a royalty agreement between it and the creditor because the creditor did not record the agreement in the land recorded pre-petition. The creditor argued that the royalty agreement was listed by the debtor as an executory contract in its schedules, and later sold to a third party purchaser. The court found that two earlier orders of the court unequivocally transferred all liabilities and obligations of the debtor, including the royalty agreement, to the third party purchaser, thus eliminating any avoidance action the debtor may have had under § 544 relating to the royalty agreement.
Creditor filed a complaint to deny the joint debtors' chapter 7 discharge under 11 U.S.C. § 727(a)(2), (3), (4), and (5). The Court granted the relief requested in the complaint under § 727(a)(2) and (a)(4)(A) as to one debtor but denied the relief requested as to the other debtor.
Court grants partial summary judgment based on doctrine of collateral estoppel and state court findings of breach of fiduciary capacity.
Creditor filed a motion to dismiss debtor's chapter 11 case for gross mismanagement of the estate and the absence of reasonable likelihood of rehabilitation. The Court granted creditor's motion to dismiss under s 1112(b)(4)(A) because of a substantial or continuing loss to the estate and an absence of a reasonable likelihood of rehabilitation. However, because the creditor did not request conversion in its motion, dismissal was conditioned on the Court finding that it is not in the best interests of the estate or the estate's creditors to convert the case to a case under chapter 7 in a subsequent hearing.