Case Summary:
Two utility providers moved for allowance of administrative priority claims under § 503(b)(9) for the value of electricity supplied in the ninety days pre-petition.  The Debtor objected, claiming that electricity was not a “good.”  The Court disagreed, and allowed the priority claim.  The Court applied the Uniform Commercial code’s definition of “goods” as all things moveable at the time of identification to the contract.  The Court found that the electricity was identified at the time it was metered at the Debtor’s plant, and that it was moveable both before and immediately after being metered.

Statute/Rule References:
11 U.S.C. § 503(b)(9)
11 U.S.C. § 546(c) -- Right of Reclamation

Key Terms:
Administrative Priority
Electricity
Goods

Case Summary:
The Debtor filed Chapter 7, then converted to Chapter 13 when the Trustee pursued preference avoidance actions.  The Chapter 7 Trustee then objected to confirmation of the Chapter 13 plan, arguing that it failed to meet the best interests test because of the potential yield of avoidance actions in a Chapter 7.  The Court held that the plan failed to meet the best interests test, because the Chapter 7 Trustee was reasonably likely to have avoided certain transfers as preferential.  The Court also held, however, that the Trustee was not reasonably likely to have sold certain property, since the Debtor held it in a constructive trust.  Further, the Court found no violation of the requirement that a plan be proposed in good faith.

Statute/Rule References:
11 U.S.C. § 547(b) -- Preferences
11 U.S.C. § 547(c)(1) -- Preferences
11 U.S.C. § 547(c)(1) -- Preferences
11 U.S.C. § 1325(a)(3)
11 U.S.C. § 1325(a)(4)
Fed. R. Bankr. P. Rule 4003(c) -- Exemptions - Burden of Proof

Key Terms:
Best Interests
Constructive Trust
Good Faith
Joint Tenancy
Plan Confirmation
Preferences

Case Summary:
The Chapter 7 Trustee brought a preference avoidance action. The Defendant orally agreed to guarantee a debt the Debtor, owed to a third party. This guarantee was made gratuitously and orally, as a favor to his friend. When the Debtor’s payment failed to clear, the Defendant paid the obligation on the Debtor’s behalf. The Debtor then repaid the Defendant. The Trustee sought to avoid those repayments. The parties agreed that the elements of a preference were present. The Court found no defense under § 547(c) applied, in that the guarantee was outside the ordinary course for each man. Further, there was no contemporaneous exchange for new value. When the Debtor repaid the Defendant, he received no new value in exchange, just cancellation of an antecedent debt.

Statute/Rule References:
11 U.S.C. § 547(a)(2) -- Preferences
11 U.S.C. § 547(b) -- Preferences
11 U.S.C. § 547(c)(1) -- Preferences
11 U.S.C. § 547(c)(2) -- Preferences

Key Terms:
Contemporaneous Exchange for New Value
New Value
Ordinary Course
Preferences

Case Summary:
The Chapter 13 Debtors agreed to pay their mortgage lender $555.56 per month toward mortgage arrears. The parties memorialized this agreement in an agreed order signed by the Court. Five months after the order was entered, the Debtors objected to the lender’s proof of claim for mortgage arrears. The Trustee then began to withhold the monthly payment that would otherwise have gone to the mortgage lender, pending resolution of the objection. Before the objection was resolved, the Debtors voluntarily dismissed their case. The mortgage lender moved for disbursement of the withheld funds and the Debtors objected, contending that the monies should be paid to them or to other secured creditors, pro rata. The Court held that under its prior order, the monies should be paid to the mortgage lender. Section 1322(a)(3) required that all secured creditors be treated the same, and the other secured creditors had already received their pro rata shares.

Statute/Rule References:
11 U.S.C. § 1322(a)(3)
11 U.S.C. § 1326(a)(1)
11 U.S.C. § 1326(a)(2)

Key Terms:
Discrimination
Plan Payment
pro rata