Case Summary:
Plaintiffs sought a determination that the debt owed to them is nondischargeable under 11 U.S.C. § 523(a)(2)(A). Debtor opposed Plaintiff’s assertion and argued Plaintiffs were collaterally estopped. The Court found collateral estoppel was inapplicable. After a trial on the issue, the Court determined Debtor’s debt to Plaintiffs was dischargeable because Plaintiffs did not sufficiently establish Debtor’s participation in the fraudulent misrepresentation that led to incurring the debt.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) - False pretenses, false representation, or actual fraud

Key Terms:
Nondischargeability

Case Summary:
Debtor sought contempt remedies for violations of the automatic stay and discharge injunction related to the Government’s attempt to satisfy restitution owed by Debtor’s husband with sequestered property, tax refunds, and Debtor’s pension. The district court made determinations about Debtor’s interest in the property and returned to this Court for sanctions. Debtor argued the Government violated the automatic stay and discharge injunction when it sought to collect restitution from Debtor’s interest in property. Further, Debtor seeks sanctions for the Government’s refusal to release a lien on property she owns with her father. The Government contended its argument in district court, that Debtor had no legitimate interest in any of the tax refund or her retirement account, was not a violation of the automatic stay or discharge injunction. Further, the Government asserted its lien on the property at issue was proper. The Court found there was no violation of the automatic stay as to the sequestered property. The Court did find violations of the automatic stay and discharge injunction in the Government’s pursuit of 100% of the tax refunds and 100% of Debtor’s pension. Further, the Court found the Government’s conduct relating to the lien on the property violated the discharge injunction.

Statute/Rule References:
11 U.S.C. § 105 -- Powers of court
11 U.S.C. § 362(a) -- Automatic stay
11 U.S.C. § 362(k)(1) -- Automatic stay violation damages
11 U.S.C. § 524(a) -- Discharge injunction

Key Terms:
Automatic Stay
Contempt
Discharge Injunction
Taggart Standard

Case Summary:
Creditor filed a proof of claim in the secured amount of $106,448.84 in Debtor’s Chapter 12 bankruptcy. The basis for the claim was a boarding lien. Shortly after the Debtor filed his Chapter 12 plan, a stipulation between Creditor and Debtor providing for the release of livestock was filed (“Stipulation”). The Stipulation also contained an agreement that Creditor would retain its lien rights. The Creditor objected to the Chapter 12 plan shortly thereafter, arguing the plan did not provide for its lien as stipulated or to treat the claim as an administrative expense.  Debtor then filed an amended plan. The amended plan, however, did not change the treatment of Creditor. The Court found that because Wis. Stat. § 779.43(3) (governing the liens of keepers) requires possession for perfection of a lien, Creditor no longer held a secured claim based on its pre-petition or post-petition statutory lien because it surrendered possession of the livestock. Similarly, when possession was relinquished, perfection of Creditor’s lien required a financing statement pursuant to Wis. Stat. § 409.310. Because this requirement was not met, perfection of Creditor’s lien was lost. Further, the Court found that Creditor was entitled to an administrative expense claim for its entire claim because Creditor’s surrender of the livestock to Debtor permitted Debtor to have possession of animals necessary for the operation of his business pursuant to 11 U.S.C. § 503(b)(1)(A).

Statute/Rule References:
11 U.S.C. § 503(b)(1)(A) -- Administrative expenses
Wis. Stat. § 409.310 -- When filing required to perfect security interest or agricultural lien
Wis. Stat. § 779.43(3) -- Liens of keepers

Key Terms:
Administrative Expenses
Perfection (Lien Perfection)

Case Summary:
Debtor was a kombucha producer who filed for bankruptcy under Chapter 11. Debtor concluded it could not make a decision regarding nonresidential real property lease assumption or rejection by the statutory deadline under 11 U.S.C § 365(d0(4)(A)(i). Debtor requested an extension of the deadline to permit Debtor adequate time to complete selling its assets. Debtor argued that if forced to assume within the statutory time, there may be unnecessary burden on the estate in the form of administrative expenses if it was later determined lease assumption is not required. Similarly, Debtor argued that premature rejection of the lease would leave the Debtor without the ability to operate its business and cripple the Debtor’s ability to maximize recovery efforts for the benefit of creditors. Plaintiff, Debtor’s landlord, opposed this request. Plaintiff’s attorneys then filed an Application for Allowance of Administrative Compensation. The Objectors to Application (which included the Debtor and Debtor’s primary secured creditor) argued that under 11 U.S.C. § 502(b)(6), a landlord’s claim for damages is limited to the amounts resulting from termination of a lease. Objectors to the Application also asserted that the requested sums do not qualify as administrative expense claims under § 503(b)(1) because the amounts were not actual or necessary costs and expenses of preserving the estate. The Court allowed the administrative expense claim of Debtor’s landlord. Based on the position taken by the Debtor, failing to extend the deadline to assume or reject the lease would have necessary implications for the sale process, could have impaired continued operation of the business, and would have impaired the ability to maximize the estate. Thus, the Court held that the work related to review of the lease and the motion for extension and its possible termination all align with the goals of preserving the estate by maximizing value for creditors, incentivizing creditors to do business with the Debtor, and preserving value.

Statute/Rule References:
11 U.S.C. § 502 -- Allowance of claims or interests
11 U.S.C. § 503 -- Administrative expenses

Key Terms:
Administrative Expenses