The Court converted Debtor’s Chapter 13 case to Chapter 7 after concluding the Debtor filed both his bankruptcy petition and his Chapter 13 plan in bad faith. Specifically, the Court found the Debtor’s actions in filing bankruptcy two days before a scheduled contempt hearing in State Court initiated by his former spouse to collect the divorce judgment owed her, and in proposing a fee-only plan that paid his creditors virtually nothing, evidenced a lack of good faith. The Court further found that conversion of Debtor’s case to Chapter 7 was in the best interests of creditors because there are potentially fraudulent or preferential transfers that a Chapter 7 trustee should investigate and possibly pursue for the benefit of the Debtor’s creditors. Finally, because Debtor filed this case solely to avoid the State Court contempt action without any legitimate need for bankruptcy relief, the Court found cause to lift the automatic stay to allow the State Court divorce proceedings and related contempt action to proceed. In re Hopper, 474 B.R. 872 (Bankr. E.D. Ark. 2012).
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Opinions
Notice: Not all of the Judges Opinions will be made available on this site. Individual Judges have the option of specifying that all, some or none of their opinions be posted.
Audrey R. Evans
The Court dismissed cause of action as failing to state a claim for relief for violation of the automatic stay where bank allegedly seized $10,000 in funds from a business account owned by the individual debtor's wholly owned corporation. The Court concluded the corporation's property is not property of the Debtors’ bankruptcy estate subject to the automatic stay. Dugan v. U.S. Bank (In re Dugan), No. 4:11–BK–13039, 2012 WL 6825328 (Bankr. E.D. Ark. June 20, 2012).
Defendant moved to set aside Default Judgment awarding $25,000 to Plaintiffs based on violations of the discharge injunction. Defendant argued that the service of process in the case was invalid because the person served was not the “officer” of the depository institution, as is required by Fed. R. Bankr. 7004(h). Following a hearing, the Court found that Plaintiffs met the requirement for service on an officer by specifically addressing the mailing to the position of the CEO, even though the specific CEO named in the mailing no longer held that position. With regard to the Defendant’s other arguments, the Court found the evidence insufficient to warrant setting aside the Default Judgment. In re Gambill, 477 B.R. 753 (Bankr. E.D. Ark. 2012).
Judge Richard D. Taylor
Court awards prevailing party attorney's fees and costs pursuant to Federal Rule of Bankruptcy Procedure 9011(c)(1)(A).
Judge Ben T. Barry
The debtors argued that the reaffirmation agreement between themselves and the creditor was legally deficient because it failed to reflect disclosures the debtors believed to be required under § 524(c) and (k). They also argued the reaffirmation agreement was deceptive because it did not disclose that one of the debtors was allegedly reaffirming an unsecured loan. The court found that the reaffirmation agreement between the creditor and the debtors met the requirements of § 524(c) and (k) and was a valid reaffirmation agreement.
The creditor objected to the debtor's discharge under 727(a)(3), (a)(4), and (a)(5) based on multiple property transfers made by the debtor prior to filing bankruptcy. The Court found that the creditor failed to prove by a preponderance of evidence the necessary elements of 727(a)(3), (a)(4), and (a)(5), and, accordingly, denied the creditor's objections to discharge. The Court also found that the creditor had abandoned an additional claim under section 727(a)(2).
The court denied the debtor's discharge under section 727(a)(4)(A) for knowingly and fraudulently failing to disclose a malpractice claim and other material omissions in the debtor's petition and schedules.
The Court denied the debtors' Motion for Summary Judgment in both cases, ruling that the creditors were not barred by res judicata from bringing dischargeability actions in bankruptcy court when fraud was not alleged in prior breach of contract actions in state court.
The court overruled the chapter 7 trustee's objection to the debtor's third amendment to exemptions. Although the debtor was confused, the court did not believe the debtor acted in bad faith.
James G. Mixon
The Court ruled that 7 U.S.C. 499(e)(c)(4) of the Perishable Agricultural Commodities Act must be strictly complied with and the creditor failed to do so. Therefore, the creditor did not qualify for PACA trust protection and the motion to abandon and for turnover was denied.