OpinionsLenders, secured creditors who seek to enforce their security interests in the chapter 11 debtor’s hotel, appealed to the District Court the court’s denial of immediate relief under section 362(d)(2) from the automatic stay imposed by section 362(a). Lenders moved the bankruptcy court under Federal Rule of Bankruptcy Procedure 8007(e) to suspend further proceedings in that court and contended that their appeal divests the court of jurisdiction to conduct further proceedings until their appeal is concluded. The court ruled that (1) it retains jurisdiction to conduct further proceedings, including on confirmation and related matters, and (2) a suspension of those proceedings is not warranted. Lee v. Hang (In re Hang), Case No. 24-23470, Adv. No. 24-2130 (March 2026) -- Judge R.M. Blise The plaintiffs filed an adversary complaint against the debtor-defendants seeking to have a debt declared nondischargeable under 11 U.S.C. § 523(a)(2)(A). The plaintiffs unwittingly invested money in a non-debtor third-party's fraudulent investment scheme, and those funds were subsequently given to the debtor-defendants in the form of a below-market mortgage loan on property purchased by the debtor-defendants. The parties filed cross motions for summary judgment. The Court determined that there were material questions of fact as to the intent element and the amount of money allegedly obtained by fraud, so neither party sustained their burden on summary judgment on the nondischargeability claim. The plaintiffs also filed a motion to amend their complaint to add claims for a declaration related to the mortgaged property and for a declaration that the debtor-defendants could not invoke a homestead exemption. The Court denied the plaintiffs' motion because the debtor-defendants would be prejudiced by a late amendment to the complaint. The Court also determined that the amendment would be futile because any objection to the claimed homestead exemption was untimely, the plaintiffs did not sufficiently plead that they owned the property at issue, and ownership of the property was irrelevant to a determination of nondischargeability. Lee v. Vang (In re Vang), Case No. 24-24067, Adv. No. 24-2153 (March 2026) -- Judge R.M. Blise The plaintiffs filed an adversary complaint against the debtor-defendants seeking to have a debt declared nondischargeable under 11 U.S.C. § 523(a)(2)(A) and to have the Court declare that the debtor-defendants could not invoke a homestead exemption. The plaintiffs unwittingly invested money in a non-debtor third-party's fraudulent investment scheme, and those funds were subsequently given to the debtor-defendants in the form of a below-market mortgage loan on property purchased by the debtor-defendants. The parties filed cross motions for summary judgment. The Court determined that there were material questions of fact as to the intent element and the amount of money allegedly obtained by fraud, so neither party sustained their burden on summary judgment on the nondischargeability claim. The Court granted the debtor-defendants’ motion with respect to their homestead exemption because the plaintiffs’ claim was not timely filed under 4003(b) and an objection to an exemption should be filed in the main case, not an adversary proceeding. The plaintiffs also filed a motion to amend their complaint to add another claim for a declaration related to the mortgaged property. The Court denied the plaintiffs' motion because the debtor-defendants would be prejudiced by a late amendment to the complaint, and the amendment sought relief the Court could not grant. Ahmed v. Pathan (In re Pathan), Case No. 24-23022, Adv. No. 24-2116 (March 2026) -- Judge R.M. Blise The plaintiff sought a determination that a $100,000 loan the plaintiff gave the debtor-defendant to use solely for business expenses related to the debtor-defendant's gas stations was nondischargeable. After trial, the Court concluded that the plaintiff met his burden of proof under 11 U.S.C. § 523(a)(2)(A). The plaintiff presented sufficient evidence to prove that he loaned money to the debtor-defendant under false pretenses because the debtor-defendant falsely suggested that he would use all the loan proceeds for business purposes. Of the $100,000 loan, the debtor-defendant used $47,112.57 for personal expenses, and the Court granted the plaintiff's request for a declaration of nondischargeability as to that portion of the debt. In re Frick, Case No. 25-25157 (March 2026) -- Judge G.M. Halfenger After the chapter 13 trustee objected to confirmation of the amended unconfirmed plan, the debtor's counsel purportedly withdrew the preconfirmation plan amendment. The trustee then submitted and the court mistakenly entered an order with respect to the debtor's payments to the trustee, superseding a previous order, requiring the debtor to make those payments in the amounts proposed in the plan as originally filed, rather than in the amounts specified in the plan amendment. A preconfirmation amendment to a chapter 13 plan cannot be withdrawn because the plan as amended "becomes the plan", 11 U.S.C. §1323(b), and this court's rules require that all parties be given notice of any changes to the plan, which is typically not required when a party withdraws a filed document. See In re Reed, No. 18-26531, 2018 WL 6975202 (Bankr. E.D. Wis. Nov. 8, 2018). Moreover, reverting to the unconfirmed plan as originally filed would not meaningfully address the trustee's objection to plan confirmation, which is that the debtor lost her job, leaving the trustee to doubt whether she "will be able to make all payments under the plan", 11 U.S.C. §1325(a)(6). The court deemed the attempted withdrawal of the plan amendment ineffective, vacated the mistakenly entered order with respect to the debtor's payments to the trustee, ordered the debtor to show cause why the court should not sustain the trustee's objection to plan confirmation and dismiss this case for cause under 11 U.S.C. §1307(c), and advised the trustee to not submit a proposed payment order in the future if a chapter 13 debtor tries to withdraw a preconfirmation plan amendment. Ballard Spahr LLP v. Official Committee of Equity Security Holders, No. 25-2134 (7th Cir. 2026) (February 2026) -- Seventh Circuit Court of Appeals Greenpoint Tactical Income Fund (“GTIF”), an investment fund focused on gems and fine minerals, filed for bankruptcy in October 2019. In the ensuing proceedings, the law firm Ballard Spahr LLP filed a claim for $236,717 in unpaid legal fees. Michael Hull, who controlled one of the two limited liability companies (“LLC”) that served as GTIF’s managing members, incurred those Ballard fees. Ballard, however, insisted GTIF was on the hook for Hull’s outstanding balance. The bankruptcy and district courts below thought otherwise, granting and affirming summary judgment to the Official Committee of Equity Security Holders (“Equity Committee”), which objected to Ballard’s claim. Affirmed. Moodie v. Olson, Adv. Proc. No. 25-02090 (January 2026) (January 2026) -- Judge G.M. Halfenger Creditor-plaintiff filed an adversary complaint alleging that the debtor-defendant owes her unliquidated debts that are excepted from a chapter 7 discharge by §523(a)(2) & (4). The defendant filed a motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). After plaintiff filed an amended complaint, the defendant conceded that the §523(a)(2) claim was well pleaded but contended that the amended complaint failed to state a §523(a)(4) claim for which relief could be granted. The defendant argued in part that the §523(a)(4) claim—a claim that the defendant owed plaintiff a debt for defalcation while acting in a fiduciary capacity—is governed by Rule 9’s requirement that fraud be pleaded with particularity. Denying the motion to dismiss, the court concluded that plaintiff’s claim did not require, and was not based on, allegations of fraud for purposes of Rule 9. The court further concluded that plaintiff’s §523(a)(4) claim, premised on an alleged knowing violation of the fiduciary duties imposed by Wis. Stat. §§779.02(5), was otherwise well pleaded. In re CandE Hoffman Holdings Inc., Case No. 24-25415-beh (December 2025) -- Judge B.E. Hanan In jointly administered Chapter 11, Subchapter V cases, the court resolved the U.S. Trustee’s objection to debtors’ counsel’s final fee application after previously disqualifying counsel from representing the individual debtors due to conflicts of interest. Although counsel initially represented both the corporate and individual debtors (the latter were principals of the former), the court found that counsel was not disinterested under 11 U.S.C. § 327(a) because of the debtors’ interrelated creditor relationships. The court therefore barred representation of the individual debtors, but allowed counsel to continue representing the corporate debtor. After confirmation, counsel sought $246,052.32 in fees and expenses for work completed on behalf of the entity, with some conceded deduction for services on behalf of the individual debtors. The U.S. Trustee objected to fees for services benefitting the individual debtors after disqualification and sought sanctions. Applying 11 U.S.C. §§ 327, 328, and 330 as well as In re Milwaukee Engraving Co., Inc., 219 F.3d 635 (7th Cir. 2000), the court held that services which benefitted the individual debtors were not compensable, even if they incidentally benefited the corporate debtor. Accordingly, the court disallowed entries that benefited only the individual debtors, including efforts to secure successor counsel. It reduced the request by $12,462.25, leaving $233,590.07 in total compensation for entity counsel. In re KLE Equipment Leasing, LLC, No. 25-22922, ECF No. 350 (December 2025) -- Judge G.M. Halfenger Creditor BMO Bank N.A. moved for derivative standing to prosecute claims the bankruptcy estate allegedly has against the individual chapter 11 debtor's sons and others for wrongful transfers. The court denied the motion because it failed to allege the bases for the requested relief with particularity, as required by Fed. R. Bankr. P. 9013. The court concluded that the motion did not adequately allege any of the following requirements for derivative standing, that (1) the debtor in possession refuses a demand to pursue the action and the refusal is unjustified; (2) the claim to be pursued in the action is colorable; and (3) the third party seeks and obtains permission from the court to pursue the claim. The court denied the motion without prejudice but ordered that any future derivative standing motion must be accompanied by (a) a proposed complaint pleading all claims for which derivative standing is requested and (b) proof that the movant presented the proposed complaint to the debtor in possession, demanded that the debtor prosecute the proposed claims, and the debtor refused that demand. In re Russ's Mulch & Trucking LLC, Case No. 25-25134 (December 2025) -- Judge R.M. Blise The debtor filed an application to employ counsel pursuant to 11 U.S.C. § 327(a) more than five weeks after filing its petition under subchapter V of chapter 11. The application requested that the employment be made retroactive to the petition date. To justify retroactive approval, the Seventh Circuit instructs that counsel must demonstrate excusable neglect. In re Singson, 41 F.3d 316 (7th Cir. 1994). The Court found that counsel had not demonstrated excusable neglect for failing to file the application before providing significant legal services to the debtor. The Court thus concluded that retroactive approval was not appropriate and approved employment of counsel as of the date of the application. |