The Court required the Debtor-in-possession to assume or reject three commercial trucking leases. The transactions between the parties were true leases and not disguised sales despite a "TRAC" clause requiring sale of the tractors at the end of the lease term, with the Debtor-in-possession obligated to pay or be paid the difference between the residual value and the sale price. Debtor-in-possession had no option to purchase under the lease and parol evidence of such an option would not be considered.
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Opinions
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James G. Mixon
The Court ruled that a discrepancy in the description of the collateral on the security agreement and certificate of title resulted from references to two different parts of the same motor home; therefore, the Court reinstated its original order, finding the order was accurate in granting the creditor relief from stay and abandonment as to the motor home as described in the security agreement.
Upon objection to confirmation of a chapter 13 plan, the Court ruled that the debtor could cure her mortgage default and resume mortgage payments on her principal residence when the property had been sold in a foreclosure sale pre-bankruptcy but the trustee's deed had not been recorded before the debtor filed her bankruptcy petition.
The acknowledgment in question did not contain the Debtor's signature and the wrong pronoun was used. As a result, the Court found the acknowledgement did not substantially comply with the Arkansas Code and the Trustee is allowed to avoid the mortgage lien.
Judge Ben T. Barry
The court overruled the chapter 7 trustee's objection to the debtor's homestead exemption where the court found that the debtor qualified as"head of a family" under Arkansas law based on the debtor's relationship with each of her brothers.
Settlement funds received by the debtor that related to a lawsuit between the debtor and the builder were "miscellaneous proceeds" subject to an assignment clause in the debtor’s mortgage with the bank. Under Arkansas statute, the debtor was a trustee with regard to the funds and, as such, should have turned the funds over to the bank. The court found that the debtor committed defalcation while acting in a fiduciary capacity.
The court overruled the debtors’ objection to the claim of the IRS finding that a properly perfected tax lien on the debtors’ personal property remains attached to the personal property even if the debtors relocated with the personal property to another county within the state.
Debtors' attorney suspended from practice in the United States Bankruptcy Court for the Eastern and Western Districts of Arkansas for violations of Federal Rule of Bankruptcy Procedure 9011 and pursuant to Local Rule 2090-2.
The Court denied the trustee's motion for turnover and overruled his objection to the debtor's exemption. The Court could not determine whether the property interest at issue--the right to payments pursuant to a judgment for past due child support--was an interest of the debtor in accordance with applicable state law based on insufficient record before it. The judgment was not in evidence and state laws differ as to whether child support arrearages are property of the custodial parent or property of the child.
In this case, the debtors claimed a homestead exemption under Arkansas law on 0.3 acres in a subdivision that prohibited further division of the property. The creditors objected to the claimed exemption and argued that because the property is indivisible and exceeds one-quarter of an acre, the exemption should be denied or limited in value to $2500.00 under the Arkansas Constitution. In the alternative, the creditors argued that the property should be sold for the estate to realize the non-exempt portion of the claimed exemption. The Court recognized that the highest return to the estate would result from a sale of the property, but further recognized that the trustee’s share of the proceeds could also be determined prior to a sale, resulting in a benefit to the estate without the additional costs of a sale.