After the debtor’s daughter filed three bankruptcy cases in her representative capacity under a durable power of attorney, the debtor sought to expunge or seal the records. The Court determined that it did not have authority to equitably expunge the bankruptcy cases. Because the debtor executed a durable power of attorney which authorized her attorney-in-fact to institute bankruptcy proceedings, and because she never formally revoked that authority, the Court found that the filings were authorized, which foreclosed any basis for sealing or annotation of the record. The Court noted, however, that cases initiated by an attorney-in-fact should take extra precautions to make clear the signer’s representative capacity.
Archer-Daniels-Midland Company v. Country Visions Cooperative, Case No. 17-cv-0313-bhl (February 2021) -- District Court
Appellant sought the reversal of a bankruptcy court order that denied appellant’s “motion to enforce” an earlier plan confirmation order issued by the same bankruptcy judge. Through its motion, the appellant asked the bankruptcy court to enforce a 2011 confirmation order against the appellee even though the appellee was not a party to the bankruptcy case at confirmation. The appellant also requested an injunction that would have prevented appellee from continuing state court litigation related to a right of first refusal on real property that the appellant purchased pursuant to the confirmation order. The bankruptcy court denied the motion, concluding that because the appellee had not received proper notice of the bankruptcy proceedings, its rights could not be affected by the confirmation order consistent with due process. The bankruptcy court also rejected appellant’s alternate theory that it was a “good faith” or “bona fide” purchaser of the property. For the reasons stated, the bankruptcy court’s ruling is affirmed.
In re Glenn Buettner, Case No. 20-24696 (February 2021) -- Chief Judge G.M. Halfenger
The trustee objected to confirmation of the chapter 13 debtor's plan, asserting that 11 U.S.C. §1325(a)(4) requires that a chapter 13 plan must pay at least as much on allowed unsecured claims as would have been paid on those claims if the case had been filed under chapter 7 and the estate had been liquidated (i.e., without regard to any administrative expenses incurred in the chapter 13 case, including attorney's fees, that would not have been incurred in a chapter 7 case). The court disagreed, concluding that, by its plain terms, §1325(a)(4) requires a determination of the amount that would have been paid on each allowed unsecured claim if the estate were liquidated under chapter 7 on the effective date of the plan (the confirmation date), which would necessarily require the payment of all allowed administrative expenses as of that date, including any attorney's fees allowed in the chapter 13 case, before payment on any lower-priority allowed unsecured claims. The court sustained the trustee's objection to confirmation of the chapter 13 plan, however, because the present value of the deferred payments on allowed unsecured claims provided for by the plan was less than the amount that would have been paid on those claims had the estate been liquidated under chapter 7 on the plan's effective date.
Verde Technologies v. C2R Global Manufacturing, Inc. (In re C2R), Case No. 18-30182-beh, Adv. No. 20-2028-beh, 2020 WL 7265867 (December 2020) -- Judge B.E. Hanan
Both parties submitted various motions to seal, supplying some evidence to support the motions, namely, declarations of officers within the companies explaining why the information to be protected falls within the scope of 11 U.S.C. § 107(b). The Court reviewed the categories of documents to determine whether they constituted trade secrets or confidential research, development, or commercial information as contemplated under the Code. In instances where the Court determined the information to be subject to public disclosure, the parties were granted 21-days’ leave to supplement the record in favor of protection.
In re Robinson, Case No. 19-22498-beh, 2020 WL 7234031 (December 2020) -- Judge B.E. Hanan
The debtor sought to extend her total plan length from 60 months to 84 months, pursuant to the temporary amendment to the Bankruptcy Code at 11 U.S.C. § 1329(d), made possible by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Her plan, however, originally was confirmed after the enactment of the CARES Act—four days after enactment. The plain text reading of the eligibility period under § 1329(d) limits modifications to plans confirmed before March 27, 2020.
In re Edward and Linda Tolliver, Case No. 20-22408 (September 2020) -- Chief Judge G.M. Halfenger
A creditor objected that the chapter 13 plan could not be confirmed because it proposed to modify the creditor's rights as the holder of a claim secured only by a security interest in the debtors' principal residence, in violation of 11 U.S.C. §1322(b)(2). The debtors responded that the proposed modification of the creditor's rights was permissible under §1322(c)(2) because the last payment on the original payment schedule for the claim was due before the final payment under the plan was due. The creditor replied that the debtors had agreed to extend the original payment schedule for the claim to a date past when the final payment under the plan was due, making §1322(c)(2) inapplicable. The court sustained the creditor's objection to confirmation of the plan because, under Wisconsin law, the debtors' agreement to a new payment schedule on the debt, in exchange for being deemed current on payments, resulted in a new contract; that new contract gave rise to the creditor's "claim", defined in the Bankruptcy Code as a "right to payment"; and the original (and only) payment schedule for that claim ends after the final payment under the plan is due.
George v. Anderson (In re Anderson), Case No. 17-29971-beh, Adv. No. 19-02165-beh, 2020 WL 4463055 (Bankr. E.D. Wis. July 31, 2020) (July 2020) -- Judge B.E. Hanan
The Chapter 7 trustee moved for summary judgment in her adversary proceeding against debtor’s brother, the recipient of an alleged fraudulent transfer. The Court weighed the facts of the case against both actual fraud under sec. 548(a)(1)(A) and constructive fraud under sec. 548(a)(1)(B), and found that the trustee had not met her burden on summary judgment to show entitlement to judgment as a matter of law.
In re Luedke, Case No. 20-20729-beh, 2020 WL 4342242 (July 2020) -- Judge B.E. Hanan
The Chapter 7 debtors claimed federal homestead exemptions in their primary residence, which was held by a living revocable trust of which they were the settlors, beneficiaries, and trustees. The Chapter 7 trustee objected to the claimed exemptions, asserting that the trust was a separate legal entity, and therefore the debtors had no interest in the residence that they could claim as exempt. Looking to Wisconsin trust law, the Court concluded that the debtors’ living trust—unlike a corporation or an LLC—was not a separate legal entity, and that the debtors maintained equitable ownership of their residence. Because that equitable ownership, coupled with the debtors’ present possessory interest, was an “aggregate interest” in the residence that could be exempted under 11 U.S.C. section 522(d)(1), the Court overruled the trustee’s objection.
In re Hefty, Case No. 19-31232-beh, 2020 WL 4289367 (July 2020) -- Judge B.E. Hanan
The trustee objected to confirmation of the above-median debtor's proposed Chapter 13 plan, asserting that it failed to provide for all of the debtor's disposable income. Because the debtor had obtained a new and higher-paying job shortly before filing his case, the trustee and the debtor agreed that the means test—using its six-month look-back period—did not accurately reflect the debtor’s “projected disposable income” under 11 U.S.C. section 1325(b)(1). But the parties disagreed on the proper method for accurately calculating projected disposable income. The trustee argued that the amount should be calculated with an amended means test, using the debtor’s new income, while the debtor asserted that only Schedules I and J mattered. The Court concluded that the means test (adjusted to reflect the upward increase in the debtor’s income), and not Schedules I and J, should be used to calculate the debtor’s projected disposable income, and sustained the trustee’s objection.
In re H2D Motorcycle Ventures, LLC and JHD Holdings, Inc., Case Nos. 19-26914-beh, 19-26915-beh, 617 B.R. 625 (Bankr. E.D. Wis. 2020) (June 2020) -- Judge B.E. Hanan
The jointly-administered Chapter 11 debtors had proposed and been approved for two significant asset sales, and now ask the Court to use the proceeds of the sales to pay select administrative claimants. Simultaneously, the U.S. Trustee filed a motion to convert the Chapter 11 cases to separate Chapter 7 proceedings, and the largest secured creditor filed a motion for relief from the automatic stay. The Court considered the best sequence and means of handling the various motions against the debtors' admission that the Chapter 11 process is no longer an option for them, as well as other facts of record. Based on the best interests of the creditors and the estates under Sec. 1112(b), the Court converted the two cases to Chapter 7, and held the remaining motions in abeyance.