A portion of the Internal Revenue Service's proof of claim arises from an assessment for a shared responsibility payment. That payment is required as a result of the debtors' failure to comply with the Patient Protection and Affordable Care Act’s individual mandate to maintain health insurance. The IRS asserts that the unremitted shared responsibility payment is an excise-tax debt entitled to priority under 11 U.S.C. section 507(a)(8). The debtors objected to the claim, contending that the shared-responsibility-payment debt is not entitled to priority. The court sustained the objection, ruling that the shared responsibility payment is not an excise tax on a transaction as required by section 507(a)(8).
In re CF Beef & Grain, LLC, Case No. 18-20898, 590 B.R. 849 (September 2018) -- Judge B.E. Hanan
After multiple creditors and the Chapter 12 trustee objected, the court denied confirmation of the debtor’s amended chapter 12 plan, due to lack of feasibility and failure to meet the best-interests test. The court found that the debtor’s cash flow projections were not reasonably possible because they appeared to understate expenses and overstate revenue; the plan did not take into account the possible loss of farmland (and attendant outbuildings) owned by the debtor’s individual members, which was in foreclosure at the time, and would mean the inability to earn any income from grain drying and storing and a reduction in the debtor’s crop acreage by almost a third; and, most significantly, the plan’s success hinged on significant “cash infusions” from another LLC owned by the same individual members, which would be possible only if the other LLC continued to default on its own loan to the debtor’s main secured creditor. In addition, the debtor’s liquidation analysis used excessive discount rates and miscalculated the required secured debt payment in a hypothetical liquidation, and the plan lacked clarity about the precise amount to be paid to unsecured creditors; based on the record, the court could not conclude that the debtor had proven the plan met the best-interests test. Because it appeared the debtor would be unable to propose a confirmable plan in the circumstances, the court granted the requests of both the trustee and an unsecured creditor to dismiss the case.
In re Justin Daniel Paul Camacho, Case No. 18-27653 (September 2018) -- Chief Judge G.M. Halfenger
The debtor filed a motion for a temporary waiver of the credit counseling requirement. The court denied the motion and dismissed the case because the debtor failed to meet the requirements for waiver provided in section 109(h) of title 11: that the debtor faced exigent circumstances and attempted to obtain the credit counseling within the seven days before the case was filed but was unable to do so. As a result, the debtor failed to meet the credit-counseling requirement imposed by section 109(h) on individuals desiring to file a bankruptcy case. The debtor's counsel then filed a letter explaining the circumstances that led the debtor to file bankruptcy and requested that the court "reinstate" the case. The court construed the letter as a motion to vacate the dismissal order under Federal Rule of Bankruptcy Procedure 9024. The court denied the motion because, even presuming the truth of the unverified statements in the letter, the debtor did not plausibly suggest that he could establish exigent circumstances or that he attempted to complete credit counseling before he filed his case.
Pansier et al v. State of Wisconsin et al (In re Pansier), Adv. No. 18-2129, Case No. 18-22297-beh, 2018 WL 4191851 (August 2018) -- Judge B.E. Hanan
The court denied the pro se debtors’ motion for leave to amend their adversary complaint to add the U.S. Trustee as a defendant and seek an injunction barring the U.S. Trustee from investigating the debtors’ interest in property listed on their current bankruptcy schedules via a previously approved Rule 2004 examination or subsequent investigation of the debtors’ property interests. The debtors claimed that res judicata and collateral estoppel applied because they had listed the property in their prior bankruptcy cases such that receiving discharges in one or more of those cases resulted in a final determination that they had no ownership interest in the property. The court denied leave because the amendment would be futile, res judicata and collateral estoppel did not apply, and the debtors could not use a complaint for injunctive relief against the U.S. Trustee to circumvent their obligation to provide full and accurate disclosures in the present bankruptcy case.
In re Salinas, Case No. 18-25509 (August 2018) -- Chief Judge G.M. Halfenger
The debtor failed to file payment advices before the expiration of the 45-day deadline set by 11 U.S.C. §521(i). The court issued an order to show cause why the debtor's case was not automatically dismissed on the 46th day for failing to file payment advices. The debtor thereafter filed payment advices. The court entered an order stating that the case was automatically dismissed on the 46th day. The debtor filed a motion to reconsider the dismissal order and provided a detailed explanation of the reasons for the failure to timely file her payment advices. The court denied the debtor's motion to reconsider because the case terminated by operation of law on the 46th day once the payment advices were not timely filed. The court reasoned that §521(i) does not afford any discretion to reinstate the case after it was automatically dismissed by statute.
Wisconsin Mutual Insurance Company v. Cross (In re Cross), Adv. No. 17-02153, Case No. 17-20977-beh, 2018 WL 3965191 (August 2018) -- Judge B.E. Hanan
The court granted the creditor’s motion for default judgment against the debtor, concluding that the creditor made a prima facie showing of a nondischargable debt under 11 U.S.C. section 523(a)(9), based on a police report (portions of which were considered under Federal Rule of Evidence 803(8)(c)) and a court record evidencing debtor’s guilty plea to the charge of operating while intoxicated (of which the court took judicial notice).
Heinrich v. Bagg, Adv. No. 17-2247 (August 2018) -- Judge B.H. Ludwig
Court found debts based on state court civil judgment for tortious interference with contract and unlawful harvesting of timber dischargeable. Creditor failed to establish at trial that debts were for willful and malicious injury under section 523(a)(6).
In re Bernhard, Case No. 17-27843 (August 2018) -- Judge B.H. Ludwig
Court granted creditor and chapter 13 trustee's motions to dismiss because the debtor's total noncontingent, liquidated unsecured debts exceeded the chapter 13 debt limits. The debtor had scheduled a substantial debt as "unliquidated" because she had several affirmative defenses to it. Nevertheless, since it was readily ascertained by reference to an agreement and through simple mathematics, it was a liquidated debt and counted toward the §109(e) debt limits.
In re Stanley Immel, Case No. 17-22036 (August 2018) -- Chief Judge G.M. Halfenger
Section 522(f)(3)(B) of title 11 provides that if a debtor elects state-law exemptions for implements and tools of the trade under a law of a state that "prohibits avoidance of a consensual lien on property otherwise eligible to be claimed as exempt", then the debtor may not avoid the lien "to the extent the value of such implements . . . [and] tools of the trade . . . exceeds $6,425." Wisconsin law "prohibits avoidance of a consensual lien on property". A debtor electing Wisconsin exemptions can only avoid a lien on implements and tools of the trade up to $6,425.
In re Groth, Case No. 17-30264 (July 2018) -- Chief Judge G.M. Halfenger
The trustee objected to confirmation because the debtor was not providing all of her projected disposable monthly income to unsecured creditors. The trustee argued that the debtor should not be allowed to deduct her homeowner association dues as a special circumstance on her means test. The court agreed and concluded that, under the facts of this case, the debtor's obligation to pay her homeowner association dues was not a special circumstance for purposes of 11 U.S.C. section 707(b)(2)(B)(i).