OpinionsThe jointly-administered Chapter 11 debtors had proposed and been approved for two significant asset sales, and now ask the Court to use the proceeds of the sales to pay select administrative claimants. Simultaneously, the U.S. Trustee filed a motion to convert the Chapter 11 cases to separate Chapter 7 proceedings, and the largest secured creditor filed a motion for relief from the automatic stay. The Court considered the best sequence and means of handling the various motions against the debtors' admission that the Chapter 11 process is no longer an option for them, as well as other facts of record. Based on the best interests of the creditors and the estates under Sec. 1112(b), the Court converted the two cases to Chapter 7, and held the remaining motions in abeyance. In re Saul Limon, Case No. 20-23368 (June 2020) -- Chief Judge G.M. Halfenger A creditor objected to confirmation of the chapter 13 plan because the plan does not provide for the creditor's allowed secured claim. The court overruled the objection because no provision of the Bankruptcy Code requires that a chapter 13 plan provide for all allowed secured claims. Cloud I Q LLC v. RADAR_Apps, Inc. (In re Cloud I Q LLC), Adv. Proc. No. 19-02110 (May 2020) -- Chief Judge G.M. Halfenger The chapter 11 debtor brought this adversary proceeding against several individuals and entities seeking the payment of a matured debt that is property of the estate under 11 U.S.C. §542(b) and damages under Puerto Rico common law on a variety of legal theories. The defendants moved to dismiss certain of the claims against them for failure to state a claim upon which relief can be granted, based on forum-selection clauses in pertinent contracts, and for failure to join one or more required parties; for mandatory abstention under 28 U.S.C. §1334(c)(2); and for a change of venue to the U.S. District Court for the District of Puerto Rico. The court granted the defendants' motions in part, concluding that the operative complaint does not plausibly allege that defendant MIGO IQ Inc. is an alter ego of defendant Synergy, LLC, or that defendants Jonathan Kotthoff and Alan Debolin are liable to the debtor under the doctrine of culpa in contrahendo. The court otherwise denied the defendants' motions. Schuessler, et al. v. SBA, et al., Adv. No. 20-2065 (May 2020) -- Judge B.H. Ludwig Chapter 12 debtors filed adversary proceedings against the SBA and its administrator after their Paycheck Protection Program loan applications were denied because of their pending bankruptcy cases. The debtors argued the denial of their applications ran afoul of the non-discrimination provision in 11 U.S.C. §525(a) and the Administrative Procedure Act, 5 U.S.C. §§701 et seq. The court denied the debtors’ request for injunctive relief. The ruling was final as to the debtors’ core claims and served as recommended findings of fact and conclusions of law to the district court on the non-core claims. Verde Environmental Technologies, Inc. v. C2R Global Manufacturing, Inc. (In re C2R Global Manufacturing, Inc.), Case No. 1830182-beh, Adv. Proc. No. 20-02028-beh, 2020 WL 2529335 (Bankr. E.D. Wis. May 18, 2020) (May 2020) -- Judge B.E. Hanan Verde filed an adversary proceeding, seeking preliminary and permanent injunctive relief related to its claims for false advertising under federal and state law. C2R responded with a motion to dismiss Verde’s Count II, relating to claims for false advertising under Wisconsin Statute section 100.18—the Deceptive Trade Practices Act (DTPA). The Court concluded that Verde, as a competitor of C2R, is not a member of “the public” and, therefore, not eligible to bring a sec. 100.18 claim. The Court also ruled that Verde was not induced to act based on any statements or representations by C2R, a second element of a claim under sec. 100.18. Accordingly, the Court granted C2R’s motion to dismiss Count II of the adversary complaint with prejudice. In re C2R Global Manufacturing, Inc., Case No. 18-30182-beh, -- WL -- (May 2020) -- Judge B.E. Hanan In approving the parties’ settlement of their patent infringement lawsuit (waged as a claim objection proceeding) the Court vacated its February 20, 2020 decision construing the parties’ disputed patent claim terms. In re Gentry, Case No. 15-20990-beh, 2020 WL 2479662 (Bankr. E.D. Wis. May 13, 2020) (May 2020) -- Judge B.E. Hanan Four years after his plan was confirmed, a debtor objected to the State of Wisconsin’s proof of claim for overpayment of ChildCare benefits. The debtor argued that the Seventh Circuit’s recent decision in In re Dennis, 927 F.3d 1015 (7th Cir. 2019) (holding that overpayments were not domestic support obligations) is controlling and warrants the reclassification of the claim as a general nonpriority unsecured claim. The Court rejected the State’s arguments that res judicata and collateral estoppel relating to the confirmed Chapter 13 plan precluded the debtor from bringing the objection. Rather, the Court determined that deadlines set by statute and rule, plus law of the case and judicial estoppel governed the Court’s analysis. In doing so, the Court sustained the debtor’s objection, found that the Court is bound to follow In re Dennis and will do so here because the debtor’s case is still open. Dalton v. Navient (In re Dalton), Ch. 7 Case No. 19-26478-kmp, Adv. No. 19-2175 (Bankr. E.D. Wis. Apr. 13, 2020) (April 2020) -- Judge K.M. Perhach The Debtors in a no-asset Chapter 7 case filed a complaint against a private student loan lender seeking reformation of the loan contracts and to void any contract procured through forgery. Because the claim did not affect the allocation of property among creditors and would have no effect on creditors besides the student loan lender, the claim was not "related to" the bankruptcy case. The Court did not have jurisdiction over the complaint, and the Court granted the lender's motion to dismiss. Gral v. Gral (In re Gral), Adv. Proc. No. 17-02277 (March 2020) -- Chief Judge G.M. Halfenger Individuals and entities related to or associated with the chapter 7 debtor brought this adversary proceeding against the estate seeking declaratory relief. The chapter 7 trustee asserted various counterclaims, which the plaintiffs moved to dismiss for failure to state a claim upon which relief can be granted. The court dismissed the counterclaims as supported by merely conclusory allegations. The court denied the trustee leave to replead the counterclaims because the estate--represented first by a committee of unsecured creditors, when the case was a case under chapter 11, and then by the chapter 7 trustee--tried and failed multiple times to plead any cognizable claims against the plaintiffs. The court also dismissed the plaintiffs' claims as supported by merely conclusory allegations and because the relief sought by the plaintiffs appears unnecessary given the dismissal with prejudice of the trustee's counterclaims. Wiseman v. Milwaukee Radiologists Ltd, Adv. No. 19-2153 (March 2020) -- Judge B.H. Ludwig The chapter 7 debtor filed an adversary proceeding against a medical service provider, alleging violations of the automatic stay. The provider mailed invoices to the debtor’s deceased husband, requesting payment of a $12.61 balance due for medical services provided to him. Because the record showed that the defendant's collection efforts were not directed against the debtor or her bankruptcy estate, the court found there was no violation of the automatic stay and dismissed the complaint. |