OpinionsAfter 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 A preconfirmation amendment to a chapter 13 plan cannot be withdrawn because the plan as amended "becomes the plan", 11 U.S.C. §1323(b), and this court's rules require that all parties be given notice of any changes to the plan,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. In re Wisconsin & Milwaukee Hotel LLC, No. 24-21743, Dkt. 803 (Bankr. E.D. Wis. Dec. 5, 2025) (December 2025) -- Judge G.M. Halfenger Two creditors (Lenders) moved under §362(d)(2) for relief from the §362(a) stay to allow them to enforce their liens on the chapter 11 debtor’s principal asset, a hotel. Lenders’ motion turned on whether the hotel is “necessary to a successful reorganization”, as used in §362(d)(2)(B). Lenders contended that the reasonable time in which to confirm a plan had passed (thus not making the hotel essential to an effective reorganization) and the debtor’s proposed plan of reorganization is fatally flawed, principally, because it violates the absolute priority rule as codified in §1129(b). The court’s opinion, entered after several days of evidentiary hearings and subsequent briefing, rejects these contentions, principally reasoning that the Lenders failed to show that the debtor’s proposed plan is so flawed that it cannot confirm a plan in a reasonable time. In doing so, the opinion addresses the follow topics: (1) issues relating to the auctioning of the debtor’s proposed sale of equity interests in the reorganized debtor; (2) the participation of the existing owner in that process as the proposed stalking horse bidder; (3) the meaning of “property” in §1129(b)(2)(B)(ii)’s prohibition on existing owners receiving or retaining property on account of their existing ownership interests; (4) potential limitations on the sale process, including whether the process can provide that the reorganized debtor will pay the stalking horse a breakup fee and whether a creditor with a security interest in real estate owned by the debtor may credit bid for the equity interests of the reorganized debtor; (5) whether the plan treats a secured creditor whose claim is paid in full unfairly or inequitably within the meaning §1129(b) based on the possibility that existing owners may be paid a dividend from excess sale proceeds after all unsecured claims are fully paid but before completion of all plan payments to the secured creditor; and (6) whether the debtor has failed to show that the need for new value is necessary. Additionally, the opinion addresses the court’s finding of an appropriate cramdown rate for purposes of §1129(b)(2), and, in so doing, discusses the extent to which the plurality opinion in Till v. SCS Credit Corp., 541 U.S. 465 (2004), has precedential force, governs cramdown determinations in cases under chapter 11, and requires the use of the prime rate as the base rate when using the formula approach to determine an appropriate cramdown rate. The opinion explains the court’s evidentiary finding on the appropriate cramdown rate, which it made using the five-year Treasury note rate (employed by the plan and lenders in the applicable industry) as the base rate and adding risk adjustments proven by the Lenders. Swanson v. Cannella (In re Window Select LLC), Adv. No. 25-02021 (October 2025) -- Judge G.M. Halfenger The liquidating trustee under the confirmed plan in the underlying chapter 11 case brought this adversary proceeding against the debtor's former principal and a revocable trust to avoid several prepetition transfers of funds from the debtor, to facilitate its former principal's purchase of residential real property from the trust, and recover the amounts transferred. The trust moved for partial summary judgment seeking a determination that, for purposes of liability and recovery under 11 U.S.C. §550(a), it was not the "initial transferee" (and is therefore not strictly liable for the return) of more than $700 thousand transferred from the debtor to Fidelity Title, Inc., which held the funds until disbursing them to the trust when the sale closed, primarily arguing that the debtor's former principal was the "initial transferee" because, while Fidelity Title held the funds, he had dominion over the funds, i.e., full control of the funds for his personal use. The court denied the trust's motion because Fidelity Title held the funds subject to its agreement to disburse the funds only if specified conditions were satisfied, in accordance with the closing statement, to the trust and others, so the debtor's former principal never had the requisite dominion over the funds. In re Kahle, Case No. 24-20054 (September 2025) -- Judge R.M. Blise Prior to filing bankruptcy, the married debtors each signed a commercial guaranty whereby they guaranteed repayment of a loan made by the bank to the debtor-husband’s company. After the debtors filed a joint chapter 7 bankruptcy case, the bank filed two proofs of claim, one for each of the guarantees. The trustee objected to the second claim, asserting that the debt owed by each debtor under the guaranties represented the same underlying unpaid loan, and the bank was entitled to just one distribution from the estate. The bank argued the claims were not duplicative because each debtor had separate liability under their separate guaranties. The Court concluded that the bank could not assert two claims because the bankruptcy estates of the married debtors were substantively consolidated pursuant to § 302(a) and Local Rule 1015, and the bank could be paid just once from the consolidated estate. The Court sustained the trustee’s objection to the second claim. Ramirez v. Knight (In re Knight), Case No. 24-22327, Adv. No. 24-2105 (September 2025) -- Judge R.M. Blise The plaintiff sought a determination that the debtor-defendant owed a nondischargeable debt for alleged misrepresentations in connection with the financing of a residential real estate "flipping" project. The plaintiff alleged the debtor misrepresented his plan regarding the sale of the property by failing to disclose his intent to refinance the debt and live in the property himself rather than offering it for sale on the open market. After trial, the Court concluded that the plaintiff had not sufficiently proven the required elements for nondischargeability under 11 U.S.C. § 523(a)(2)(A). The Court found that while the debtor knowingly created a false impression by omitting information about his intent and the plaintiff justifiably relied on that omission, the plaintiff failed to prove that the debtor intended to deceive him. |