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Hon. Thomas L. Perkins

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.