Prior to filing for relief, the debtor advised the creditor that she was rescinding her mortgage obligation pursuant to the Truth-in-Lending Act. The creditor filed an adversary proceeding to confirm the validity and extent of its lien and to determine that the debtor's obligation for her "wrongful purported rescission" was nondischargeable in bankruptcy. The debtor moved to dismiss the adversary proceeding, contending that it was a non-core proceeding. The court noted that the trustee had not abandoned the real property and that the debtor's bankruptcy case had not been closed. The court noted that the trustee may have a valuable asset to administer if the creditor's lien is subject to rescission. The court held that the adversary proceeding was a core proceeding and denied the debtor's motion to dismiss.
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Robert F. Hershner, Jr. (Retired)
The IRS argued that the debtor's proposed Chapter 11 plan was not feasible. The debtor proposed to sell his primary asset, a 6,708 acre tract of land, and use the proceeds to pay the costs of the sale, the secured claims, and the administrative claims. The debtor proposed to pay the IRS's priority tax claim of some $9 million by making semi-annual payments over a term of ten years. The proceeds from the sale would not be sufficient to satisfy the priority tax claim. The court determined that the debtor would not be able to perform the obligations called for in his proposed Chapter 11 plan. The court sustained the IRS's objection to confirmation.
The Chapter 11 debtor's board of directors voted to terminate a severance benefit plan some five days prior to filing for bankruptcy relief. Certain former employees of the debtor filed proofs of claim for severance pay. The employees contended that the severance plan's termination was not effective because a "change in control" of debtor had occurred. The employees also contended that the board of directors was not acting in good faith in terminating the severance plan. The Court held that the board of directors' vote to terminate the severance plan was effective.
The creditor obtained a default judgment in state court when the debtor failed to respond to a request for production of documents. The state court's order stated that by reason of the debtor's default, the court affirmatively found that the actions of the debtor constituted a fraud on the creditor. The creditor contended that under collateral estoppel principles, the state court's order may be used to establish conclusively the elements of fraud in this dischargeability proceeding.
The Court disagreed, noting that the debtor was acting on the advice of counsel who advised that filing bankruptcy was inevitable. The Court also noted that the debtor was unable to produce the records because he no longer had control or access to his former business location and its business records.
Chief Judge John T. Laney, III
The Court held a hearing on the Application for Interim and Final Compensation for the Responsible Person of SGE Mortgage Funding Corp. and Attorneys for SGE Mortgage Funding Corp. ("Movants") and the objection to the application by the Committee of Investors Holding Unsecured Claims ("Respondent"). Respondent challenged Movants request for compensation on numerous grounds including incompetence and mismanagement. Under relevant case law, once a prima facia case is made by an applicant, any objection must be substantiated by evidence showing that the applicant requested an unreasonable amount. The Court held that Respondent did not meet its burden and approved Movants’ application for interim and final compensation.
The Court held a hearing on two Motions of Samuel P. Scott ("Movant") for Relief from the Automatic Stay to pursue an action against Jackie G. and Patricia A. Willliams and Circle B Enterprises, Inc. ("Respondents") in state court. Under the test articulated in In re South Oakes Furniture, Inc., 167 B.R. 307 (Bankr. M.D. Ga. 1994)(J. Walker), Movant was entitled to relief from the stay because the hardship to Movant to start over in Bankruptcy Court outweighed any hardship to Respondents if the case proceeded in state court where it had been pending for almost two years. Under the final prong of the test, the Court held that Movant had established a probability of prevailing on the merits.
Judge James D. Walker Jr. (Retired)
A jury verdict for a specific dollar amount that had not been reduced to judgment was a liquidated debt for purposes of Chapter 13 eligibility under section 109(e) because the trial judge did not have unfettered discretion to change the amount of the verdict.
Court would not deviate from plain language of statute providing for avoidance of judicial lien in order to prevent windfall to debtors when there was neither certainty that a windfall would occur nor certainty that the Court could, by its decision prevent such a windfall.
Under amendment to Georgia homestead exemption, married debtor who held full ownership interest in martial property could claim $20,000 homestead exemption, even though his wife had not filed bankruptcy.
A court order that could be set aside for improper service of process was a liquidated debt for purposes of Chapter 13 eligibility under section 109(e) because the determination to set aside the order can only be made with reference to specific legal criteria.