OpinionsAfter 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. Branko Prpa, LLC v. Ryan et al. (In re Ryan), 629 B.R. 616, aff’d sub nom. Ryan v. Branko Prpa MD LLC, No. 21-CV-0449-BHL, 2022 WL 613313 (E.D. Wis. Mar. 2, 2022) (on appeal) (March 2021) -- Judge B.E. Hanan Prior to filing for bankruptcy, the debtor entered into a compromise agreement concerning a workers’ compensation claim, which an administrative law judge approved in an order directing that part of the total compromise amount be paid to the debtor, part be paid to the debtor’s workers’ compensation counsel, and the remainder be paid to the debtor’s counsel’s law firm’s trust account “for disbursement to medical providers and lienholders.” The debtor tried to exempt the entire amount of the compromise, and one of the medical-provider creditors objected, asserting that the amount ordered to be set aside for the medical providers and lienholders was not the property of the debtor and therefore could not be exempted. The creditor also requested that the Court declare an express trust or impose a constructive trust on those set-aside funds. The Court granted summary judgment in favor of the creditor, concluding that, under Wisconsin law, the state court administrative order created an express trust, or, in the alternative, imposition of constructive trust was appropriate, meaning the funds ordered to be set aside for disbursement to third parties were not the property of the debtor and could not be exempted. 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. 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. Verde Environmental Technologies, Inc. v. C2R Global Manufacturing, Inc. (In re C2R Global Manufacturing, Inc.), Case No. 1830182-beh, Adv. Proc. No. 20-02028-beh, 2020 WL 2529335 (Bankr. E.D. Wis. May 18, 2020) (May 2020) -- Judge B.E. Hanan Verde filed an adversary proceeding, seeking preliminary and permanent injunctive relief related to its claims for false advertising under federal and state law. C2R responded with a motion to dismiss Verde’s Count II, relating to claims for false advertising under Wisconsin Statute section 100.18—the Deceptive Trade Practices Act (DTPA). The Court concluded that Verde, as a competitor of C2R, is not a member of “the public” and, therefore, not eligible to bring a sec. 100.18 claim. The Court also ruled that Verde was not induced to act based on any statements or representations by C2R, a second element of a claim under sec. 100.18. Accordingly, the Court granted C2R’s motion to dismiss Count II of the adversary complaint with prejudice. In re C2R Global Manufacturing, Inc., Case No. 18-30182-beh, -- WL -- (May 2020) -- Judge B.E. Hanan In approving the parties’ settlement of their patent infringement lawsuit (waged as a claim objection proceeding) the Court vacated its February 20, 2020 decision construing the parties’ disputed patent claim terms. |