Here are some cases from around the country — note the 7th Circuit and ND IL decisions among them:
DEBTOR’S DISSIPATION OF FUNDS NOT GROUNDS FOR DENIAL OF DISCHARGE
Although the debtor received and quickly dissipated a substantial insurance settlement within one year of her bankruptcy filing, there was no evidence of fraudulent intent to hinder, delay or defraud creditors sufficient to deny the debtor a discharge.
In re Sims (Bankr. C.D. Ill 2004)
COURT MUST DETERMINE WHETHER DEBTOR OWNS PROPERTY
Bankruptcy court may not allow sale of property as “property of the estate” without first determining whether debtor in fact owned the property.
In re Rodeo Canon Development Corp. (9th Cir. 2004)
CH 13 DEBTOR PAID PRINCIPAL OF TAX IN PLAN BUT HELD LIABLE FOR INTEREST AFTER DISMISSAL
Debtor Leonard Moore (the “Debtor”) filed an Objection to the Internal Revenue Services’ Amended Proof of Claim for the payment of penalties and interest on the Debtor’s 1995 tax obligation, arguing that the tax debt was satisfied during the pendency of a prior Chapter 13 filing. The Internal Revenue Service (the “IRS”) responds that Debtor’s previous filing was dismissed, and as no discharge was granted to Debtor, 11 U.S.C. § 349(b)(3) permits the IRS to seek interest and penalties that accrued during the period that Debtor was under the protection of Chapter 13 of the Bankruptcy Code even if the principal amount of the tax was repaid during the prior bankruptcy case. For the Page 2 reasons set forth below, the Court holds that Debtor is required to pay interest and penalties on a satisfied tax obligation when debtor did not receive a discharge in his previous Chapter 13 filing.
IN RE MOORE, (S.D.N.Y. 2004)
TRUSTEE MAY PURSUE UNSCHEDULED LITIGATION CLAIM
Where a debtor’s failure to list a litigation claim on her schedules was inadvertent, and the equities balance in favor of her estate, judicial estoppel does not bar pursuit of the claim by her trustee.
Parker v. Wendy’s International, Inc. (11th Cir. 2004)
DIFFERENCE BETWEEN TRUE LEASE AND FINANCING AGREEMENT
In four cases combined in one ruling, court held a “lease” under § 365 must be a “true” lease, as opposed to a financing instrument. Because three of the four subject “leases” were not true leases, the debtor is entitled to summary judgment.
The four adversary proceedings that produced the present motions all involve a similar situation: tax-exempt bonds were issued to finance the construction of airport improvements for the benefit of United, and the debt service on the bonds was to be paid with funds received from United.
In re UAL Corp. (Bankr. IL 2004)
ORAL MISREPRESENTATIONS DO NOT SUPPORT FRAUD EXCEPTION
§523(a)(6) does not allow for debts procured by oral misrepresentations of the debtor’s financial condition to be found non-dischargeable because this interpretation would be incompatible with the more specific provisions of §523(a)(2)(B)
In re Gulevsky (7th Cir. 2004)
IRS MAY LEVY ON TRUSTEE’S FUNDS AFTER DISMISSAL OF CHAPTER 13
Because the dismissal of a bankruptcy case prior to confirmation removes the protections afforded by the Bankruptcy Code, the funds held by a Chapter 13 trustee after administration of the estate are not afforded protection from levy. Although § 1326(a)(2) mandates that the Chapter 13 trustee return such funds to the debtor after deducting allowed administrative expenses, a taxing authority is entitled to levy such funds after dismissal and prior to disbursement by the trustee.
In re Steenstra (1st Cir. BAP 2004)
TRUSTEE MUST ABANDON CAUSE OF ACTION
A Chapter 7 bankruptcy trustee’s acquiescence to the continuation of an appeal of an estate cause of action by the debtor’s attorney is insufficient to confer standing on the debtor or his attorney. For such permission to be effective, the cause of action must be formally abandoned by the trustee.
Turner v. Cook (9th Cir. 2004)