Judge Morgan

Neilson v. Cedar Funding Inc. (In re Cedar Funding Inc.)

Plaintiff chapter 11 trustee filed an adversary proceeding against defendant investors, seeking a determination that assignments of interests in deeds of trust which debtor corporation made to the investors shortly before it declared bankruptcy were preferential transfers that could be avoided under 11 U.S.C.S. § 547(b). The trustee filed a motion for summary judgment with respect to 17 of 19 assignments.
Ruling: 
Assignments of interests in deeds of trust to investors within preference period were avoidable.
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Commercial case opionion summary, case decided on April 06,2010, LexisNexis #0610-125

In re Aubuchon

Debtors filed a voluntary petition under chapter 13. Debtors moved for valuation of their residence and for avoidance of a second deed of trust held by a credit union.
Ruling: 
Avoidance of second deed of trust denied given sufficient equity in subject property.
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Consumer case opionion summary, case decided on March 04,2010, LexisNexis #0510-099

In re ComUnity Lending Inc.

Former employees of the debtor who prevailed in an action against the debtor under the Employee Retirement Income Security Act (ERISA), 29 U.S.C.S. § 1001 et seq., filed a motion asking the court to determine that the attorneys' fees they were awarded for prevailing in the ERISA action should be paid as an administrative expense of the debtor's chapter 7 estate.
Ruling: 
Attorneys' fees incurred in ERISA action against debtor gave rise to general unsecured claim.
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Commercial case opionion summary, case decided on February 16,2010, LexisNexis #0410-113

In re Vallejo

Before the court was debtors' motion to value their residence and to avoid the second deed of trust of a creditor. At issue was whether any equity was available to partially secure the second deed of trust, which would bring into play the anti-modification protection of 11 U.S.C.S. § 1322(b)(2).
Ruling: 
Deed of trust voided where there was no equity in subject property.
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Consumer case opionion summary, case decided on February 09,2010, LexisNexis #0410-062

In re SONICblue Inc.

Movant, a claim holder by purchase of a creditor's claim, sought an additional $ 300,000 in fees and expenses as an allowed an administrative claim pursuant to 11 U.S.C.S. § 503(b)(3) and (4), incurred in challenging an application for a final award of compensation from a law firm that had served as special litigation counsel for certain matters. The claim holder had revealed deficiencies in the special litigation counsel's performance.
Ruling: 
Purchaser of creditor's claim allowed administrative expense claim incurred in successful challenge to special litigation counsel's fee application.
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Commercial case opionion summary, case decided on December 29,2009, LexisNexis #0210-137

John Richards Homes Bldg. Co. LLC v. Adell (In re John Richards Homes Bldg. Co. LLC)

Appellee, a judgment debtor, moved for partial dismissal of appellant judgment creditor's challenge to an order of the United States Bankruptcy Court for the Eastern District of Michigan that denied the creditor's request for additional punitive damages based on the judgment debtor's post-award conduct. The judgment debtor argued that res judicata or collateral estoppel in a Florida case between the parties precluded the appeal.
Ruling: 
Appeal of denial of additional damages for debtor's filing involuntary petition against creditor in bad faith was not barred by res judicata after similar proceeding in another district court was dismissed.
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Commercial case opionion summary, case decided on March 12,2009, LexisNexis #0909-063

Rollins v. Neilson (In re Cedar Funding Inc.)

Plaintiffs, investors in a second deed of trust created through the debtor on a third party's real property, filed an adversary proceeding requesting a judicial declaration that they had either an equitable or a legal interest in the note and deed of trust securing repayment. Defendant, the chapter 11 trustee, moved to dismiss the complaint, asserting the interest was subject to avoidance as a preferential transfer under 11 U.S.C.S. § 547(b).
Ruling: 
Bankruptcy court refused to dismiss complaint of investors seeking judicial declaration of an equitable or legal interest in debtor's property.
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Commercial case opionion summary, case decided on October 30,2008, LexisNexis #0209-120

In re Zamani

The debtor proposed a plan of reorganization that would cure or pay off three promissory notes held by the secured creditor bank. Because the debt to the creditor was over- secured, it is entitled to recover interest on its claims under 11 U.S.C.S. § 1124(2). The parties disagreed, however, whether the bank was entitled to recover interest at default rate under its agreements with the debtor, or must be satisfied with interest at the basic rate.
Ruling: 
Creditor not entitled to default rate of interest where not specified in original contract.
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Consumer case opionion summary, case decided on April 07,2008, LexisNexis #0808-022

In re Connectix Corp.

Creditor, the former commercial landlord of the debtor, filed a claim in the amount of $2,335,283.99 based on the debtor's future lease obligations. The chapter 7 trustee, the debtor, and its major shareholders, objected to the amount of claim, and asserted that, under the correct application of 11 U.S.C. § 502(b)(6), the landlord's recovery from the bankruptcy estate to $446,246.99.
Ruling: 
Landlord's capped claim for unpaid commercial rent allowed but less draws on letter of credit.
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In re Sonicblue Inc.

Bankruptcy debtors'counsel issued a prepetition opinion letter assuring payment to certain of the debtors'senior bondholders who effectively controlled the creditors'committee in the debtors'bankruptcy. After disclosure of the opinion letter, the U.S. Trustee moved to disqualify the debtors'counsel and to appoint a chapter 11 trustee, and a claims trader which acquired claims against the estate moved to convert the case to chapter 7.
Ruling: 
Debtor's counsel disqualified for failure to disclose connection to senior bondholders who controlled creditors'committee.
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