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Hon. William V. Altenberger

Claim held by Department of Human Services for overpayment of child care subsidy is a domestic support claim entitled to priority under section 507(a)(1)(B).

Attorney fees of over-median Chapter 13 debtor are property payable under plan from debtor's disposable income as calculated on Form B22C.

§28 USC 157:  Court lacks jurisdiction to determine validity of Debtor's assignment of personal injury claim upon Trustee's abandonment of claim.

§ 544:  Fraudulent conveyance - reasonably equivalent value.

§ 523(a)(2)(A):  Debt incurred when Debtor/Payee of check deposits check with Creditor and payment is disallowed by issuer is discharged.

Bankr.R. 9024/F.R.C.P. 60(b):  Confirmed Chapter 12 Order vacated to allow Creditor to amend plan to provide for an earlier claim payment date.

Hon. Mary P. Gorman

Case No. 22-70235

Chapter 7 Trustee's objection to the Debtor's claims of exemption in "Household Goods, "Electronics," and a handgun allowed in part. The Debtor's unitemized, categorical claims of exemption could not be traced to insurance proceeds from postpetition fire that resulted in loss of the Debtor's personal property. As a result, the Debtor's claims of exemption were limited to the scheduled amounts.

11 U.S.C. §541(a)(1), (6)

Case No. 15-71581

United States Trustee filed motion to reopen bankruptcy case to investigate whether cause of action stemming from post-petition cancer diagnosis is property of the estate. In granting the motion, the Court made clear that no action to administer the asset would be allowed absent proof that the cause of action is property of the estate.

11 U.S.C. §§350(b), 541(a)

Case No. 21-70207

Trustee authorized to sell real estate co-owned by the bankruptcy estate and nonfiling spouse as tenants by the entirety for the benefit of the couple's joint creditors. The co-owners' interests in the property, which were contingent by virtue of a prepetition dissolution of marriage petition filed in Illinois state court, were determined and allocated among the co-owners in accordance with the Illinois Marriage and Dissolution of Marriage Act.

11 U.S.C. §363(h); 735 ILCS 5/12-112; 750 ILCS 5/503

Case Nos. 22-70120 and 22-70305

The United States Trustee's motions to examine debtors' transactions with attorneys granted in two dismissed cases filed by the same law firm on behalf of non-existent entities. Because the filings yielded no benefit to the entities actually intended to be debtors and exposed the entities' individual representatives to legal jeopardy, and because the attorneys' handling of the cases fell well short of the minimum standards for competent representation, the attorneys were required to disgorge all fees and costs paid to them.

11 U.S.C. §§329(b), 707(b)(4); Fed. R. Bankr. P. 2017(a), 9011(b)

Case Nos. 22-70120 and 22-70305

The United States Trustee's motions to dismiss granted in two cases filed by the same law firm on behalf of non-existent business entities. Because amending the petitions to correct the names (and in one case the Employer Identification Number) would not cure the problems of originally filing petitions for entities that do not exist and because entities that did not file the cases in the first place cannot rely on the rule allowing amendments to substitute themselves as the debtors, both cases were properly dismissed.

11 U.S.C. §§101(41), 109(a); Fed. R. Bankr. P. 1009(a) 

Case No. 21-70349

Debt owed for overpayment of unemployment benefits excepted from discharge where Debtor misrepresented his status as unemployed in applying for and regularly certifying his eligibility for benefits despite being full-time employed at all times.

11 U.S.C. §523(a)(2)(A)

Case No. 18-71012

Debtor's voluntary motion to dismiss Chapter 7 case for cause denied notwithstanding his promise to pay creditors outside bankruptcy. The Debtor was previously denied a discharge in the long-pending case, and his history of abuse of the bankruptcy process precluded a finding that the best interest of his creditors would be served by dismissal. The Debtor also failed to establish authority for his request that the bankruptcy filing be expunged or sealed.

11 U.S.C. §707(a)

Case No. 21-90618

Chapter 7 Trustee's objection to the Debtor's amended claim of exemption denied. The Debtor's interest in her ex-husband's retirement account awarded to her in dissolution of marriage was exempt under Illinois law on the petition date.

735 ILCS 5/12-1006(a)

Case No. 20-71283

Fee applications of the Debtor's attorney and case trustee approved in Chapter 11 Subchapter V case in which consensual confirmation was achieved. The case, however, raised concerns about the developing standards for handling Subchapter V cases in the Central District of Illinois, warranting careful review and discussion of the work done and fees sought.

11 U.S.C. §§1181-1195

Case No. 15-81467

Prepetition transfers made to satisfy what were primarily debts of the debtor company's controlling shareholder when the company was insolvent and undercapitalized were avoided as constructively fraudulent transfers under the Illinois Uniform Fraudulent Transfer Act and the Bankruptcy Code.

11 U.S.C. §§544, 550

740 ILCS 160/5; 740 ILCS 160/6

Case No. 18-71139

Debtor had standing to object to claims. Claims for debts of limited liability company of which individual debtor was member/manager were disallowed in debtor's individual bankruptcy case where claimants failed to meet their burden of proving that the debtor was personally liable to them for the debts.

§502(a); Fed. R. Bankr. P. 3001

805 ILCS 180/10-10

Case No. 20-90855

Debt evidenced by final state court judgment excepted from the Debtor's discharge. Because the factual findings of the state court supported the factual elements necessary to establish a finding that the debt arose from the Debtor's defalcation as a fiduciary, the Debtor was collaterally estopped from relitigating those issues and the Plaintiffs were entitled to summary judgment in their favor.

11 U.S.C. §523(a)(4)

Case No. 19-70433

United States Trustee's Motion for a Determination of Reasonable Value of Services of Debtor's Attorney and for Sanctions granted. Disgorgement of fees and reimbursement of costs required where Debtor's attorney's conduct fell below professional standards and violated the Bankruptcy Code and Rules in the handling of the Debtor's Chapter 7 case.

§§105, 329, 526; Fed. R. Bankr. P. 1009, 7054, 9011

Case No. 20-71820

Amended complaint and adversary proceeding dismissed with prejudice because the plaintiffs lacked standing and, in any event, failed to state a plausible claim upon which relief could be granted despite having previously been admonished of the defects in prior complaints and given leave to correct those defects.

§523(a)(6); Fed. R. Civ. P. 12(b)(6), Fed. R. Bankr. P. 7012

Case No. 20-90547

DIscharge denied where Debtor made false oaths in his bankruptcy petition and schedules by exaggerating his role and interest in various business entities.

11 U.S.C. §727(a)(4)(A)

Case No. 20-71187

Chapter 11 individual debtor could claim Florida condominium, owned with his wife as tenants by the entirety, as fully exempt under §522(b)(3)(B) and the laws of the State of Florida.

11 U.S.C. §522(b)(3)(B)

Case No. 20-71187

Chapter 11 individual debtor could not claim Illinois tenancy by the entirety exemption in residential property that was not his homestead.

11 U.S.C. §522; 735 ILCS 5/12-1201; 735 ILCS 5/12-112; 765 ILCS 1005/1c

Case No. 20-70844

Venue is proper for preference action commenced by the Chapter 7 case trustee against defendant that conducted business across the country, including the State of Illinois, and transacted with the debtor in the Central District of Illinois.

28 U.S.C §§ 1391(c) and 1409(b)

Case No. 19-70782

Actual and punitive damages, as well as attorney fees, awarded to Debtor as sanction against creditor for willful violations of the automatic stay.

Section 362

Case No. 18-71139

Discharge denied where Debtor transferred and concealed assets and made multiple false oaths on his schedules, statement of financial affairs, and at his creditors meeting.

Sections 727(a)(2)(A) and (4)(A)

Case No. 19-71492

Motion to allow late-filed claim or to extend the time for filing denied where creditor had actual knowledge of Chapter 7 bankruptcy case despite not receiving proper, formal notice of the case.

Section 726(a)(2)(C); Federal Rule of Bankruptcy Procedure 3002(c)(6)(A)

Case No. 18-71012

Discharge denied where Debtor transferred and concealed the transfer of creditor's collateral, falsified documents in relation to his dealings with the creditor, and made a false oath in scheduling an asset at a clearly inflated value.

Sections 727(a)(2)(A), (3), and (4)(A)

Case Nos. 19-71144 and 19-71778

United States Trustee's Motions for Determination of Reasonable Value of Services of Debtors' Attorney and for Sanctions granted, in part. Disgorgement of fees and costs required where Debtors' attorney's conduct fell below professional standards and violated the Bankruptcy Code and Rules in the preparing, filing, and handling of the Debtors' bankruptcy cases.

Sections 105, 329, 526, 707(b)(4); Fed. R. Bankr. P. 9011

Case No. 01-92550

Motion to Reopen Chapter 11 case denied where third party successor in interest to the residual assets of the Debtor failed to establish cause for reopening.

Section 350(b)

Case No. 18-71832

Debt excepted from discharge where Debtor signed security agreement misrepresenting his interest in and the encumbered status of collateral pledged.

Section 523(a)(2)(A) and (B)

Case No. 18-71744

No exception to discharge where plaintiff failed to establish that it was owed a debt by the individual debtor, as well as other key elements of its causes of action.

Section 523(a)(4), (6)

Case No. 19-70537

United States Trustee's motion for disgorgement of fees granted. Fees and costs charged by Debtor's attorney to reopen case and file motion to avoid lien that should have been filed when the case was originally open but for the attorney's failure to perform reasonable investigation had to be disgorged.

Section 707(b)(4)(C), (D); Fed. R. Bankr. P. 9011


Case No. 18-91109

Movant's ten motions to disqualify filed in a closed adversary proceeding denied.

28 U.S.C. §455

Case No. 19-90467

The Chapter 7 debtor's medical bills were consumer debts for purposes of determining whether "granting of relief would be an abuse of the provisions" of Chapter 7.

Sections 707(b)(1) and (b)(2)

Case No. 18-71772

Chapter 7 Trustee's motion to reopen case to administer asset denied where the debtors had disclosed "possible inheritance" of an "unknown" value and the Trustee abandoned the asset by filing his Report of No Distribution and allowing the case to close without further investigation. 

Sections 350(a) and (b), 554(c); Fed. R. Bankr. P. 5009 and 5010

Case No. 17-70853

Discharges of both Debtors denied where one Debtor made multiple false oaths at creditors meeting and subsequent 2004 examination and both Debtors willfully refused to comply with the Court's order requiring production of documents and participation in 2004 examinations.

Section 727(a)(4)(a) and (6)(A)

Case No. 17-91140

Application for Administrative Expense for the attorney representing the Debtors in a Chapter 11 small business case that was subsequently converted to Chapter 7 allowed, in part, and denied, in part. The attorney's failure to conform to the basic organizational standards for fee applications and the overall caliber of legal work warranted denial of a significant portion of the total fees requested.

Section 330; Fed. R. Bankr. P. 2016

Case No. 19-70152

Judicial lien partially avoided to the extent that there was not enough equity in homestead to satisfy the lien after subtracting other liens and the Debtor's homestead exemption from the value of the property.

Section 522(f)(2)(A)

Case No. 17-91187

No exception to discharge where plaintiff failed to establish that it was owed a debt by former employee, as well as other key elements of its cause of action.

Section 523(a)(4), (6)

Case No. 17-90819

Lumping separate causes of action under the Illinois Uniform Fraudulent Transfer Act ("IUFTA") and the Federal Debt Collection Practices Act ("FDCPA") into a single count warranted dismissal with leave to file amended complaint.

Fed. R. Civ. P. 12(b)(6); Fed. R. Bankr. P. 7012

Case no. 13-90942

Final compensation for custodian and attorney of Chapter 11 corporate debtor allowed, in part, and denied, in part. Inadequate disclosures at the time of employment warranted denial of fees and costs in professionals' final applications for compensation.

Sections 327, 328, 330; Fed. R. Bankr. P. 2014, 2016

Case No. 17-90985

Debt owed to Plaintiff by limited liability company for breach of contract excepted from discharge of individual Debtor with company ownership or membership interest where the Debtor's false representations caused and resulted in the breach of contract and damages sustained by Plaintiff.

Section 523(a)(2)(A)

Case No. 17-90542

Amended complaint and adversary proceeding dismissed with prejudice when plaintiff failed to state a plausible claim upon which relief could be granted despite having previously been given leave to correct the defects in the original complaint. 

Sections 547, 550; Fed. R. Civ. P. 12(b)(6), Fed. R. Bankr. P. 7012

Case No. 18-70442

Chapter 7 Trustee's objection to the Debtors' claim of exemptions denied. Despite statutory presumption, the Trustee failed to meet his burden of proof in the face of the Debtors' credible and uncontradicted testimony to the contrary.

735 ILCS 5/12-1001

Case No. 15-71018

Motion to reconsider order on allowance of claim or for a new trial based on "newly discovered evidence" denied where moving party failed to establish that it exercised diligence in obtaining the evidence prior to judgment being entered.

Section 502(j); Federal Rules of Civil Procedure 59 and 60; Federal Rules of Bankruptcy Procedure 9023 and 9024

Case No. 16-91187

Debtors' discharges revoked where they were informed that tax refund was estate property in which the case trustee had an interest and ordered to turn over the refund but did not do so until after the action to revoke their discharges was commenced.

Section 727(d)(2).

Case No. 17-70467

Postpetition unsecured debt not incurred in the ordinary course of business was not entitled to administrative expense treatment when prior court approval was not sought.

Section 364(a)-(c)

Case no. 13-90942
Interim compensation for custodian and attorney of Chapter 11 corporate debtor allowed, in part, and denied, in part.
Section 330, Fed. R. Bankr. P. 2016.

Case No. 14-71512
Stay pending appeal of judgment granted where prevailing party filed a cross-appeal regarding parts of the judgment not severable from the rest.
Fed. R. Bankr. P. 7062(d), 8007

Case No. 15-71018
Creditor's contingent claim against Debtors as gaurantors allowed in the amount of zero because claim was likely to remain contingent.
Section 502(b), (c) 

Case No. 14-71512
Creditor in a voluntary Chapter 7 case entitled to compensatory and punitive damages for the Debtor's willful stay violation, as well as declaratory relief voiding the state court judgment obtained by the Debtor without first seeking stay relief.
Section 362(k)

Case No. 17-71908
Chapter 13 trustee justified in not paying pre-confirmation adequate protection payments without the filing of a motion and the entry of an order specifically authorizing the payments to be made to a creditor.
Section 1326(a)(1)(C)

Case No. 17-71371
Trustee's objection to Debtors' claim of exemption in inherited IRA sustained. Exemption for "retirement plans" does not apply to inherited IRAs under Illinois law.
735 ILCS 5/12-1006

Case No. 12-72022 and 15-90801
Failure to fully disclose all compensation paid or promised to auctioneer warranted denial of applications for compensation of auctioneer.
Sections 327 and 330; Fed. R. Bankr. P. 2014, 2016, 6005

Case No. 17-70310
Discharge denied where Debtor failed to disclose cash on hand in order to hinder, delay, or defraud the Trustee and her creditors.
Section 727(a)(2)(B) and (4)(A)

Case No. 17-70869
Joint stipulation regarding apparent agreement between Chapter 7 Debtor and her creditor to except a debt from discharge not approved where there was no pending adversary proceeding to properly bring the matter before the Court.
Sections 523(c) and 524; Rules 4007(c), 7001(6), and 7003

Case No. 17-70784
Chapter 13 Trustee's objection to plan confirmation based on the Debtors' deduction of postpetition 401(k) contributions in calculating disposable income was overruled.
Sections 541(b)(7) and 1306(a)(1)

Case No. 17-90458
Trustee's objection to Debtor's claim of exemptions overruled and her motion for turnover order denied where proceeds from the sale of the Debtor's homestead were exempt under Illinois law on the petition date.
Section 522(b); 735 ILCS 5/12-906

Case No. 13-71508
Trustee's objection to Debtor's claim of exemptions sustained in reopened case where Debtor failed to show excusable neglect for not amending schedules before case originally closed.
Fed. R. Bankr. P. 1009(a), 9006(b)(1)

Case No. 17-70023
Dismissal of Chapter 7 case warranted because the debtor did not rebut the presumption of abuse that arose from failing the means test.
Section 707(b)(1)-(2).

Case No. 15-71919
Discharge denied where Debtor concealed and then misrepresented the timing and nature of the transfer of his only substantial, unencumbered, non-exempt asset to a family-owned company of which he has a part in order to hinder, delay, or defraud his creditors.
Sections 727(a)(2)(A) and (4)(A)

Case No. 17-70325
No authority to grant the Chapter 7 Trustee's motion requesting that the Debtor's power of attorney be allowed to borrow and turnover the cash value of life insurance policies. Section 704(a)(1).

Case No. 16-71878
Debtor's motion to convert his Chapter 7 case to Chapter 13 denied where his conduct in filing his Chapter 7 case was not in good faith.
Sections 706(a) and (d), 1307(c).

Case No. 16-71699
Individual did not have sufficiently stable and regular income to enable him to make payments under any plan and therefore was not eligible to be a debtor under Chapter 13.
Sections 101(30), 109(e), 1307(c), 1325(a)(7)

Adversary No. 16-09002
Ross J. Fleckenstein and Kimberly A. Fleckenstein, Case No. 15-90922
Debt not excepted from discharge where creditor failed to meet burden of proof.
Section 523(a)(2)(B)

Case No. 16-70536
Secured creditor could not be paid by the trustee through Chapter 12 plan without having a claim on file.
Fed. R. Bankr. P. 3002(c)

Case No. 13-90942
Chapter 11 corporate debtor's income tax debt for tax year ending post-petition is entitled to administrative expense claim treatment.
11 U.S.C. 503, 507

Adversary No. 15-09033
Blair M. Minton, Case No. 14-91293
Illinois LLC's operating agreement did not contain the types of material obligations that would make it an executory contract. The Court did not have subject matter jurisdiction over request for declaratory relief based on hypothetical facts.
11 U.S.C. 365; 28 U.S.C. 2201(a); 805 ILCS 180/1-1 to 60-1

Case No. 16-70699
Objection to discharge denied where omission of asset from schedules was inadvertent.
Section 727(a)(4)(A)

Adversary No. 16-07008 and 16-07012
Case No. 15-71944 and 16-70161
Payday lender not entitled to presumption of nondischargeability. Loans not excepted from Debtors' discharges.
Section 523(a)(2)(A), (C); Fed. R. Bankr. P. 7055

Adversary No. 15-07051
John Adrian Wease and Kimberly Ann Wease, Case No. 15-71431
Debt not excepted from discharge where creditor failed to meet burden of proof.
Section 523(a)(2), (4), and (6)

Case No. 15-71627
Application for compensation denied and attorney sanctioned for filing petition with debtors' electronic signatures affixed without first obtaining original "wet signatures."
Sections 105(a), 330(a)(3); Fed. R. Bankr. P. 1008, 9011.

Case No. 14-72106
Confirmation of Chapter 11 plan denied where no affirmative ballots were cast.
11 U.S.C. §1129(a)(10)

Case No. 15-90708
Motion for leave to file late proof of claim denied.
Fed. R. Bankr. P. 3002(a), (c)

Adversary No. 14-7021
In re Sheryle Henry, Case No. 14-70113
Student loan debt not discharged where Debtor failed to prove elements of Brunner test.
Section 523(a)(8)

Adversary No. 14-7008
THR & Associates, Inc., Case No. 12-72022
Motions to dismiss adversary complaint denied - causes of action adequately stated and not time-barred.
Fed. R. Civ. P. 12(b)(6); Fed. R. Bankr. P. 7012

Case No. 15-90458
Sections 330(a), 326(a)
Chapter 7 trustee compensation is commission-based.

Adv. 15-9009
In re Blair M. Minton, Case No. 14-91293
Contractual provision which conditions repayment of loan upon default on other loans is not an unenforceable penalty.
Fed. R. Bankr. P. 7056

Adv. No. 14-7065
Case No. 14-70578
Debt owed to former spouse for maintenance reimbursement to which Debtor was not entitled and obtained through actual fraud is nondischargeable.
Section 523(a)(2)(A)

Case No. 13-72140
Chapter 7 Trustee's Final Report, which disclosed sale of asset at a loss and disclosed payment of estimated rather than actual expenses, reluctantly approved with adjustment to expenses and admonitions about future practices.
Sections 704(a), 330(a)(1)(B)

Case No. 14-90026
Objection to exemptions based on fraud and bad faith denied.
735 ILCS 5/12-1006

Adv. No. 14-07069
In re Butler, 14-71585
Section 523(a)(8)
Student debt not discharged where debtor failed to demonstrate "certainty of hopelessness."

Adv. No. 15-7033
(In re Robert J. Jordan, Case No. 15-70132)
Mortgages obtained by unlicensed lenders are not invalid under Illinois law solely because of the licensing violation.
205 ILCS 635/1-3(e).

Adv. No. 15-7023
Revocation of discharge denied where elements of proof - "knowing and fraudulent conduct" and "refusing" to comply - were unestablished.
Section 727(d)(1)-(3)

Case No. 14-72070
Minimal attorney fee awarded in Chapter 13 case where quality of work was poor and contemporaneous time records were not kept.
Section 330

Case No. 15-71018
Mortgagee with valid, perfected security interest in post-petition rents entitled to stay relief and abandonment.
Sections 362(d)(1), 363(c)(2), 552(b)(2), 554(b)

Adv. No. 14-9013
Section 727(a)(2)(A)
Debtor's discharge denied for making transfers to hinder and delay collection efforts of judgment creditors.

Case No. 14-71331
Local Standards: Housing and Utilities allowance is available to anyone who has housing expenses.
11 U.S.C. 707(b)(2)(A); 11 U.S.C. 1325(b)

Adv. No. 14-7063
Adversary complaint dismissed for lack of subject matter jurisdiction.
28 U.S.C. 1334; 28 U.S.C. 157

Adv. No. 14-07012
Objection to discharge sustained where debtor failed to disclose estate property and failed to comply with court order
Sections 727(a)(4)(A), (a)(6)(A)

Case No. 12-70904
Trustee's application for fees relating to hypothetical distribution of converted estate funds denied.
Section 330(a), 326(a)

Case No. 11-72074
Motion to Amend or Alter Judgment denied.
Section 102(1)

Case No. 11-91764
Application for attorney fees allowed in part; request for disgorgement denied.
Section 329(b)

Case No. 14-70700
Section 1307(c)
Lack of good faith and unreasonable delay warranted case dismissal with one-year bar to refiling.

Case No. 14-70979
Income-based repayment terms do not make a student loan an executory contract which can be assumed or rejected in a Ch. 13 plan.
Sections 365, 1322(b)(7)

Case No. 14-71879
Section 541
Child support in hand generally belongs to parent, not child, and is property of Ch. 7 estate.

Adv. 14-7006
Discharge revoked for failure to report and turn over EEOC award proceeds.
Section 727(d)(2)

Bodily injury exemption may not be claimed by uninjured co-debtor spouse.
735 ILCS 5/12-1001(h)(4)

Ch. 7 trustee not entitled to "confirmation" of unauthorized sale.
Section 363(b); Fed. R. Bankr. P. 6004

Case No. 14-71307
735 ILCS 5/12-1001(g); 735 ILCS 5/12-1006(a).
Trustee's objection to claims of exemption allowed in part; denied in part.

Case No. 14-70578
Sections 502, 507(a)(1)(A), 101(14A)
Claim for child support arrearage entitled to priority treatment; claim for reimbursement for maintenance overpayments is a general unsecured claim.

Case No. 13-70172
Section 330(a)(3)
Chapter 13 no-look fee denied. Fees reduced due to poor quality of work and failure to properly keep time.

Case No. 14-70025
Sections 362(a)(1),(2) and 524(a)(1),(2)
No cause shown to lift stay or modify discharge injunction.

Exemption for public assistance benefits does not extend to benefits received pre-petition.
735 ILCS 5/12-1001(g)

Case No. 12-71112
Plan modification is distinct from claim allowance process.
Section 1329

Case No. 10-72120
Motion to Modify Chapter 13 Plan granted in part.
Sections 1329, 1325(a)(6)

Case No. 14-70013
Replacement value is the post-BAPCPA standard for redemption
Sections 722, 506(a)

Case No. 13-71645
Section 330
Application for Attorney's Fees allowed in part; denied in part.

Cases No. 10-71700 and 11-72448
Chapter 13 Trustee's motions to modify confirmed plans denied
Section 1329

Sections 363(b), 503; Rule 2016
Fee application required regardless of basis for employment.

Sections 727(a)(2)(A), 727(a)(4)(A)
Discharge denied for failure to disclose remainder interest

Section 547(b),(c); Fed.R.Bankr.P. 7056
Defense of ordinary course of business sustained to defeat preference action in part.

Case No. 13-71433
Section 1325(a)(4)
Cost/benefit analysis required to value avoidable preference.

Obligation to pay marital debt determined to be domestic support obligation and, therefore, stay relief granted.
Section 523(a)(5)

Sections 1307(b), (c)
Chapter 13 case dismissed with bar to refiling as sanction

Stay relief, abandonment denied to contract for deed seller
Sections 362, 541, 554

Sections 329, 330; Rule 2016
"No look" fee denied due to poor quality of legal services.

Sec. 362
Annulment of stay denied.

Discharge denied under Section 727(a)(2)(A) where Debtor, while subject to a citation to discover assets, hindered and delayed collection by creditor.

§524(a)(2): City enjoined from collecting pre-petition claim for demolition expenses. 

Hon. Peter W. Henderson

The IRS moved the Court to abstain from hearing an adversary proceeding in which the Debtor-Plaintiff sought a determination that his pre-petition tax debts were dischargeable notwithstanding 11 U.S.C. §523(a)(1)(C). Abstention is an exceptional remedy, however, and it would be inappropriate to abstain from hearing a core bankruptcy matter in favor of transferring the dispute to the district court. The Court was confident it had jurisdiction to hear the matter, which was both constitutionally and prudentially ripe. Bankruptcy courts are authorized to determine the dischargeability of federal taxes notwithstanding the Declaratory Judgment Act, 28 U.S.C. §2201. And the potential increase in judicial resources required to adjudicate the dispute did not justify abstention.

11 U.S.C. §523(a)(1); 28 U.S.C. §1334(c)(1); 28 U.S.C. §2201

The corporate Debtor moved for a finding that one of its shareholders violated the automatic stay, 11 U.S.C. §362(a)(3), by bringing a cause of action that belonged to the corporation in state court. The shareholder alleged that officers of the Debtor had engaged in shareholder oppression under 805 ILCS 5/12.56. Unlike a derivative common-law action for breach of fiduciary duty, the asserted cause of action under §12.56 belonged to the shareholder alone, not the Debtor, so the shareholder did not violate §362(a)(3).

11 U.S.C. §362(a)(3); 805 ILCS 5/12.56

Hon. Thomas L. Perkins

Section 507(a)(8)(A)(i).

Debtors filed serial Chapter 13 cases, fully paying the IRS’s allowed claim for assessed income taxes plus prepetition interest in the earlier case.  In the later case, the IRS filed a claim for the additional interest that accrued after the petition in the earlier case, which the IRS asserted was not discharged in the earlier case and must be treated as a priority claim in the later case.  The Court rejected the IRS’ argument, determining that under the plain meaning of sec. 507(a)(8)(A)(i), the claim was not entitled to priority status since the IRS was not stayed from collecting the additional interest once the Chapter 13 Plan was confirmed and estate property vested in the Debtors.

Post-confirmation inheritance acquired by Chapter 13 debtor determined to be property of the estate that supported the Trustee’s proposed plan modification to increase the distribution to unsecured creditors.

The sections are 541(a)(5), 1306 and 1327.

On Trustee’s constructive fraud avoidance complaint, Summary Judgment granted in favor of Defendant Bank that loaned Debtor funds used to pay off Debtor’s judgment debt, where Trustee alleged Debtor had incurred loan obligation without receiving reasonably equivalent value since judgment had been entered as a sanction for violation of garnishment statute. 

The sections are 11 U.S.C. sec. 548(a)(1)(B) and 740 ILCS secs. 160/5(a)(2) and 160/6.

Debts incurred by Debtor in her husband’s probate proceeding were not incurred by fraud or willful and malicious conduct and were dischargeable.  The doctrine of collateral estoppel did not apply to the probate court orders despite the probate court’s finding that the Debtor’s actions were willful and malicious, where the issues of the Debtor’s conduct were not shown to be substantively identical to the issues in bankruptcy, were not necessary to the orders, and were not fully litigated in the probate proceeding. 

The sections are 523(a)(2)(A) and (a)(6).

Creditor-Plaintiff brought an adversary proceeding under Section 523(a)(2)(A) to except from discharge a debt for fraud, alleging that Debtor fraudulently induced her to personally co-sign a business loan. Plaintiff failed to prove a cause of action for the tort of fraudulent inducement under Illinois law, requiring proof by clear and convincing evidence. A separate debt for contribution between co-makers was established as a matter of state law, but Plaintiff failed to prove that the Debtor made promises that he had no intention of keeping in order to induce her to co-sign the loan, and thus failed to prove by a preponderance of the evidence that the debt should be excepted from discharge.

In farm Chapter 11 case, where Debtors obtained crop input financing by agreeing to sell future farm receipts to finance company, contrary to interest of Bank with prior perfected security interest in crops and proceeds, and where the Bank and the finance company claimed a competing interest in certain crop proceeds, Court determined on the facts at trial that Bank had not “authorized the disposition free of” its security interest under U.C.C. 9-315(a)(1), so that the Bank retained its lien on Debtors’ crops and proceeds notwithstanding alleged sale to finance company. Court also determined that the evidence did not support finance company’s alternative theory of Equitable Subordination under Bankruptcy Code section 510(c), finding that Bank did not exert excessive control over Debtors’ business, and thus was not an insider, and took no inequitable action with an intent to harm the finance company.

Under 523(a)(2)(A), Debtor-Farmers held not to have fraudulently obtained a farm operating loan by submitting a financial statement that failed to include certain unsecured debts and a secured debt loan payment. Bank proved part of its nondischargeability claim under 523(a)(6), where Debtors’ use of proceeds of Bank’s collateral was proved to be outside of ordinary course of dealing established by past practices followed by the parties.

The section number is 735 ILCS 5/12-1001(h)(4).

Exempt proceeds from personal injury settlement used to pay off lien on motor vehicle owned by debtor, were traceable to the vehicle, thereby enabling the debtor to claim an exemption in the vehicle as “property traceable to” the settlement proceeds under § 5/12–1001(h)(4). Traceability is not restricted to situations where the debtor uses the exempt funds to purchase the secondary asset.


Section 523(a)(2)(A)

Debtor remodeling contractor determined to have breached contract by failing to complete project. But debt for resulting contract damages determined dischargable where debtor had sincere intent and belief, when the contract was formed, that he could complete the project.

§ 541(a)(1)
Annual bonus payable only in employer’s absolute discretion was a mere expectancy under Illinois law, not a property interest, and therefore was not property of the estate.  Court determined that the “sufficiently rooted” test of Segal v. Rochelle was largely supplanted by § 541(a)(1).

§ 507(a)(1)(B)
Debt to Illinois Dept. of Human Services for overpayment of child care benefits was a domestic support obligation entitled to priority treatment under section 507(a)(1)(B).

§  303

Punitive damages of $15,000 each, assessed against two individuals who acted in bad faith by filing an involuntary petition against a debtor who was not indebted to them.

§ 735 ILCS 5/12-901
Debtor did not abandon homestead or lose homestead exemption by separating from her husband and moving into a leased duplex. Trustee's objection to homestead exemption claim is denied.

§  544
Security interest was unperfected and avoidable by Trustee, where financing statement identified security agreement as containing description of collateral, but financing statement failed to indicate or identify any collateral and failed to use supergeneric description.

Divorce court debt for attorney fees incurred in litigation relating to noncustodial parent's visitation rights determined to be a domestic support obligation that is not dischargeable under section 523(a)(5).

§ 1328
Chapter 13 debtors’ failure to pay direct payments on 2nd mortgage did not warrant dismissal of case without discharge as sought by Trustee after completion of all plan payments due Trustee.

Stay relief granted where Debtor’s hotel was determined to be worth less than balance due on secured claim, and Debtor was not making demonstrable progress toward a successful going concern liquidation.

740 ILCS 160/5(a)(2)
Where Debtor LLC made mortgage loan payments to Bank for loan obtained personally by Debtor’s members, where the evidence established that the payments were in lieu of paying rent to the members who owned the commercial real estate and leased it to the Debtor, the Debtor received “reasonably equivalent value” for the payments, so that the payments were not avoidable as constructively fraudulent transfers.

§ 1325(b)(1)
 DEBTOR may confirm chapter 13 plan over Trustee’s objection by paying unsecured claims 100% without interest.

Debtor's motion for summary judgement Denied on nondischargeability complaint for securities fraud where prepetition settlement agreement had a "no admission of liability" provision.
The appropriate section of the Bankruptcy Code is sec. 523(a)(19).

Fraudulent transfer avoidance actions dismissed as untimely; look-back periods are statutes of repose not subject to equitable tolling

Motion to Dismiss denied as breach of fiduciary duty claim by officer of agricultural cooperative was adequately alleged.

§ 502. State-court judgment on note had claim preclusive effect where debtor objected to validity and amount of claim.

§ 109(e) Debtor's liability on Guaranty of payment where, under Illinois law, guarantor's liability is contingent on default by primary obligor, and where underlying note was not in default on petition date, was a contingent debt for purposes of Chapter 13 eligibility.

§ 544(a) Chapter 7 Trustee could not establish bona fide purchaser status and so could not override divorce judgment awarding marital residence to non-debtor wife.

District Court affirms Bankruptcy Court's November 20, 2014 Opinion/Order and March 12, 2015 Order.

Based on the evidence at trial, the Debtor, a roofing contractor, did not commit fraud when he failed to complete a roofing contract after making substantial repairs before running out of money.

Amended Complaint dismissed where Trustee failed to allege an actual transfer of property of the Debtor.  Court rejected implied transfer theory.

Nonrefundable Child Tax Credit may not be exempted as a public assistance benefit.

Substantive consolidation of individual Debtor and Corporate Debtor denied.

Monthly payments to ex-spouse characterized in MSA as "equalization payments" determined to be in the nature of maintenance or support.

§§544(b) & 548(a)(1) Mutual promises set forth in bilateral contract were adequate consideration as a matter of contract law; motion for consideration denied.

Student loans determined nondischargeable for Debtor who is 33 years old and holds a master's degree.

Constructive fraud avoidance claims denied where debtor was contractually obligated for sums paid to general contractor.

§544(a) Creditor whose lien was noted on vehicle certificate of title under its former corporate name, nonetheless retained perfected status.

215 ILCS 5/238 Cash value of life insurance not exempt where beneficiary is non-dependent adult son.

§506(b) Oversecured creditor whose secured status was preserved via marshaling, was entitled to postpetition interest under §506(b).

§§541 (a)(1) & (a)(6)  Debtor's contingent right under CBA to receive profit sharing payment was property of the estate, on a pro rata basis to exclude earnings from post-petition services.

§§541 (a)(1) & (a)(6)  Debtor's contingent right under CBA to receive profit sharing payment was property of the estate, on a pro rata basis to exclude earnings from post-petition services.

§§541 (a)(1) & (a)(6)  Debtor's contingent right under CBA to receive profit sharing payment was property of the estate, on a pro rata basis to exclude earnings from post-petition services.

28 U.S.C. § 407 & 11 U.S.C. § 522, Social Security proceeds excluded from the estate; no equitable exceptions to exemptions permitted. 

§§ 541(a), 556 and 362(b)(6) Cross motion for summary judgment denied where grain sale contracts are not integrated and record did not contain evidence of industry custom.

Rule 4004(b)  Order extending discharge objection deadline to earlier of fixed date or debtors' compliance with turnover order must be enforced literally.

§ 522(b) Exemption denied as sanction for debtors' failure to schedule lawn tractor

§ 1325(b)(2)
Child support payments were fully excludable from chapter 13 debtor's current monthly income.
Issued: Sept. 12, 2013

Marshalling allowed following conversion and liquidation of real estate.

§ 735 ILCS 5/12-1001(g): Illinois exemption for "right to receive" benefits did not protect funds in debtor's possession.

§ 362(d)(2): Stay modified where proposed reorganization was not feasible.

§ 544:  Summary judgment denied where reasonably equivalent value was a material question of fact.