The summaries on this website are summaries of the opinions issued by the judges of the Bankruptcy Court for the Western District of Virginia from October 2004 to date. The opinions may be searched by year, judge, category and chapter. For a more detailed search, enter a keyword in the search box above. This opinion bank, however, is not an exhaustive list of opinions issued by the judges of the Western District. These summaries are not intended to replace other research methods, but may be used as a starting point for your research. These summaries do not contain information as to whether an opinion has been published, appealed or the disposition of any such appeal, or otherwise overruled or affected by subsequent case law or statute. These summaries have been prepared for the convenience of the researcher and in no way constitute an interpretation by the Court of the opinion summarized. Please rely on the opinion not the summary. Please contact Judge Connelly's chambers or Judge Black's chambers regarding any questions or errors.
The court revised its previous approval of a settlement agreement to remove the condition that the court imposed on an insider seeking release of all claims for guaranteeing the settlement payments.
A creditor objected to a report of sale of assets filed by the debtor. The Court held that the creditor, through its motions, briefs, and exhibits, improperly attempted to use its objection to sale as a motion for reconsideration of its previously adjudicated claim in this case. Accordingly, the objection is overruled except to the extent to which the sale includes collateral for a secured claim.
The Debtor converted her bankruptcy to Chapter 13 and then reconverted back to Chapter 7. A creditor filed a Complaint to determine dischargeability of debt and deny the Debtor's discharge, and the Debtor filed a Motion to Dismiss the Complaint as untimely filed. The issue presented is whether the creditor filed the Complaint within the prescribed time period allowed under the Federal Rules of Bankruptcy Procedure. Rule 4007(b) provides that "[a] complaint other than under § 523(c) may be filed at any time." The Court determined that the creditor's Complaint arises under 11 U.S.C. § 523(c), and is therefore governed by Rule 4007(c), not Rule 4007(b). Rule 4007(c) provides that a "complaint to determine the dischargeability of a debt under § 523(c) shall be filed no later than 60 days after the first date set for the meeting of creditors under § 341(a). . . ." Rule 1019(2) provides that when a Chapter 13 case has been converted or reconverted to a Chapter 7 case, "a new time period for filing . . . a complaint to obtain a determination of dischargeability of any debt shall commence pursuant to Rule[] . . . 4007, provided that a new time period shall not commence if a chapter 7 case had been converted to a chapter . . . 13 case and thereafter reconverted to a chapter 7 case and the time for filing . . . a complaint to obtain a determination of the dischargeability of any debt, or any extension thereof, expired in the original chapter 7 case."
The Court determined that since the time for filing a complaint in the Debtor's original Chapter 7 filing had expired many months before the conversion to Chapter 13, Rule 1019(2) does not provide a new time period for the creditor to file a Complaint. Accordingly, the Court sustained the Debtor's Motion to Dismiss the Complaint as untimely.
Debtors' motion to approve sale of residence free and clear of liens under section 363 approved. The motion was not served on the second lienholder, but the sale of the property free and clear of the first and second deeds of trust and tax lien was authorized by section 363(f)(3) because the net sale proceeds were more than enough to pay such liens in full. Second lienholder had already been paid in full with interest in accordance with the confirmed chapter 13 plan. Additionally, under section 1327(c), residence property was vested back in the debtors free and clear of the second lienholder's claim, subject only to the payment with interest of the determined amount of its claim, which had taken place already. However, as the second lienholder did not have notice of the sale, sale of property approved but the order authorizing the sale to be served on secured creditor and trustees of deed of trust with limited opportunity to file objection thereto.
A creditor filed a Complaint seeking to determine dischargeability of debt. Seventy-eight (78) days later, the Debtor filed a Motion to Dismiss the Complaint, citing Federal Rule of Bankruptcy Procedure 7012(b) and Federal Rule of Civil Procedure 12(b)(6). The Court denied the Debtor's Motion to Dismiss pursuant to Rule 12(b) on the ground that it was untimely filed.
Upon the Plaintiff's Complaint to determine the dischargeability of a judgment under 11 U.S.C. § 523(a)(6) for willful and malicious injury, the Court held that the judgment is excepted from discharge pursuant to Section 523(a)(6). To be excepted from discharge under Section 523(a)(6), the debtor’s act has to be one in which the debtor intended to cause harm to the entity, or to a property interest of the entity, not just an intentional act where harm resulted. The Fourth Circuit has held that the equivalent of actual malice may be inferred from the circumstances; thus, malice may be implied from deliberate and intentional act done with "knowing disregard for the right of others." See In re McNallen, 62 F.3d 619, 626 (4th Cir. 1995). Therefore, because the debtor knew that the hospital had a valid lien on the tax refund, she acted willfully acted against the interest of the hospital when she received and spent her refund. Accordingly, the Court found that this intentional action was sufficient to deny discharge of the debt under Section 523(a)(6).
A creditor sought a declaration that debts arising from an educational loan is non-dischargeable under 11 U.S.C. § 523(a)(8). The Plaintiff asserted that the debt was discharged in her Chapter 7 case. Since the debt arose from an education benefit "made, insured, or guaranteed by a governmental unit," the burden shifts to the Plaintiff to demonstrate that excepting the debt from discharge will impose an undue hardship on her and her dependents. See 11 U.S.C. § 523(a)(8). Under the undue hardship test, the Plaintiff must establish the three prongs outlined in Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2nd Cir. 1987). In this case, the Plaintiff failed to meet her burden of proving the first two prongs of the Brunner test for undue hardship. Plaintiff would have disposable income after making the payment of her student loans and her total household income is expected to increase during the repayment period of the loan. Accordingly, the debt is nondischargeable.
The Court found that an assignee Creditor did not have a workman's or materialman's lien under West Virginia law because the liens were not filed in accordance with the statute, despite an exception from the automatic stay. A general unsecured creditor does not have standing to assert an equitable subordination motion against another general unsecured creditor without authorization of the Court after notice and hearing to all creditors and parties in interest.
The Debtor/Plaintiff failed to show that her student loan debt imposes an undue hardship when her husband's income is factored in, so the court declared the debt non-dischargeable.
The Court granted the debtors' litigation counsel's Petition for Approval of an Administrative Expense for pre-petition services pursuant to 11 U.S.C. § 503.