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Case Summaries June 2013

Posted by John Smith | Aug 22, 2014 | 0 Comments

ARIZONA

Case Name: In re Strata Title, LLC, 2013 WL 2456399 (Bkrtcy.D.Ariz.)

Case Summary:

On June 6, 2013, the United States Bankruptcy Court for the District of Arizona issued its decision finding Schedule 1 of an LLC operating agreement was no longer property of the estate and finding cause to lift the automatic stay.

Notable Points to Bankruptcy Practitioner:

The Court gives a good analysis of an operating agreement and its interplay of state law and bankruptcy law in interpreting and defining how to enforce the provisions of the agreement in the context of the bankruptcy.   The Court addresses several issues in the opinion worth a quick review, including whether the prepetition assignment of membership interests in an LLC was an absolute assignment, rendering those interests not property of the estate; the effect of rejection upon an operating agreement; whether a party had properly perfected its security interest in the membership interests; and whether the memberships interests were still property of the estate after certain conditions had not occurred in the operating agreement.

Case Name: In re Val-Mid Associates, L.L.C., 2013 WL 2297070 (Bkrtcy.D.Ariz.)

Case Summary:

On June 14, 2013, the United Sates Bankruptcy Court for the District of Arizona denied Debtor's confirmation of a Chapter 11 plan and converted the case to a Chapter 7.

Notable Points to Bankruptcy Practitioner:

In a short but direct opinion the Court denied the Debtor's Amended Plan because it failed to prove that the Amended Plan satisfied the good faith requirement of 11 U.S.C. § 1129(a)(3).  In a case that you wish a bit more had been said on this issue, it appears the Debtor failed to provide a method for creditors to recover on potential preference and fraudulent transfer actions.  The statement of financial affairs indicated payments of $98,000 to insiders during the preference period, which substantially exceeded the contributions by the Debtor under the plan.  Furthermore, under the best interests test, if the creditors are not certain if they are receiving more than their liquidation value the purposes of the Code cannot be achieved.  Why the Court did not let the Debtor amend the plan again is a bit mystifying; however, the Court stated the Debtor already had two opportunities to confirm and there was a marked lack of support of the plan by the unsecured creditors.

Case Name: Greenbelt Claims Recovery, LLC v. Transnation Title Insurance Company, et al., 2013 WL 3199809 (Bkrtcy.D.Ariz.)

Case Summary:

On June 21, 2013, the United States Bankruptcy Court for the District of Arizona denied Defendant Transnation Title Insurance Company's motion for summary judgment seeking to dispose of claims that arose out of allegations that the offering of investment opportunities in the form of promissory notes and trust deed programs constituted the offer and sale of securities under Arizona's Securities Act.

Notable Points to Bankruptcy Practitioner:

In a short opinion by the Honorable Ballinger Jr., the Court walks easily through the complex web of the required elements and case law factors in order to make the determination that these promissory notes, which were tied to trust deeds, either partially or wholly, were indeed securities and not investment contracts.

SOUTHERN DISTRICT OF CALIFORNIA

Case Name: In re Maricela and Michael Gamboa, 2013 WL 2460514 (S.D.Cal.)

Case Summary:

On June 3, 2013, the United States Bankruptcy Court for the Southern District of California granted the Trustee's motion to increase the percentage of distribution to the unsecured creditor based on the Debtor's tax refunds; however, the Court adjusted that percentage downward to account for the Trustee's administrative fee to distribute the tax refund.

Notable Points to Bankruptcy Practitioner:

No notable points of interest to the Bankruptcy practitioner.

IDAHO

Case Name: In re Clay W. Preuit and Mary E. Preuit, 2013 WL 2467976 (Bkrtcy.D.Idaho)

Case Summary:

On June 7, 2013, the United States Bankruptcy Court for the District of Idaho sustained the Trustee's objection disallowing a claimed exemption.

Notable Points to Bankruptcy Practitioner:

This is an exemption planning case taken a bit too far by this debtor.  The debtor was in the midst of having a substantial judgment taken against him and he just happened to transfer $120,000 into an annuity.  If you are practicing in Idaho and you are considering a substantial transfer in the hopes of protecting those assets from the Trustee's reach, you may want to read this case.  It is a factual determination and the more above the board you appear the better chance your debtor may have.

Case Name: In re Lynn Wallace Ray, 2013 WL 3187317 (D.Idaho)

Case Summary:

On June 21, 2013, the United States Bankruptcy Court for the District of Idaho granted the Trustee's motion for turnover of the Debtor's vehicle because the equity exceeded the exemption amount.

Notable Points to Bankruptcy Practitioner:

No notable points of interest to the bankruptcy practitioner.

Case Name: In re Parrott Broadcasting Limited Partnership, 2013 WL 3230345 (D.Idaho)

Case Summary:

On June 26, 2013, the United States Bankruptcy Court for the District of Idaho sustained the Ch. 11 Trustee's objection to the Ch. 7 Trustee's proof of claim.

Notable Points to Bankruptcy Practitioner:

In a rather unusual set of factual circumstances the Court had to resolve an objection to a proof of claim filed by the Ch. 7 Trustee, which was objected to by the Ch. 11 Trustee.  Nothing unusual as to the case law, but I think the Court enjoyed the rarity of the circumstance.

Case Name: In re Trent Jenkins and Vickie Jenkins, 2013 WL 2606910 (D.Idaho)

Case Summary:

On June 11, 2013, the United States Bankruptcy Court for the District of Idaho ordered a Bankruptcy Petition Preparer to refund its fees to the debtor and pay a fine to the Trustee.

Notable Points to Bankruptcy Practitioner:

No notable points for the bankruptcy practitioner – however, a fun read to see the extent and reach of these preparers to increase their fees.

Case Name: In re Pierre J. Saviers, 2013 WL 2606495 (D.Idaho)

Case Summary:

On June 11, 2013, the United States Bankruptcy Court for the District of Idaho denied Debtor's objection to the Trustee's application for compensation and reimbursement for the Ch. 7 Trustee's attorneys.

Notable Points to Bankruptcy Practitioner:

No notable points for the bankruptcy practitioner.

About the Author

John Smith

Law Offices of Gerald K. Smith and John C. Smith, PLLC, Tucson, ArizonaPartner (Sept 2008 – Present)Smith & Smith focuses primarily on civil and commercial litigation, secured transactions, bankruptcy and corporate reorganization.  In addition to their bankruptcy and commercial litigation practice, John has developed considerable expertise opposing wrongful foreclosure by large banking institutions against homeowners, a persistent problem in Arizona.

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