Category Archives: fraudulent transfers

In re Netzel, 08-046723 (ND IL ED) (J. Doyle)

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Issued: January 20, 2011 by Judge Doyle

Case #: 09 B 46723, 10 A 01292

The Issue: Whether an individual creditor has  standing under  § 523(a)(4) to bring a direct action against directors of an insolvent corporation for breach of fiduciary duty.

The Story: Debtor owned a plumbing company.  Plaintiff claimed that Debtor breached his fiduciary duty to creditors after the plumbing company became insolvent due to the diversion of company funds to pay for the Debtor’s personal debts.  Creditor claimed that the debt was non-dischargeable in bankruptcy under Rule 523(a)(4).  The court held that the individual creditor lacked standing.   Also a good walk thru on Illinois law about “Special Circumstances Fiduciary Duty.”

Click here to view and download the opinion in .pdf format.

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In re Adolph, 09-32836 (ND Ill. ED)(J. Goldgar)

In re Braden J. Adolph, 09-32836
Issued: January 28, 2011
By:  A. Benjamin Goldgar

The Issues
: The proper use and interpretation of 11 USC 707(a) and (b), the dynamic duo of bankruptcy dismissal. Under consideration is the distinction between dismissal for cause via 707(a) and the presumption of abuse in 707(b).

The Upshot
: Judge Goldgar engages in a close analysis of 11 USC 707 and determines that bad faith is not a reason to dismiss under 707(a) and only consumer debts can be excepted from discharge under 707(b) – especially in light of BAPCPA. In this case, where an Attorney seeks his fees from a business debtor of his Client, the Court finds him to be out of luck – not a consumer debt, and not a bad faith filing. Boom shakalaka.

Click here to view and download the opinion in .pdf format.

 

Trustee v. Penn Media, 03 A 01141

 

Bankruptcy:  In re marchFirst, Inc, 01 B 24742
Adversary: Trustee v. Penn Media, 03 A 01141
Opinion Issued: October 14, 2010
By;  The Hon. A. Benjamin Goldgar

Upshot: Trustee moves to recover a payment as part preference and part fraudulent transfer. Defendant, a creditor with which debtor did business, moves for summary judgment. Creditor/Defendant’s motion is granted as to the preference and denied as to the fraudulent transfer.

Click here to view and download the opinion in .pdf format.

Westlaw Case Updates

 

Reed v. City of Arlington (Sep.17) (Cir. 5)

In a Chapter 7 case in which debtors omitted a pending $1 Million+ judgment from sworn statements and filings, district court’s order discharging debts and allowing the Trustee to collect on behalf of the Estate is reversed to protect the integrity of the judicial processes.

Deutsche Bank v. Tucker (Sep. 15) (Cr. 6)

Chapter 13 Debtor claims that she need only cure the amount of her mortgage default that is secured, and that all additional fees and expenses should be treated as unsecured. The bankruptcy court agreed, but the district court vacated and remanded. Following remand the bankruptcy court held that bank fees and advances allowed under the Note, Mortgage, and applicable State law, should be included in the cure amount set forth in the Chapter 13 Plan.

In re: Gebhart (Sept. 14) (Cir. 9)

Court may have property sold and any non-exempt equity distributed even if the property only rose in value after the filing date. In this case the value of debtors’ home increased during his Chapter 7 and the bankruptcy court’s order approving appointment of a broker was affirmed on appeal. The fact that the value of the debtor’s homestead exemption, plus encumbrances, had been equal to the market value of the residence at the time of filing did not prevent the trustee from taking advantage of the windfall.

In re Hanson/Grant LLC v. Hanson

Bankruptcy:   In re Stuart M. Hanson, 09-04820
Adversary: 6050 Grant LLC v. Hanson, 09-00447

Opinion issued Oct. 5, 2010 by the Honorable John H. Squires

Upshot: After a hearing the Court determined that $93,461.29 owed by the Debtor to 6050 Grant was non-dischargeable under §523(a)(2)(A).  Two weeks after entry of the Opinion, Debtor filed a motion to alter it. According to Rule 59(e) of the Federal Rules of Civil Procedure, incorporated here by Bankruptcy Rule 9023, a judgment may be amended based on one or more of the following: the Court’s manifest error of law or fact, newly discovered evidence, or a change in controlling law. Under the circumstances, the Court found none of these conditions, so the judgment stands.

Click here to view and download the Opinion in .pdf format.

BoA, GMAC, Chase, and Others Delay Foreclosures

BoA joins a growing number of mortgage companies whose employees signed key documents in foreclosure cases without verifying that information. GMAC Mortgage and JPMorgan Chase have halted 10’s of thousands as well.

The 23 states in which BoA is delaying foreclosures include Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New JerseyNew Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South CarolinaSouth Dakota, Vermont and Wisconsin.
Read the entire article online by clicking here.

Q+A: Potential Embezzlement

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Q: I am a limited partner. I suspect that the general partner converted funds belonging to the limited partnership. How do I sue on behalf of other limited partners?

A: A general partner is a fiduciary to limited partners, much as a director is to shareholders in a corporation. This means that the gp account for his actions to the limited partners and at all times conduct itself with the utmost good faith. If those rules were not observed then the proper remedy is a derivative suit – so named because the complaining party must sue in the name of the limited partnership. Before filing suit however certain questions must be answered and you may need to hire a forensic accountant to fully investigate. Finally, keep in mind that if the limited partnership or the general partner need(s) to file bankruptcy then a post-filing adversary complaint is your route.