Motion to avoid judicial lien granted on grounds of exemption impairment. The issue before the Court was whether § 522(f) allows a debtor to avoid a postpetition judicial lien obtained prior to conversion from Chapter 13 to Chapter 7 for a deficiency on a postpetition, preconversion debt. Pursuant to § 348(d), a judicial lien must be treated for the purpose of § 522(f) as if it arose prepetition. Because the Creditor’s judicial lien impaired the Debtor’s claim of exemptions, the lien is avoided.In
Opinions
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Judge John T. Laney, III
Creditor’s motion for relief from the automatic stay was denied. Debtor’s right to redeem the vehicle under O.C.G.A. § 44-14-403(b)(1) was property of the bankruptcy estate, and it did not expire at the end of the sixty days provided by 11 U.S.C. § 108(b). Debtor also was in possession of the vehicle at the time of the petition. Debtor’s confirmed plan provided for Creditor’s secured claim. Creditor failed to object to Debtor’s Chapter 13 plan prior to confirmation. The doctrine of res judicata barred Creditor from objecting to the plan postconfirmation.
Creditor’s motion for relief from the automatic stay was denied. Debtor’s right to redeem the vehicle under O.C.G.A. § 44-14-403(b)(1) was property of the bankruptcy estate, and it did not expire at the end of the sixty days provided by 11 U.S.C. § 108(b). Debtor also was in possession of the vehicle at the time of the petition. Debtor’s confirmed plan provided for Creditor’s secured claim. Creditor failed to object to Debtor’s Chapter 13 plan prior to confirmation. The doctrine of res judicata barred Creditor from objecting to the plan postconfirmation.
No extreme circumstances (bad faith) exception present in § 1112 to Debtor's right to convert from Chapter 11 to Chapter 7, and, even if Debtor engaged in serious preconversion misconduct, such misconduct not sufficient to prevent conversion under Court's equitable powers where conversion not prejudicial to creditors or abuse of process.
The matter came before the Court on Defendants’ Motion for Judgment on the Pleadings. The motion sought dismissal of the Trustee’s complaint, whereby the Trustee brought various preference and fraudulent transfer claims. Defendants argued that dismissal was appropriate because the Trustee failed to adequately plead the factual allegations required to make out each of the claims listed in the complaint. According to Defendants, after stripping away the bare legal conclusions, the remaining allegations were insufficient to state a claim for relief that is plausible on its face. The Court granted the motion in part and denied it in part. The court granted the motion as to the Trustee’s 11 U.S.C. § 548 claims, finding that the transfer at issue occurred outside the statutory reach back period. Similarly, the Court granted the motion as to Trustee’s 11 U.S.C. § 544 and O.C.G.A. § 18-2-70 et seq., again finding the transfers at issue occurred outside the applicable reach back period. The Court denied the motion as the Trustee’s remaining claims.
Chief Judge Austin E. Carter
Defendants' motions seeking to compel arbitration of Plaintiff/Debtor's stay violation claim denied because compelling arbitration of stay violation conflicts with Congress’s purpose in enacting the Bankruptcy Code.
Chapter 7 Trustee sought avoidance under §§ 547 and 548 of alleged transfer of interest of Debtor in property. Defendant recorded quitclaim deed transferring to Debtor one-half interest in property. Transfer alleged by Trustee consisted of Debtor’s later (prepetition) execution and recordation of quitclaim deed as to such property in favor of Defendant. Both deeds were apparently executed and recorded pursuant to unrecorded agreement under which Debtor was either to earn his interest in property by performing listed repairs by date certain or deed property back to Defendant (the “Agreement”). Parties brought cross-motions for summary judgment, which the Court disposed of as follows: (1) cross-motions as to threshold issue of “transfer of an interest of the debtor in property” denied because genuine issue of fact existed as to whether equitable interests remained in Defendant (such as in constructive trust) and transfer was of bare legal title; (2) cross-motions as to Defendant’s assertion of Debtor’s exemption under § 522(g) denied because Defendant had no standing to raise Debtor’s exemptions; (3) cross-motions as to Defendant’s ordinary course defense under § 547(c)(2) denied because Agreement (though apparently constituting first-time debt) could potentially be shown as ordinary from record and second quitclaim was plausibly executed in accordance with Agreement’s terms; (4) Plaintiff’s motion as to Defendant’s new value defense under § 547(c)(4) granted (and Defendant’s motion denied) because Defendant did not show new value, and new value (if any) was not extended after alleged transfer.
Motion to reopen case for the purpose of filing reaffirmation agreements denied on grounds of futility because such reaffirmation agreements, being executed after granting of discharge, would be unenforceable under 11 U.S.C. § 524(c).
The IRS filed a claim asserting priority status for the portion of its claim representing an exaction imposed (pursuant to I.R.C. § 72(t)) on account of a Debtor's early withdrawal from an IRA. The Debtors objected that the exaction is not entitled priority by § 507(a)(8) of the Bankruptcy Code. The IRS argued that the exaction was entitled to priority as a tax under § 507(a)(8)(A) or, alternatively, as a penalty in compensation of actual pecuniary loss under § 507(a)(8)(G). The Court held that the exaction was not a tax because it was enacted primarily to deter early withdrawal of retirement funds rather than to support the government and, bearing no relation to any actual loss to the government, was accordingly a non-pecuniary-loss penalty not entitled to priority status.
Judge James P. Smith
The defendants advanced funds to GLC. The debtor personally guaranteed GLC’s notes. After GLC defaulted, the debtor honored his guarantees by paying the balance due on the notes and taking an assignment of the notes, a profit sharing agreement and guarantees. GLC’s business failed. Thereafter, the debtor filed a Chapter 11 case.
The debtor’s trustee sought to recover under bankruptcy and state fraudulent and preferential transfer statutes the payments made by the debtor to the defendants. 11 U.S.C. §§ 544(b), 547, 548(a), 550; O.C.G.A. §§ 18-2-74, -75. The court held that the debtor had received reasonably equivalent value because he received a dollar for dollar satisfaction of his guarantee debt in return for his payments. The court also ruled that the defendants were not non-statutory insiders of the debtor. Since these adversary proceedings were “Stern-Core” matters to which the defendants did not consent to the court entering a final judgment, the court’s decision was a proposed findings of fact and conclusions of law. Bankruptcy Rule 9033.