Articles Tagged with “northern district of illinois”

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This post was prepared by yours truly, with contributions from Phil Bradford, a financial web content writer. Phil graduated from New York University School of Law and recently joined Herald University as a reporter. He has also written for websites such as debtfreeguys.com and disabilitycanhappen.org

An now, on with the post…

Those who’ve exhausted their financial options or are unable to meet obligations due to illness, divorce, job-loss, or other life-altering events, may consider filing Bankruptcy to get their life back on track.  Here is a quick-guide to help you navigate the process with the help of a good Bankruptcy Lawyer:

Basic Types of Bankruptcy

The most basic distinction when thinking about Bankruptcy is the one between a liquidation (Chapter 7) and a reorganization (Chapter 13 for most people). Whether you need to file a Chapter 7 or 13 case will depend on several factors, including:

  • Total “household” income
  • The value of your property
  • What you stand to lose
  • What you intend to keep

That said, below you will find a few of the most important points when considering if Bankruptcy is right for you.
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BK Ct. ND IL EDAmerican Eagle vs. Friedman, 13-AP-01199

Bankruptcy Court, N.D. Ill., Eastern Div.  Opinion: December 29, 2015.

JACK B. SCHMETTERER, Bankruptcy Judge.

This case resulted in a Summary Judgment finding despite the assertion by the Debtor-Defendant of his 5th Amendment right to be free from self-incrimination.

Specifically, this Adversary Case arose from the Chapter 7 Bankruptcy filed by Arthur Friedman (“Debtor”). Creditor-Plaintiff, American Eagle Bank (the “Plaintiff) filed a 3-count Complaint to determine the dischargeability of debt as follows:

Count I  –  per 11 U.S.C. § 523(a)(2)(A)
Count II –  per 11 U.S.C. § 523(a)(6)
Count III-  per 11 U.S.C. §§ 727(a)(3) and (a)(5)
Count IV- per  11 U.S.C. §§ 727(a)(2), (4),(5) and (7)

Count IV was added in the Amended Complaint. The Debtor answered both the Complaint and the Amended Complaint.

On August 4, 2015 the Plaintiff served Requests for Admission pursuant to Fed.R.Bankr.P.7036. The Debtor never responded, and the Plaintiff brought a Motion for Summary Judgment as to Count IV, alleging that the unanswered Requests were deemed admitted under Fed.R.Civ.P.36(a)(3). The Court agreed, and Summary Judgment was granted on Count IV.

I. JURISDICTION AND VENUE

Subject matter jurisdiction is proper in the Bankruptcy Court per 28 U.S.C. §1334, and this is a “core proceeding” under 28 U.S.C. §§157(b)(2)(A), (I), and (O) since it seeks to determine the dischargeability of a debt. Therefore, it “stems from the bankruptcy itself” and may be decided by a Bankruptcy Court (See: Stern v. Marshall, 131 S.Ct. 2594, 2618 (2011)).

II. UNCONTESTED FACTS

The Plaintiff filed a Statement of Material Facts as required by Local Rules, but the Debtor failed to file an opposing statement; thus “[a]ll material facts in [Plaintiff’s] statement…[were] deemed admitted.” Accordingly, the following was taken from the Plaintiff’s Statement of Material Facts, Debtor’s Answers, and the Requests for Admission:

Debtor was a principal and the president of Prestige Leasing (“Prestige”). Before filing, the Debtor was party to a lawsuit that was settled in his favor. As a result, the Debtor received $75,000 annually, minus attorneys’ fees.  Payments were made to Prestige until it was closed in 2011. After that time, payments were made to the Debtor. In his Answers the Debtor admitted as much, and that payments were received within a year of filing bankruptcy.

Moreover since the Debtor did not respond to the Requests for Admission within the 30-day time limit prescribed by the rules, the resulting admission could be deemed a violation of his Fifth Amendment right not to incriminate himself. Therefore, the Court’s inquiry began with a discussion of the Debtor’s Fifth Amendment rights.

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7th Circuit Court Seal

EAR vs. Brandt/Brandt vs. Horseshoe Hammond, 14‐2174
Appeal from District Court (ND IL ED) 12‐cv‐00271
Decided Oct. 13, 2015

Introduction

In an Adversary Proceeding in the Chapter 11 Bankruptcy case of Equipment Acquisition Resources (EAR), Plan Administrator William Brandt (Brand) sought to avoid and recover the so-called “fraudulent transfers” made to EAR’s founder that he subsequently lost gambling at Horseshoe Casino.

Facts

EAR was established in 1997 to manufacture and refurbish machinery for use in creating technology products. Beginning in 2005 however, it also began defrauding creditors through crooked equipment financing activities. As a result, founder Sheldon Player and a company Officer named Malone pocketed about $17 Million each.

It was not until September 2009 that an outside forensic accounting firm hired by EAR’s Board of Directors detected the fraud. In response to the revelation about the wrongdoing, the company’s Board and all Officers resigned. EAR’s shareholders then elected William Brandt as the sole Board Member and Chief Restructuring Officer. Shortly thereafter the company sought Chapter 11 Bankruptcy protection.

Procedural History

Brandt filed an Adversary proceeding against Player and Malone in the Chapter 11 case pursuant to 11 U.S.C. 544, 548, and 550 to avoid and recover the transfers made to them. Brandt prevailed, then had to collect from Horseshoe.

In the ensuing case in the District Court, Horseshoe moved for Summary Judgment under the aegis of the statutory “Good Faith” defense in 11 U.S.C. 550(b)(1). Horseshoe prevailed in the District Court.

Brandt appealed the District Court’s ruling, arguing that it had misinterpreted §550(b)(1) and, in addition, it should have granted his prior Motion to Compel production of documents related to investigations conducted by Horseshoe concerning Player.

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In re Olde Prairie Block Owner, LLC, 10-022668

Opinion Issued by Judge: Jack B. Schmetterer

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

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