Upon consideration of an objection to Debtors’ Plan, the Court determined that Debtors’ interest in their father’s probate estate constitutes an equitable interest under the Code and is property of the bankruptcy estate. Accordingly, the Court overruled the objection in part as to the interests in the probate estate being part of Debtors’ bankruptcy estate and sustained the objection in part because Debtors have personal liability for some portion or all of the probate estate taxes.
Plaintiff filed a motion to remand stating that defendants improperly removed a state proceeding to federal court in violation of 28 U.S.C. § 1452(a)’s police and regulatory exception. Defendants removed the civil case under 28 U.S.C. §§ 1441, 1452(a), and under Article III of the Constitution § 1251. This court found that defendants could not remove pursuant to §1441 because the basis for removal under federal question and diversity jurisdiction was lacking. Since the plaintiff, being the State of Texas, is not a citizen for purposes of analysis under the federal statute, removal was barred under § 1441. The court also found that defendants had no basis for removal under 28 U.S.C. § 1251 of Article III because of misinterpretation. The statute states that the Supreme Court has original but not exclusive jurisdiction, thus, if the subject matter was not exclusive to federal courts, then it could very well be heard in state proceedings. The court found in that defendants had improperly removed the case in violation of the police and regulatory exception to § 1452(a) because plaintiff is trying to enforce matters of Texas law, under DTPA, as a matter of safeguarding the public interest. The court found that plaintiff was not acting to protect its own pecuniary interests, but rather the public’s, specifically, the individual consumers that put forth the complaints against the defendants. The court granted the plaintiff’s motion to remand to state court.
In re: La Fuente Home Health Services, Inc. - 2017 Bankr. LEXIS 834 | 2017 WL 1173599
Tuesday, March 28, 2017
Plaintiff, La Fuente, filed for Chapter 11 bankruptcy in 2014. Upon doing so, plaintiff listed Palmetto in the creditor’s matrix and served Palmetto with an affidavit, which also provided notice. This court set a hearing for October 22, 2014 and between then and January 21, 2015, the bankruptcy schedules and plan were approved and confirmed. On July 2, 2015, this court entered a Final Decree that close plaintiff’s case. Plaintiff later requested its bankruptcy case to be reopened to include an Adversary Proceeding in which the U.S. Department of Health and Human Services were attempting to recoup debt owed directly from La Fuente. Palmetto and Sylvia Mathews Burwell, Secretary of HHS, filed a motion to dismiss the plaintiff’s Complaint and Application for Permanent Injunctive Relief and/or Alternatively Summary Judgment. This court, pursuant to Supreme Court precedent concluded that sufficient notice was provided to defendants and that it had subject matter jurisdiction to hear and settle the dispute, therefore, the motion was denied
Upon consideration of Debtor’s Application to Employ Special Litigation Counsel, the Court found that Debtor had a constitutional right—albeit not an absolute right—to choice of counsel. Further, the Court found that Debtor’s Application complied with the requirements of 11 U.S.C. § 327(e) and Fed. R. Bankr. P. 2014. As such, the Court GRANTED Debtor’s Application to Employ Special Litigation Counsel and OVERRULED the Objection.
In re Brothers Materials, LTD. - 2016 Bankr. LEXIS 4077
Monday, November 28, 2016
Upon consideration of Debtor’s Motion to Enforce the Plan, the Court found that all parties, including the Internal Revenue Service, were bound by the terms of the confirmed plan. Therefore, Debtor’s Counsel was entitled to payment of awarded administrative expenses from the proceeds of the sale of non-debtor property contributed to the estate by Debtor’s principals pursuant to the terms of the plan. As such, the Court GRANTED Debtor’s Motion to Enforce the Plan and OVERRULED the IRS’s Objection.
Pending before the Court were two motions: Frescos Tomver’s (“Frescos Tomver”), an unsecured creditor, Objection to Disclosure Statement (the “Objection”) and Debtor’s Motion to Appoint Saul Zuniga as Designated Representative of Divine Ripe, L.L.C. Pursuant to Federal Bankruptcy Rule 9001(5)(A) (the “Motion to Appoint”). The Objection alleged that Debtor’s Disclosure Statement does not contain adequate information on Debtor’s Plan of Reorganization, specifically information on Marco Jimenez’s (“Jimenez”) financial capabilities and information about Debtor. Further, the Objection alleges that Debtor’s plan violates federal law. Debtor’s Motion to Appoint sought approval to appoint Saul Zuniga, Debtor’s employee, as the Designated Representative. The Court, in applying the standards for adequate information in a disclosure statement, held that Debtor failed to disclose adequate information regarding Debtor’s and Jimenez’s financial resources necessary for Debtor’s successful reorganization. As such, the Court SUSTAINED the Objection and found Debtor’s Disclosure Statement is NOT APPROVED. In consideration of the Motion to Appoint, the Court found that Saul Zuniga (“Zuniga”) does not qualify as an “other person in control” because Zuniga is not knowledgeable about Debtor’s affairs and has not been formally given authority to act on behalf of Debtor by Debtor’s sole member, Jimenez, pursuant to Fed. R. Bankr. P. 9001(5) and Tex. Bus. Orgs. Code § 101.251-254. Further, the Court found that the Motion to Appoint should be DENIED.
In re: Treyson Dev., Inc. - 2016 WL 1604347 | 2016 Bankr. LEXIS 1768
Tuesday, April 19, 2016
Pending before the Court in the main bankruptcy case and related adversary proceeding were two motions: Creditor’s Motion for Relief from Order (“Motion to Vacate”) and Plaintiff’s Motion to Remand, Abstention and 9027(e)(3) Statement (“Motion for Remand”). Creditor, in its’ Motion to Vacate sought to have the Court’s Order Confirming the Debtor’s Plan vacated because of a provision that was impermissible. Plaintiff, which is the creditor from the bankruptcy case, in its Motion for Remand sought remand or abstention of the adversary proceeding. The two motions were interrelated because the provision in the Debtor’s Plan released and discharged the Debtor’s sole member from liability for the Plaintiff’s claims. The Court reviewed the standard for the binding effect of a confirmed plan upon noticed parties before determining that, upon applying such standard to the instant matter, a confirmed plan is binding upon the Creditor because the Creditor received notice of the proceedings and failed to object or timely appeal. As such, this Court DENIED the Motion to Vacate The Court, in applying the standards for remand and abstention to the instant matter, held that, having contemporaneously interpreted the provisions of the Debtor’s Plan, this Court should ABSTAIN from hearing the instant matter and the matter should be returned to state court for further proceedings. Thus, this Court GRANTED the Motion for Remand.
In determining a motion to convert or dismiss two jointly administered chapter 11 cases, this Court was required to determine the applicability of 11 U.S.C. § 1121(e)’s plan filing deadlines for small business cases. This Court determined that the one small-business debtor, who had elapsed the deadline for filing a plan, essentially precluded the other debtor from filing a plan. However, this court concluded that § 1121(e)’s deadline did not apply to creditors, who were willing to file a competing plan in the jointly administered cases. This Court therefore found no cause for dismissal or conversion, as a feasible plan could still be proposed, and as such the motion was DENIED.
Debtor filed a so-called “chapter 22,” which consisted of two simultaneously open chapter 11 cases filed in serial sequence, where the plan from the first chapter 11 had been substantially consummated. Before this Court were three motions: Debtor’s Motion for Final Decree to close the first chapter 11 case; Creditor’s Motion for Relief from Stay in the second case; and Creditor’s Motion to Dismiss the second case. This Court found that the plan from the first case had been substantially consummated, thus rendering the estate fully administered and justifying a Final Decree. This Court also concluded that the secured creditor was entitled to relief from stay on the basis of 11 U.S.C. §§ 362(d)(1), (d)(2), & (d)(4). Moreover, this Court concluded that, while there isn’t a per se prohibition against filing a serial chapter 11 where the plan had been substantially consummated, Debtor’s lack of good faith in filing its second chapter 11 merited dismissal.
Debtor filed a Motion to Extend Stay to Non-Debtor Marco Jimenez pursuant to 11 U.S.C. § 362, which was DENIED. The Debtor sought to have the Automatic Stay extended to the sole member of the Debtor, Marco Jimenez. The basis for the Debtor’s motion was that the non-debtor needed the protections of the Automatic Stay to aid in his ability to make contributions to the Debtor to facilitate a successful reorganization. However, at the hearing, the Debtor failed to demonstrate that the extension of the Automatic Stay to Marco Jimenez would have any effect on the Debtor’s likelihood to have a successful reorganization and there was not such an identity of interest between the Debtor and the non-debtor that the potential of a judgment in the matter pending before the District Court would, in essence, be a judgment against the Debtor. As such, this Court denied the Debtor’s Motion.
Debtors filed a Motion for the Court to reconsider its dismissal with prejudice, which was DENIED. Debtors had voluntarily dismissed their case subsequent to a creditor having filed a motion for relief from stay, thus raising the issue of the applicability of 11 U.S.C. § 109(g)(2), which prohibits an individual from being a debtor for 180 days where said debtor voluntarily dismisses a case “following” the request for relief from stay. Debtors argued that § 109(g)(2) requires that there be causation between the request for relief from stay and the voluntary dismissal. At the hearing on the Motion, Debtors offered no evidence or testimony as to whether causation was lacking in its case. This Court concluded that § 109(g)(2)’s most reasonable construction was that of a chronological application, rather than a causal one. This Court thus DENIED the Motion to Reconsider.
Debtor sought confirmation of their proposed plan in their Chapter 11 Small Business Case. The Plan suffered from multiple deficiencies and was not confirmable pursuant to 11 U.S.C. §§ 1121 and 1129. Furthermore, the proposed plan had not been confirmed within the 45-days required by § 1121(e) nor had the Debtor moved for an extension of time. As such, the Debtor’s proposed plan was not confirmed by this Court.