OpinionsThe debtor requested that the court confirm its fourth amended chapter 11 plan, which proposed to pay Computershare Trust Company, N.A.'s secured claim at a rate equal to the five-year Treasury note rate plus 320 basis points, adjusted every five years to account for changes in the base rate. Computershare objected to plan confirmation on several grounds, including that the plan failed to meet §1129(b)(2)(A)(i)(II)'s confirmation requirement that future periodic payments equal the present value of its secured claim on the plan's effective date. Computershare argued that the interest rate paid on its secured claim must be a fixed rate and cannot be based on a variable rate, and it sought to present the testimony of its expert to opine that, if the court determined that a fixed rate were required, then the appropriate base rate to choose was not the five-year Treasury note rate but, instead, the yield for a U.S. Treasury maturing in 18 years. The debtor moved to exclude the expert's testimony as irrelevant because the court previously ruled that the plan's future payments on Computershare's allowed secured claim must be discounted at a rate equal to the prevailing rate for five-year Treasury notes, as referenced in the plan, which included adjustments every five years to account for changes in the prevailing rate, plus 320 basis points. The court granted the debtor's motion, ruling that the cramdown rate was the law of the case and that Computershare had presented no good justification for departing from the previous determination. In re Cytophil, Inc., Case No. 25-20576 (June 2026) -- Judge G.M. Halfenger Several years before filing a chapter 11 bankruptcy petition, the debtor hired the Jansson Munger & McKinley Ltd. law firm to represent it in defending against patent claims and to press counterclaims against its adversary. The firm represented the debtor in the litigation through dismissal of all claims, but the debtor didn't timely pay the firm's bills. The parties' engagement agreement required immediate payment of monthly invoices, but, although the debtor made partial payments through April 2018, it owed the firm more than $1.3 million when the litigation ended in June 2019. The debtor filed its bankruptcy petition on February 4, 2025, listing the firm as an unsecured creditor with a claim of about $1.3 million that was liquidated and undisputed. The firm filed a proof of claim for the same amount to which another creditor objected. The objecting creditor contended that the claim was barred in substantial part by Wisconsin's six-year statute of limitations, Wis. Stat. §893.43(1), because the monthly invoices were due on receipt and most of them were more than six years old when the debtor filed its bankruptcy case. The court overruled the claim objection. It opined that under governing Wisconsin law the firm's breach of contract claim for the total amount of unpaid legal services did not accrue until the firm's duty to continue representing the debtor in the litigation ended with the dismissal of all claims in June 2019, less than six years before the debtor filed its bankruptcy petition. In re Wisconsin & Milwaukee Hotel, LLC, Case No. 24-21743 (May 2026) -- Judge G.M. Halfenger The chapter 11 debtor filed a motion under Federal Rule of Civil Procedure 60(b)(5) to modify the court's May 2024 order that required the debtor to make monthly payments to its principal secured creditor as a condition for the debtor’s use of the secured creditor's cash collateral. The creditor objected, contending that the motion was untimely under Rule 60(c) and failed to make the showing required for modification under Rule 60(b)(5). The court concluded that, while the debtor filed its motion within a reasonable time as required by Rule 60(c), the debtor was not entitled to relief under Rule 60(b)(5) because the court concluded that the debtor had not experienced a significant change in circumstances warranting relief under that rule. Although the court denied the debtor's motion, it modified the May 2024 order to discontinue all monthly payments after the May 2026 payment because "continuation of the Order's monthly payment term has no ongoing equitable purpose or function beyond the commencement of the May 26 confirmation hearing." Id. at 15. In re Wisconsin & Milwaukee Hotel, LLC, Case No. 24-21743 (May 2026) -- Judge G.M. Halfenger The court entered an opinion and order approving the debtor's request to conduct an auction sale of equity in the reorganized debtor and to approve related auction procedures. The court determined, among other matters, that, under the circumstances presented, a creditor holding a claim secured by property not including equity interests was not entitled to credit bid at the auction sale of interests in the reorganized debtor. In re Wisconsin & Milwaukee Hotel LLC, Case No. 24-21743 (April 2026) (April 2026) -- Judge G.M. Halfenger Lenders, secured creditors who seek to enforce their security interests in the chapter 11 debtor’s hotel, appealed to the District Court the court’s denial of immediate relief under section 362(d)(2) from the automatic stay imposed by section 362(a). Lenders moved the bankruptcy court under Federal Rule of Bankruptcy Procedure 8007(e) to suspend further proceedings in that court and contended that their appeal divests the court of jurisdiction to conduct further proceedings until their appeal is concluded. The court ruled that (1) it retains jurisdiction to conduct further proceedings, including on confirmation and related matters, and (2) a suspension of those proceedings is not warranted. In re Frick, Case No. 25-25157 (March 2026) -- Judge G.M. Halfenger After the chapter 13 trustee objected to confirmation of the amended unconfirmed plan, the debtor's counsel purportedly withdrew the preconfirmation plan amendment. The trustee then submitted and the court mistakenly entered an order with respect to the debtor's payments to the trustee, superseding a previous order, requiring the debtor to make those payments in the amounts proposed in the plan as originally filed, rather than in the amounts specified in the plan amendment. A preconfirmation amendment to a chapter 13 plan cannot be withdrawn because the plan as amended "becomes the plan", 11 U.S.C. §1323(b), and this court's rules require that all parties be given notice of any changes to the plan, which is typically not required when a party withdraws a filed document. See In re Reed, No. 18-26531, 2018 WL 6975202 (Bankr. E.D. Wis. Nov. 8, 2018). Moreover, reverting to the unconfirmed plan as originally filed would not meaningfully address the trustee's objection to plan confirmation, which is that the debtor lost her job, leaving the trustee to doubt whether she "will be able to make all payments under the plan", 11 U.S.C. §1325(a)(6). The court deemed the attempted withdrawal of the plan amendment ineffective, vacated the mistakenly entered order with respect to the debtor's payments to the trustee, ordered the debtor to show cause why the court should not sustain the trustee's objection to plan confirmation and dismiss this case for cause under 11 U.S.C. §1307(c), and advised the trustee to not submit a proposed payment order in the future if a chapter 13 debtor tries to withdraw a preconfirmation plan amendment. Moodie v. Olson, Adv. Proc. No. 25-02090 (January 2026) (January 2026) -- Judge G.M. Halfenger Creditor-plaintiff filed an adversary complaint alleging that the debtor-defendant owes her unliquidated debts that are excepted from a chapter 7 discharge by §523(a)(2) & (4). The defendant filed a motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). After plaintiff filed an amended complaint, the defendant conceded that the §523(a)(2) claim was well pleaded but contended that the amended complaint failed to state a §523(a)(4) claim for which relief could be granted. The defendant argued in part that the §523(a)(4) claim—a claim that the defendant owed plaintiff a debt for defalcation while acting in a fiduciary capacity—is governed by Rule 9’s requirement that fraud be pleaded with particularity. Denying the motion to dismiss, the court concluded that plaintiff’s claim did not require, and was not based on, allegations of fraud for purposes of Rule 9. The court further concluded that plaintiff’s §523(a)(4) claim, premised on an alleged knowing violation of the fiduciary duties imposed by Wis. Stat. §§779.02(5), was otherwise well pleaded. In re KLE Equipment Leasing, LLC, No. 25-22922, ECF No. 350 (December 2025) -- Judge G.M. Halfenger Creditor BMO Bank N.A. moved for derivative standing to prosecute claims the bankruptcy estate allegedly has against the individual chapter 11 debtor's sons and others for wrongful transfers. The court denied the motion because it failed to allege the bases for the requested relief with particularity, as required by Fed. R. Bankr. P. 9013. The court concluded that the motion did not adequately allege any of the following requirements for derivative standing, that (1) the debtor in possession refuses a demand to pursue the action and the refusal is unjustified; (2) the claim to be pursued in the action is colorable; and (3) the third party seeks and obtains permission from the court to pursue the claim. The court denied the motion without prejudice but ordered that any future derivative standing motion must be accompanied by (a) a proposed complaint pleading all claims for which derivative standing is requested and (b) proof that the movant presented the proposed complaint to the debtor in possession, demanded that the debtor prosecute the proposed claims, and the debtor refused that demand. In re Wisconsin & Milwaukee Hotel LLC, No. 24-21743, Dkt. 803 (Bankr. E.D. Wis. Dec. 5, 2025) (December 2025) -- Judge G.M. Halfenger Two creditors (Lenders) moved under §362(d)(2) for relief from the §362(a) stay to allow them to enforce their liens on the chapter 11 debtor’s principal asset, a hotel. Lenders’ motion turned on whether the hotel is “necessary to a successful reorganization”, as used in §362(d)(2)(B). Lenders contended that the reasonable time in which to confirm a plan had passed (thus not making the hotel essential to an effective reorganization) and the debtor’s proposed plan of reorganization is fatally flawed, principally, because it violates the absolute priority rule as codified in §1129(b). The court’s opinion, entered after several days of evidentiary hearings and subsequent briefing, rejects these contentions, principally reasoning that the Lenders failed to show that the debtor’s proposed plan is so flawed that it cannot confirm a plan in a reasonable time. In doing so, the opinion addresses the follow topics: (1) issues relating to the auctioning of the debtor’s proposed sale of equity interests in the reorganized debtor; (2) the participation of the existing owner in that process as the proposed stalking horse bidder; (3) the meaning of “property” in §1129(b)(2)(B)(ii)’s prohibition on existing owners receiving or retaining property on account of their existing ownership interests; (4) potential limitations on the sale process, including whether the process can provide that the reorganized debtor will pay the stalking horse a breakup fee and whether a creditor with a security interest in real estate owned by the debtor may credit bid for the equity interests of the reorganized debtor; (5) whether the plan treats a secured creditor whose claim is paid in full unfairly or inequitably within the meaning §1129(b) based on the possibility that existing owners may be paid a dividend from excess sale proceeds after all unsecured claims are fully paid but before completion of all plan payments to the secured creditor; and (6) whether the debtor has failed to show that the need for new value is necessary. Additionally, the opinion addresses the court’s finding of an appropriate cramdown rate for purposes of §1129(b)(2), and, in so doing, discusses the extent to which the plurality opinion in Till v. SCS Credit Corp., 541 U.S. 465 (2004), has precedential force, governs cramdown determinations in cases under chapter 11, and requires the use of the prime rate as the base rate when using the formula approach to determine an appropriate cramdown rate. The opinion explains the court’s evidentiary finding on the appropriate cramdown rate, which it made using the five-year Treasury note rate (employed by the plan and lenders in the applicable industry) as the base rate and adding risk adjustments proven by the Lenders. Swanson v. Cannella (In re Window Select LLC), Adv. No. 25-02021 (October 2025) -- Judge G.M. Halfenger The liquidating trustee under the confirmed plan in the underlying chapter 11 case brought this adversary proceeding against the debtor's former principal and a revocable trust to avoid several prepetition transfers of funds from the debtor, to facilitate its former principal's purchase of residential real property from the trust, and recover the amounts transferred. The trust moved for partial summary judgment seeking a determination that, for purposes of liability and recovery under 11 U.S.C. §550(a), it was not the "initial transferee" (and is therefore not strictly liable for the return) of more than $700 thousand transferred from the debtor to Fidelity Title, Inc., which held the funds until disbursing them to the trust when the sale closed, primarily arguing that the debtor's former principal was the "initial transferee" because, while Fidelity Title held the funds, he had dominion over the funds, i.e., full control of the funds for his personal use. The court denied the trust's motion because Fidelity Title held the funds subject to its agreement to disburse the funds only if specified conditions were satisfied, in accordance with the closing statement, to the trust and others, so the debtor's former principal never had the requisite dominion over the funds. |