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    In re Ackerman, Case No. 23-22510-beh, 2024 WL 1925980 (May 2024) -- Judge B.E. Hanan
    The Chapter 13 debtor filed a plan proposing to “cure and maintain” a claim secured by a reverse mortgage on her homestead under 11 U.S.C. § 1322(b)(5). Several years prior to the petition date, the debtor and her now-deceased husband had signed the reverse mortgage on the property, while only her husband had signed the promissory note. The debtor’s husband passed away a little more than a month before she filed her case. The mortgage creditor objected to confirmation of the debtor’s plan, arguing that the entirety of the note had been called due prepetition, based on the death of her husband, combined with her failure to cure a prepetition tax arrearage on the property, and had to be paid in full through her plan. The Court examined the language of the mortgage and note at issue, as well as the applicable federal laws and regulations in existence when the note and mortgage were signed, and concluded that the parties intended that the maturity date of the note would be fixed upon the occurrence of one of two events: (1) the later of either (a) the death of the borrower or (b) the death (or ineligibility) of the nonborrowing spouse (the debtor); or (2) the sale of the property. Because the loan had not matured on its own terms due to the debtor’s failure to cure the property tax arrearages, the Court concluded that the debtor could cure the contractual default through her plan, and overruled the creditor’s objection.

    In re Weylock, Case No. 18-30208 (April 2024) -- Chief Judge G.M. Halfenger
    The chapter 13 debtors filed an objection to a mortgage creditor's response to the trustee's notice of final cure payment. The court construed the creditor's response to state that the debtors are current on postpetition payments for purposes of 11 U.S.C. §1322(b)(5), despite the outstanding postpetition fees, charges, and expenses listed in the response, and declined to act on the debtors' objection, which should have been filed (if at all) as a motion for a determination of final cure and payment under Federal Rule of Bankruptcy Procedure 3002.1(h).

    Scott Smith v. Gregory Kleynerman, 93 F.4th 1071 (7th Cir. 2024) (February 2024) (March 2024) -- Seventh Circuit Court of Appeals
    The Chapter 7 debtor moved to reopen case and to avoid, on exemption-impairment grounds, judicial lien that was placed on his interest in limited liability company (LLC) through charging order requiring him to turn over his future distributions and interest in LLC to judgment creditor, his former business partner. The bankruptcy court granted the motion to reopen and conditionally granted the motion for avoidance, provided that debtor reimburse judgment creditor for costs and fees incurred in the relevant state court litigation. The district court affirmed.

    The Seventh Circuit Court of Appeals affirmed the decision of the district court holding that (1) the bankruptcy court did not abuse its discretion in reopening the case, and (2) the bankruptcy court did not clearly err in valuing debtor’s interest in the LLC as less than $15,000.

    In re Goldapske, Case No. 19-23754 (March 2024) -- Chief Judge G.M. Halfenger
    The debtors filed a motion to modify the confirmed chapter 13 plan, purporting in relevant part to merely clarify the plan's existing terms: that payments under the plan began 30 days after the petition was filed. The trustee objected to the debtors' proffered construction of the plan, arguing that payments under the plan began after the plan was confirmed, and further objected to modification of the confirmed plan in accordance with the debtors' motion. The court agrees with the trustee's reading of the confirmed plan's terms and that 11 U.S.C. §1329(a) does not permit the modification of a confirmed plan to change the plan's effective date, i.e., the beginning of the period for payments under the plan, for purposes of 11 U.S.C. §1322(d), and the applicable commitment period, for purposes of 11 U.S.C. §1325(b). But the debtors' motion might instead be construed as a permissible request to reduce the time for payments under the confirmed plan, so the court afforded the trustee additional time to supplement her objection to the motion.

    In re Oshkosh Refurb, Inc., Case No. 23-25769-beh (oral ruling) (February 2024) -- Judge B.E. Hanan
    The Chapter 11 debtor’s primary secured creditor moved for relief from the automatic stay as to only a portion of the collateral securing its claim (aged inventory and used vehicles), arguing that the property was not necessary for an effective reorganization under section 362(d)(2) because the debtor could successfully reorganize without it. The Court rejected such a narrow construction of the word “necessary,” which would allow for stay relief any time a single piece of property could be taken away from the debtor’s assets without jeopardizing the overall success of a contemplated reorganization. Instead, the Court considered whether the property contributed to, or had a role to play, in the debtor’s reorganization efforts. Because the evidence established that the property at issue would aid in the debtor enterprise’s overall income-producing capabilities, it was necessary for a reorganization that contemplated preservation of that enterprise, and stay relief was inappropriate.

    In re Greenpoint Tactical Income Fund LLC, Case No. 19-29613 (February 2024) -- Chief Judge G.M. Halfenger
    The court confirmed the debtor's chapter 11 plan in May 2022. In August 2023 the debtor's former managing members moved the court to compel the reorganized debtor to pay amounts the former managing members asserted they were due under the plan. The court granted the motion in part and denied it in part, declaring that the former managing members had administrative claims that are due and owing but denying other requests for relief, including a request to compel the reorganized debtor to make the required payments.

    In re Arrow Express, Inc., Case No. 95-24187 (February 2024) -- Chief Judge G.M. Halfenger
    Unclaimed Funds Recovery Services VII Inc. ("UFRS") filed a petition under 28 U.S.C. §2042 for the release of unclaimed funds, purportedly as the successor claimant to a creditor in this chapter 7 case. The court denied the petition, and UFRS moved for reconsideration. UFRS then filed another petition under §2042, purportedly as the successor claimant to another creditor in the case. The court denied both UFRS's motion for reconsideration and UFRS's second petition for the release of unclaimed funds because UFRS has not appeared by counsel and corporations are not ordinarily permitted to appear in and seek relief from a federal court except by counsel.

    In re Greenpoint Tactical Income Fund LLC, n/k/a Alluvium Fund LLC, Case No. 19-29613 (December 2023) -- Chief Judge G.M. Halfenger
    1. In a single consolidated request for relief, H Informatics LLC filed an application for allowance of administrative expenses under 11 U.S.C. §503(b)(1)(A) and debtor Greenpoint Tactical Income Fund, n/k/a Alluvium Fund LLC ("Fund") moved for approval under Federal Rule of Bankruptcy Procedure 9019 of the Fund's compromise of H Informatics' administrative expense claim. The United States trustee and the U.S. Securities and Exchange Commission objected.
    The court denied the motion to compromise, determining that the existing record did not afford an adequate basis from which the court could determine whether the compromise bore a reasonable relationship to the amount that H Informatics could be allowed under 11 U.S.C. §503(b)(1)(A). With respect to H Informatics' application for allowance of administrative expenses, the court noted that if H Informatics was required to have its employment approved under 11 U.S.C. §327, then it would not be permitted to apply for compensation under 11 U.S.C. §503(b)(1)(A). The court concluded that an evidentiary hearing was required to determine whether H Informatics was a "professional person", thus required to have its employment approved under 11 U.S.C. §327. The court further reasoned that even if H Informatics is not a professional person under §327, the existing record did not allow the court to determine the "actual, necessary costs and expenses of preserving the estate", necessitating an evidentiary hearing to determine the extent to which the court should allow H Informatics' administrative expense claim under 11 U.S.C. §503(b)(1)(A).
    2. The court denied H Informatics' motion in limine and for summary judgment based on its denial of the motion to compromise.

    In re Higgins, Case No. 23-22024 (December 2023) -- Judge R.M. Blise
    The Court held that Matrix Financial Services Corporation did not have a security interest in property of the bankruptcy estate, and the Court sustained Matrix’s objection to the debtor’s chapter 13 plan and granted its motion for relief from stay. The debtor’s plan proposed to cure and maintain the mortgage on his deceased father’s house. The debtor’s father had died intestate, and his estate was never administered in probate court. The debtor and several siblings were entitled to equal shares of their father’s estate. The court held that a chapter 13 plan can provide for a mortgage under 11 U.S.C. § 1322(b)(5) where the debtor is not personally liable on the debt and is not in contractual privity with the creditor, but only if the underlying collateral is property of the bankruptcy estate. The debtor argued that the debtor’s interest in his parents’ probate estate, which included the house, was sufficient to draw the house into the bankruptcy estate pursuant to the definitions in 11 U.S.C. §§ 101(5) and 102(2). The creditor argued that the debtor’s interest was not in the house itself, but in the probate estate.

    The Court turned to Wisconsin probate law to determine the extent of the debtor’s interest in the house. The Court acknowledged that before the 1971 enactment of the Wisconsin probate code, legal title to a decedent’s real property passed automatically to the heirs, but since the probate code’s enactment a decedent’s interest in all property, including real property, passes to the personal representative of the decedent’s estate. Relying on Shovers v. Shovers, 2006 WI App 108, 718 N.W.2d 130, the Court held that legal title to a decedent’s property remains suspended until the appointment of a personal representative. Therefore, before property is transferred by an appointed personal representative, the heirs have an interest in the probate estate and at most have an equitable interest in the property that is part of the probate estate. The debtor was adamant the house would ultimately pass to him following probate, but such an outcome was not guaranteed. The Court held that Matrix’s security interest did not attach to whatever equitable interest the debtor may have in the house, so the house itself, as opposed to the debtor’s equitable interest, was not part of the bankruptcy estate for purposes of Matrix’s objection to confirmation and motion for relief from stay.

    In re Solis-Ocon, Case No. 19-27917 (December 2023) -- Judge R.M. Blise
    The Court granted the trustee’s motion to vacate a chapter 13 debtor’s discharge pursuant to Fed. R. Civ. P. 60(b)(1). An error by an employee of the chapter 13 trustee caused an unsecured claim to be incorrectly characterized as secured. The debtor paid the trustee an amount that the trustee represented would be sufficient to pay all unsecured claims. Thereafter, the trustee filed a notice of completion of plan payments and the Court entered an order discharging the debtor. The trustee discovered the error less than a month after the discharge order and filed a motion to vacate the discharge pursuant to Fed. R. Civ. P. 60(a). The debtor objected to the motion and the Court held that the discharge order did not contain the type of clerical error or mistake contemplated by Rule 60(a). The trustee then raised 60(b)(1) as a basis for vacating the discharge order, arguing the order was based on a factual mistake. The Court relied on In re Bethe, No. 11-25388-GMH, 2017 WL 3994813 (Bankr. E.D. Wis. Sept. 8, 2017), in holding that a discharge order could be vacated under Rule 60(b)(1) if it resulted from a mistake and if the equities of the case warranted relief. The Court concluded the discharge order was based on a factual mistake because the debtor had not made “all payments under the plan” as required for discharge pursuant to 11 U.S.C. § 1328(a) and that the equities of the case favored granting the trustee’s motion.