This opinion is based on the debtor’s complaint to avoid judgment liens as preferential transfers and the creditor’s allegation of the debtor’s solvency as an affirmative defense. After finding that the debtor was a going concern, the Court analyzed the balance sheet of the debtor on the date of the transfers and determined the debtor was insolvent on the date of the transfers. Accordingly, the Court found that the registration of the creditor’s judgment that created liens on the debtor’s property were preferential transfers, and avoided the liens.
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Opinions
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Judge Richard D. Taylor
Granting a motion to reinstate, which is actually a motion to set aside an order of dismissal under Rule 9024, does not retroactively reinstate automatic stay during period of time case was dismissed.
Bank’s alleged reliance on fraudulent financial statement not reasonable for purposes of § 523(a)(2)(B) when all loans were in default prior to debtors’ submission of the financial statement to the bank and only one loan was renewed after the bank received the financial statement. Bank found to have reasonably relied on financial statement for the renewal of one loan because former bank president assisted debtors in filling out the financial statement, and debtors did not rebut the bank’s reliance
To be a "debtor engaged in business" as that term is defined under 11 USC s 1304(a) requires that the debtor be self-employed AND incur trade credit. If both prongs are not met, the debtor is not required to file operating reports as required under s 1304(c).
If a creditor receives notice of a plan sufficient to satisfy the requirements of due process, with a sufficient description of the debtor's treatment of the creditor's lien under the plan, the principles of res judicata will control and the plan will be binding on all parties regardless of an unobjected to proof of claim.
Audrey R. Evans
Debtor could not discharge a student loan obligation pursuant to 11 U.S.C. § 523(a)(8) despite her bleak financial circumstances because there were enough available funds in her budget to pay her debt in installments under the William D. Ford Direct Loan Consolidation Program’s Income Contingent Repayment plan while maintaining a minimal standard of living. Not selected for publication.
The confirmation of Debtor’s chapter 11 plan, which did not address the issue of the Federal Government's setoff rights, does not affect that entity's right to setoff a tax refund owed to Debtor against Debtor's tax debt. The Court found that § 1141, discussing the binding nature of a confirmed plan, does not apply to the setoff provision § 553, based on the plain language of that setoff provision. However, the Court found, although § 553 preserved a creditor's setoff rights even in light of a confirmed plan, that it is also logically consistent for the Code to preserve, as a corollary to the preservation of setoff rights, any defenses to those rights that existed outside of the bankruptcy. Therefore, wavier could be a defense to setoff and the Federal Government could have waived its rights to setoff by its conduct. In light of this ruling, the Court determined that further evidence on waiver was needed before it could reach a decision on whether the Federal Government had, in fact, waived those rights. In re Ronnie Dowdy, Inc., 314 B.R. 182 (Bankr. E.D. Ark. 2004)
Court sustained Chapter 13 Trustee's objection to claim where creditor failed to have its lien recorded on the subject vehicle's certificate of title in accordance with Arkansas' Vehicle Titling Statute. Creditor failed to establish that it had an equitable lien, and in any case, Court held that the Trustee's avoidance powers are superior to equitable liens. Although Debtor had listed creditor as secured in its confirmed plan, the Court held that such language was not binding, nor did it afford res judicata effect because of language in the plan confirmation order providing that all debts referred to in the Debtor's plan meant "allowed claims," and the creditor's claim had not yet been allowed. In re Shelby, 313 B.R. 292 (Bankr. E.D. Ark. 2004).
Court overruled Chapter 13 Trustee's objection to claim where creditor had proven that its lien was recorded on the subject vehicles' certificates of title in accordance with Arkansas' Vehicle Titling Statute although creditor subsequently lost those titles. The Court held that once the requirements of the Arkansas' Vehicle Titling Statute were met, the creditor had perfected its security interest; there is no requirement that it be able to produce a copy of the title, and no provision under Arkansas law causing it to lose its perfection upon losing the titles. In re Hill, 313 B.R. 290 (Bankr. E.D. Ark. 2004).
Creditor's alleged failure to attach writing to proof of claim did not render claim invalid. The Court found no cause to reconsider allowed claim where Debtors presented no evidence to dispute the merits or validity of the claim, and failed to justify a two-year delay in moving for reconsideration of the claim. Additionally, the Debtors do not have standing to object to the transfer of a claim under Rule 3001, and accordingly, no alleged deficiency in the claim transfer can serve as cause for reconsideration of a claim under § 502(j). Not selected for publication.