Tag: bad faith

Bankr. E.D.N.C.: In re Strongs- Ineligibility under 11 U.S.C. § 109(g) for Willful Failure to Abide by Court Orders

Summary:

Bio-Med obtained a default judgment against Ms. Strongs for breach of contract and conversion, alleging that she had improperly retained insurance reimbursement checks totaling $88,767.75, using those funds to purchase two luxury vehicles, which were subsequently transferred to family members. Ms. Strongs filed a Chapter 13 bankruptcy, but after her §341 Meeting of Creditors was continued four times, the Trustee moved to dismiss the case, alleging a lack of good faith in prosecuting the case and failure to disclose either the Bio-Med lawsuit or the vehicle transfers. After initially contesting the dismissal, Ms. Strongs withdrew her opposition and the case was dismissed.… Read More

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Bankr. M.D.N.C.: In re Carter- Standing in Involuntary Bankruptcy; Good Faith in Filing Involuntary Bankruptcy

Summary:

The Debtor caused a fatal motor vehicle accident while under the influence and was subsequently pleaded guilty to felony death by motor vehicle. At the time of the collision, the Debtor was covered by his own insurance with State Farm and the Allstate insurance policy held by the owner of the car the Debtor was driving. The decedent’s estate settled with both Allstate, but after being unable to reach terms with State Farm, ultimately obtained a wrongful death verdict for approximately $2.8 million. When collection efforts failed, the Estate commenced an involuntary Chapter 7, with the Trustee employing special counsel to pursue automobile liability claims against State Farm and Allstate.… Read More

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Bankr. E.D.N.C.: In re Fields- Denial of Motion to Convert from Chapter 7 to Chapter 13

Summary:

In his Chapter 7 petition, Mr. Fields listed a 1987 Porsche 911 as non-operational and worth $500. The Trustee, however, obtained a on-site appraisal, which found the vehicle to be operable and worth between $12,000 and $30,000. After the Trustee declined to object, Mr. Fields did receive his discharge, but was unable to buy the vehicle from the Trustee. Instead he sought to have his discharge revoked and to convert to Chapter 13.

Relying on In re Marrama, 549 U.S. 365 (2007), the bankruptcy court held that due to both Mr. Fields’ failure to accurately value to vehicle and since he lacked income sufficient to support a feasible Chapter 13 plan, conversion was not allowed.… Read More

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Bankr. W.D.N.C.: In re Nelson- Denial of Objection to Conversion from Chapter 7 to Chapter 13

Summary:

The Chapter 7 Trustee discovered that the Female Debtor was the 50% beneficiary of her late father’s springing trust, with her share being worth approximately $100,000, that had not been listed in the petition. The Trustee also cam to believe, based on a valuation by a realtor, that real property valued at $10,000 by the Debtors was actually worth as much as $44,900. After discovery and belated disclosure of these, the Debtors sought to convert their case to Chapter 13, with the Trustee objecting. At the hearing on the conversion, the Male Debtor testified that he had based the value of the real property on the opinion of another realtor.… Read More

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Bankr. W.D.N.C.: In re Jennings- Denial of Conversion from Chapter 7 to Chapter 13

Summary:

In addition to a misstatement regarding their residency in the Western District of North Carolina, the Debtors failed to disclose in their Chapter 7 petition that they had transferred real property to their daughter within one year of their bankruptcy filing. Upon discovery by the Trustee (and likely facing avoidance of the transfer) the Debtors sought to convert to Chapter 13, amending their petition to include the transfer and also including additional income from the Female Debtor.

Beginning from Marrama v. Citizens Bank of Massachusetts, and then heavily relying on In re Goines, 397 B.R. 26, 30 (Bankr. M.D.N.C. 2007) and In re Southern, 2011 WL 1226058, at *3 (Bankr.… Read More

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Bankr. W.D.N.C.: In re Woodend, L.L.C.- Dismissal of Chapter 11 for Bad Faith

Summary:

Deertrack Investors, L.L.C. (“Deertrack”) was a South Carolina limited liability company, whose sole asset is a golf course located in Horry County, South Carolina.  Deertrack and this golf course have been “mired” in litigation for several years.  Synovus holds a Deed of Trust against the golf course and had obtained a court order for the property to be sold at a foreclosure auction on July 5, 2011.  Shortly before the foreclosure,   Deertrack merged with Woodend, L.L.C., a North Carolina corporation with common owners.  Woodend then filed Chapter 11, eight days prior to the Synovus foreclosure.

Synovus moved to dismiss the Chapter 11 case of Woodend, arguing that it was filed in bad faith. … Read More

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Bankr. E.D.N.C.: In re Boyette- § 707(b)(3) following Conversion

Summary:

The Debtor filed Chapter 13 in 2009, subsequently converting to Chapter 7 on May 9, 2011.  This conversion was one day prior to a hearing to determine the status of the claim of the Debtor’s ex-wife, Ms.  Day.

Ms.  Day argued that the conversion was only done in an attempt to avoid paying her claim through the Debtor’s Chapter 13 plan, which otherwise only required $21.50 to complete.   Additionally, Ms.  Day alleged that the Debtor self-reported environmental hazards on their property, in an effort to reduce the value.  Accordingly, Ms.  Day sought to have the Debtor’s Chapter 7 dismissed pursuant to 11 U.S.C.… Read More

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Bankr. E.D.N.C.: In re Harper- Denial of Motion to Convert from Chapter 7 to Chapter 13 Due to Bad Faith

Summary:

The Chapter 7 Debtors failed to disclose in their petition their interests in various real estate partnerships and multiple foreclosure proceedings, which the Chapter 7 Trustee discovered through reviewing the Debtors’ tax return and public records.  The Debtors then sought to convert to Chapter 13 and the Chapter 7 Trustee objected.

The Court held the Debtors  initial schedules were so misleading as to give rise to an inference  of bad faith, which in turn prevents conversion. Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365 (2007).  The debtors argued that providing the 2009 tax return, which disclosed some of the missing items, demonstrates they were not purposefully concealing matters from the Trustee. … Read More

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Bankr. MDNC: In re Greene- Bad Faith Amendment of Exemptions

Summary:

The Debtors had initially disclosed in their petition that they anticipated receiving tax refunds for 2008 totaling $3,000.00.  The actually received $11,194.00, but failed to notify either the Chapter 13 Trustee or their attorney.

After failing to obtain confirmation of their original Chapter plan, which sought to strip-off a junior mortgage held by State Employee’s Credit Union,  a the Debtors proposed a plan releasing their residence to SECU.  Under the new plan, no funds would be paid to SECU, which accordingly sought and obtained an order allowing for adequate protection payments.

A few hours after the hearing, the Debtors converted their case to Chapter 7. … Read More

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