Statute/Rule References:
29 U.S.C. § 1930 -- U.S. Trustee Fees
Key Terms:
Chapter 11 - Plan Disbursements
U.S. Trustee Fees
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Opinions
The Western District of Wisconsin offers a database of opinions for the years 1986 to present, listed by year and judge. For a more detailed search, enter a keyword, statute, rule or case number in the search box above.
Opinions are also available on the Government Printing Office website for Appellate, District and Bankruptcy cases. The content of this collection dates back to April 2004, though searchable electronic holdings for some courts may be incomplete for this earlier time period.
For a direct link to the Western Wisconsin Bankruptcy Court on-line opinions, visit this link.
Judge Robert D. Martin
Case Summary:
The debtor brought this adversary proceeding to determine whether he should be discharged from his debt to the Wisconsin Department of Workforce Development ("WDWD") for unpaid unemployment insurance contributions of his corporation. The Court found the debt to be nondischargeable under either 11 U.S.C. § 523(a)(1)(A) or 11 U.S.C. § 523(a)(1)(B)(ii) of the Bankruptcy Code. Relying on the Eighth Circuit B.A.P. in In re Voightman, 239 B.R. 380 (8th Cir. B.A.P. 1999), the court found the unpaid unemployment insurance contributions to be an excise tax under § 507(a)(8)(E) of the Bankruptcy Code. According to the court, the obligation at issue was an excise tax because it was "an involuntary pecuniary burden imposed by the State of Wisconsin on employers . . . for the public purpose of creating a 'gradual and constructive solution of the unemployment problem.'" Finally, the court held that the debt was also nondischargeable under § 523(a)(1)(B)(ii) because this section "excepts from discharge any debt of an individual debtor for a tax where a return was filed late and within the two-year period prior to bankruptcy." Because the debtor was liable for the debt as a responsible party, and the returns were filed late and within the two-year period prior to bankruptcy, the debtor's debt for unpaid unemployment insurance contributions is not dischargeable under § 523(a)(1)(B)(ii).
Statute/Rule References:
11 U.S.C. § 523(a)(1) -- Nondischargeability - Taxes
Key Terms:
Taxes - Dischargeability
Case Summary:
The debtors brought an adversary proceeding to determine whether the post-petition maintenance fees that accrued on the debtors' campsite were dischargeable in their bankruptcy and seeking sanctions against the defendant for violating the automatic stay in attempting to collect a debt. The court (Judge Martin) held that the 11 U.S.C. § 523(a)(16) requirements for an exception to discharge had not been met because (1) the unit is not a dwelling unit; (2) the debtor never physically occupied the unit; and (3) the debtors never rented or received rent from the unit. The court then, following the holding of the Seventh Circuit in In the Matter of Rosteck, 899 F.2d 694 (7th Cir. 1990), held that the post-petition maintenance fees were dischargeable in the debtors' bankruptcy because the debt was for future assessments based on a pre-petition contract to pay, and the debt arose pre-petition. The court refused to impose sanctions on the defendants because if the defendants attempted to collect a debt from the debtors, they did so under a good faith belief, supported by case law, that the debt was nondischargeable.
Statute/Rule References:
11 U.S.C. § 523(a)(16) -- Nondischargeability - Fees / Assessments to Associations
Key Terms:
Claims - Definition
Maintenance Fees
Key Terms:
Collateral Estoppel
Fraud
Statute/Rule References:
11 U.S.C. § 548 -- Fraudulent Conveyance
Wis. Stat. § 706.01 -- Statute of Frauds
Key Terms:
Fraudulent Conveyance
Judge Thomas S. Utschig
Case Summary:
Debtor filed adversary proceeding contending student loan debt constituted an "undue hardship" under 11 U.S.C. § 523(a)(8). The Court concluded that the debtor could not maintain a minimal standard of living, especially given the presence of other student loans the debtor conceded were nondischargeable. The debtor had done everything he could to maximize income and minimize expenses. His expenses still exceeded his income by a considerable amount. Accordingly, the debt was an "undue hardship" under § 523(a)(8) and dischargeable. [Reversed on appeal, 262 B.R. 457 (W.D. Wis. 1999)]
Statue/Rule References:
11 U.S.C. § 523(a)(8) -- Nondischargeability - Student Loans
Key Terms:
Student Loans
Case Summary:
Creditor filed adversary proceeding alleging that a state court judgment and criminal restitution award were nondischargeable. Both the judgment and the restitution award stemmed from the same conduct – the debtor’s alleged conversion or embezzlement of funds, which the plaintiff alleged was nondischargeable under either 11 U.S.C. § 523(a)(4) or (a)(6).
The court concluded that the restitution award was entitled to preclusive effect under principles of collateral estoppel. Despite the fact that the debtor pled guilty without admitting any wrongdoing, the state court record was replete with additional factual findings which mandated preclusive effect. The jury verdict in the civil suit, however, did not establish that the debtor’s conduct was willful and malicious, in that the jury could have concluded that the debtor was guilty of mere “reckless” conduct. Summary judgment was entered under § 523(a)(4) and denied under § 523(a)(6).
Statue/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Embezzlement
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury
Key Terms:
Collateral Estoppel
Embezzlement
Willful and Malicious
Case Summary:
Debtor filed an adversary proceeding seeking to discharge a judgment entered in state court in favor of his former spouse. The judgment consisted of unpaid child support dating from the 1970s, together with accrued interest. The debtor contended that the court should discharge the obligation as it did not represent support and was no longer necessary to support debtor’s children, who were now in their mid-30s. Based upon 11 U.S.C. § 523(a)(5), the court concluded the debt was nondischargeable.
Under § 523(a)(5), the court’s focus is upon the parties’ intent at the time of the divorce. Subsequent circumstances are irrelevant. As the debtor admitted the debt was originally in the nature of child support, it could not be discharged. The accrued interest was ancillary to the primary debt, and likewise nondischargeable.
Statue/Rule References:
11 U.S.C. § 523(a)(5) -- Nondischargeability - Divorce Decrees
Key Terms:
Divorce Decrees – Maintenance or Property Division
Settlement
In re Klug Farm Partnership, Case No. 99-50046-12 (05/27/1999) -- Judge Thomas S. Utschig 05/27/1999
Case Summary:
Partnership which had been previously dissolved by the agreement of the partners filed bankruptcy. The primary secured creditor moved to dismiss the case, contending that (i) a dissolved partnership was not eligible to proceed under chapter 11 or 12, and (ii) that the individual partners’ own prior bankruptcies prevented them from acting on behalf of the partnership. The court found that at least in the context of a family farm partnership operated solely by a husband and wife, the dissolution did not necessarily terminate the business operation or mandate that the partnership “wind up” its affairs. Rather, the agreement of the partners dictates whether the partnership can continue reorganization efforts. Likewise, while state law would normally preclude a bankrupt partner from acting on behalf of the partnership, the partners can agree otherwise. The motion to dismiss was denied.
Statue/Rule References:
11 U.S.C. § 1208(c) -- Dismissal
Wis. Stat. § 178.03 -- Partnership
Wis. Stat. § 178.25(2) -- Dissolution of Partnership
Key Terms:
Dismissal
Partnerships
Case Summary:
Former business partner sued the debtors, contending that his judgment against the debtors was nondischargeable under §§ 523(a)(4) and (a)(6). Creditor also claimed the debtors’ discharge should be denied for alleged misrepresentations and other activities related to valuation of their assets, primarily their stock interest in a company which the debtors valued at “$0" in their schedules. The court found that the debtors’ use of a “liquidation value” rather than a “going concern” value was appropriate under the circumstances, and as a result there was no basis to deny the debtors’ discharge under § 727(a). Likewise, the court concluded that there was no “fiduciary capacity” between the parties under § 523(a)(4). However, the state court jury did find that the debtor acted in a manner which qualified as “willful and malicious” conduct under § 523(a)(6), and the debt was excepted from discharge on that basis.
Statute/Rule References:
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud in Fiduciary Capacity
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury
11 U.S.C. § 727 -- Discharge
Key Words:
Discharge
Fraud – Fiduciary Capacity
Willful and Malicious