After the failure of the debtor’s confirmed chapter 11 plan, the debtor’s largest secured creditor moved to dismiss the case. Another creditor objected, urging conversion to chapter 7. The debtor conceded that “cause” to dismiss or convert the case existed under 11 U.S.C. section 1112(b), but argued that dismissal was warranted. In deciding between the two options, the court considered whether a chapter 7 trustee in a converted case would be able to administer any assets for the benefit of unsecured creditors. The court found that the debtor had no unencumbered liquid assets to fund a chapter 7 administration, and there was little to no evidence that a chapter 7 trustee would be able to find or recover any “hidden” assets of the debtor (or pay for the necessary investigation), as one creditor had asserted. As a result, dismissal, rather than conversion, was in the best interest of the creditors and the estate.
Van Eperen v. Baycare Health System, Adversary No. 16-2412 (September 2017) -- Judge B.E. Hanan
The court concluded that, for purposes of an avoidance action under section 547(b), a transfer of funds garnished under the Wisconsin garnishment statute occurred at the time the funds were conveyed to the creditor, not when they were deducted from the debtor's paycheck.
In re Sier, Case No. 17-20837 (August 2017) -- Judge B.E. Hanan
The chapter 7 debtor moved to reopen her case in order to vacate her discharge order and file reaffirmation agreements made after the discharge order was entered. The court denied the motion, questioning first whether the court could vacate the discharge order for such a purpose, and concluding that, in any event, the debtor had failed to demonstrate that she was entitled to relief under Rule 60(b).
In re Schmidt, Case No. 08-25973 (July 2017) -- Judge B.E. Hanan
The court granted the motion of the debtor's personal representative to reopen the case, file a certificate of financial management, and obtain a discharge, despite the passage of several years, outlining the factors courts consider in determining whether to grant such a motion.
In re Nelson, Case No. 16-22089 (February 2017) -- Judge B.E. Hanan
Debtor's counsel filed an application for compensation seeking allowance of $6,654.43 for services rendered in a relatively straightforward chapter 13 case that lasted only eight months. The court allowed $5,679.43 in compensation because it concluded that the application impermissibly sought compensation for noncompensable clerical tasks and several services that seemed duplicative. The court's decision discuses best practices that counsel should follow when filing fee applications, and highlights the interplay between the district's no-look fees, the local rules, the bankruptcy rules, and pertinent case law on fee applications.
In re Green Box NA Green Bay, LLC, Case No. 16-24179 (October 2016) -- Judge B.E. Hanan
The United States trustee moved to dismiss the chapter 11 debtor-in-possession's case for cause under 11 U.S.C. section 1112(b). The motion was later joined by three secured creditors. The court examined six different grounds for cause, and concluded that the movants had not met their burden to show that there was cause to dismiss the case, so it denied the motion. The court also ordered the debtor to file amended monthly operating reports and disclosures relating to its previous legal proceedings by a date certain.
In re Lucia Vargas, Case No 16-23199 (September 2016) -- Judge B.E. Hanan
The court sustained the creditor's objection to the debtor's motion for referral to the MMM Program based on the creditor's inability to modify a loan on which the debtor was not the borrower (and without the participation of the borrower), but explained the purpose of this district's MMM Program, and noted the limited circumstances in which the court will consider sustaining such an objection.
In re Reinhart, Case No. 16-21042, 559 B.R. 217, 559 B.R. 217 (September 2016) -- Judge B.E. Hanan
The chapter 13 trustee objected to plan confirmation contending that the debtor's chapter 13 plan failed to pay all disposable income under 11 U.S.C. section 1325(b). The trustee contended that the debtor's reimbursements from his employer for mileage and meal expenses, but not the corresponding expenses, constituted income which must be factored into the debtor's calculation of current monthly income. The court agreed with the trustee and sustained her objection, concluding that the broad language defining current monthly income under 11 U.S.C. section 110(10A) encompassed reimbursements, without regard to their corresponding expenses. The court also concluded that the debtor's corresponding expenses in association with the reimbursement income are properly deducted when calculating the debtor's disposable income on Form 122C-2 of the Means Test.
Woodsman LLC v. Denil, Adversary Case No. 15-2567 (May 2016) -- Judge B.E. Hanan
This adversary proceeding involved a dispute over the rights and interests of the defendant-debtors, the vendees, in a piece of real property that was subject to a land contract where the redemption period under state law had expired, but the state court had yet to enter an order under Wisconsin Statutes section 846.30 finalizing the strict foreclosure. Plaintiff, Woodsman LLC, the vendor, moved for summary judgment on two alternative grounds: (1) that the subject property was not property of the debtors' bankruptcy estate; or (2) that the entry of an order finalizing Woodsman's judgment of strict foreclosure under Wisconsin Statutes section 846.30 was a ministerial act not subject to the automatic stay. The court held that: (1) the subject property was property of the debtors' bankruptcy estate because the debtors held equitable title in the property until a final order under Wisconsin Statutes section 846.30 was entered; and (2) entering a final order under Wisconsin Statutes section 846.30 was not a ministerial act excepted from the automatic stay even if the ministerial acts exception was a permissible construct within the Seventh Circuit.
In re Gibas, Case No. 15-31102, 543 B.R. 570 (January 2016) -- Judge B.E. Hanan
A couple filed for chapter 11 relief after obtaining a voluntary dismissal of their prior joint chapter 13 case in which a secured creditor had moved for relief from the automatic stay shortly before the debtors requested dismissal. The husband moved to continue the automatic stay; the wife moved to impose the stay; and the court ordered the couple to show cause why they were eligible to be debtors under section 109(g)(2). Interpreting the word “following” in section 109(g)(2) to mean “after,” rather than requiring a causal connection between the dismissal and motion for relief from stay, the court concluded that the couple were not eligible for relief under Title 11. Based on the couple's past history of serial filings and egregious conduct in eight bankruptcy cases filed since 2011, the court dismissed the case with a one-year bar to refiling. The court further held that, even if the couple were eligible under section 109(g)(2), their conduct demonstrated bad faith, which would preclude the court from continuing or imposing the automatic stay as to either.