The Debtor’s prepetition payment of her long-time cohabiting partner’s real estate taxes was avoidable in part as a fraudulent conveyance, because the defendant failed to meet his burden of production to establish that the Debtor received reasonably equivalent value for the payment.
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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