In a noncore proceeding, the Court entered a proposed order for the District Court’s review finding that the Defendants violated the Fair Debt Collection Practices Act (“FDCPA”), breached a contract with the Plaintiff, and committed the torts of fraud and misrepresentation. Subsequently, the District Court entered an order adopting the proposed findings of fact and conclusions of law. Humes v. LVNV Funding, L.C.C. (In re Humes), 496 B.R. 557 (Bankr. E.D. Ark. 2013).
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Opinions
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Audrey R. Evans
Addendum to: Order Granting Motions to Appoint Trustee. This Addendum, to be read in conjunction with the Order Granting Motions to Appoint Trustee, contains facts and testimony regarding the various individuals and entities involved, the Debtor, the Debtor’s Chapter 11 filing, and the series of events that led to the Motions to Appoint a Trustee. Although the Court does not repeat its reasoning for finding that the appointment of a trustee was necessary and appropriate in this case, additional findings are made.
The Court denied the defendant’s request for a jury trial in the debtors’ § 362(k)(1) action for a willful violation of the automatic stay. The Court applied the Seventh Amendment right to trial by jury analysis set forth by the Supreme Court in Granfinanciera, S.A. v. Nordberg and concluded that the defendant was not constitutionally entitled to a jury trial because a § 362(k)(1) action asserts a “public right.” Calderon v. Bank of Am. Corp. (In re Calderon), 497 B.R. 558 (Bankr. E.D. Ark. 2013).
Order Granting Motions to Appoint Trustee. Court found cause to appoint a Chapter 11 trustee pursuant to 11 U.S.C. § 1104(a)(1), and that the appointment of a trustee was in the best interests of the creditors and the estate pursuant to § 1104(a)(2). Specifically, the Court found that a trustee must be appointed in this case to serve as a neutral fiduciary and the estate’s sole representative due to the distrust created by the various actions of certain insiders and related parties, their disrespect for the Debtor’s fiduciary duties to all its creditors, the acrimony that exists between the Debtor and its creditors, particularly the Southwest Trustee, and the dishonesty and lack of transparency as to who controls this Debtor.
Court denied Debtor’s discharge pursuant to 11 U.S.C. § 727(a)(5) for failing to explain the loss of an asset. The uncontroverted evidence was that the Debtor sold and received payment for a house prior to filing. At the hearing, the Debtor failed to provide a reliable explanation to convince the Court that he had not hidden or improperly shielded the proceeds from that sale. Bailey v. Whitehead (In re Whitehead), 483 B.R. 902 (Bankr. E.D. Ark. 2012).
Order Approving Application to Employ Attorney. Court approved employment of Chapter 11 Debtor-in-possession's proposed counsel James E. Smith and Smith Akins, P.A. pursuant to 11 U.S.C. § 327(a) finding that Smith was disinterested and did not hold or represent an adverse interest to the Debtor-in-possession's estate. Court found that Smith did not represent an adverse interest based on his prepetition representation of the Debtor while certain transfers took place because Smith had valid reasons to counsel Debtor to make the transfers and Smith did not represent those insiders receiving the transfers, even if their interests were adverse to the Debtor. Court also found that Smith's employment was in the best interests of the estate due to his knowledge of the Debtor, its operations, and the extensive litigation involving the Debtor both before and since filing bankruptcy. In re Living Hope Se., LLC, 495 B.R. 866 (Bankr. E.D. Ark. 2012).
Court denied the Debtors’ Motion for Summary Judgment on a cause of action seeking to avoid a creditor’s lien. As part of that ruling, the Court found that the statutory language of 11 U.S.C. § 544(a)(3) grants authority to avoid a lien to the trustee, but not to the debtor. Following Eighth Circuit precedent construing that statutory language narrowly, the Court held that the Debtors lacked standing to avoid the creditor’s lien under § 544(a)(3). The Court also found that the Debtors’ other claims, which were not based on § 544(a)(3), required a trial. Huskey v. Citimortgage, Inc. (In re Huskey), 479 B.R. 827 (Bankr. E.D. Ark. 2012).
Order Approving in Part Application to Employ Attorney. Court found that Chapter 11 Debtor's proposed counsel Chip Welch and Ashley Hudson were disinterested and neither held nor represented an adverse interest to the Debtor's estate, and accordingly, they could be hired to represent the Debtor-in-possession under 11 U.S.C. § 327(a). Court did not grant application to hire applicants nunc pro tunc to the date of Debtor's Chapter 11 filing where an objection was filed and no explanation was provided for the tardiness of the application to employ. In re Living Hope Se., LLC, 495 B.R. 424 (Bankr. E.D. Ark. 2012).
Court found that a joint venture created by individual husband and wife debtors did not constitute a separate legal entity, specifically a general partnership, based on evidence presented, and that accordingly, the debtors' bankruptcy estate included property held in the name of the joint venture. The Court also granted a permanent injunction in favor of the Trustee to prevent the Bank of England from exercising control over and selling certain grain held in the name of the joint venture. Rice v. Carlton Farms, LLC (In re Webb), 474 B.R. 891 (Bankr. E.D. Ark. 2012), aff’d, 742 F.3d 824 (8th Cir. 2014).
In an Order sustaining an Objection to Confirmation, the Court held that 11 U.S.C. § 1225(a)(5)(B)(i) requires that a secured creditor be allowed to retain a lien on cross-collateralized property, and that the Debtor could not sever cross-collateralization through the Chapter 12 plan without the secured creditor’s consent. In re Heath, 483 B.R. 708 (Bankr. E.D. Ark. 2012).