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Case Numbersort descending Opinion Summary ( date sorted)
Michelle M. Harner
In re: Forest Capital, LLC, 16-13850
Jan 24, 2018

In re: Forest Capital, LLC, 16-13850
Adversary Case: Forest Capital, LLC. v. Fischer Porter & Thomas, P.C., et al., 16-00337
Counsel for Debtor: Jeremy S. Friedberg
Counsel for Fischer Porter & Thomas, P.C. et al.: Andrew L. Cole

This adversary proceeding requires the Court to evaluate both the avoidance of an alleged postpetition transfer and the transferee’s liability for the same if the transferee asserts a valid and perfected lien in the transferred property. Specifically, the Defendant made a postpetition transfer of property in the amount of $25,000.00 to itself in payment of certain prepetition legal fees. The Plaintiff asserts that the postpetition transfer constitutes an avoidable transfer under section 549 of the Bankruptcy Code and is moving for partial summary judgment on that basis. The Defendant’s opposition to that motion turns largely on section 550 of the Bankruptcy Code and the reasoning of In re C.W. Min. Co., 477 B.R. 176 (B.A.P. 10th Cir. 2012). The Bankruptcy Court, Michelle M. Harner, Judge, held that, based on the existing record, the Defendant had not established a valid and enforceable attorney’s lien under applicable state law. The Court further determined that the Defendant received the postpetition transfer in violation of section 549 of the Bankruptcy Code. The Court did not, however, direct repayment of the postpetition transfer, as the Plaintiff’s motion did not seek such relief and the Court found genuine issues of material fact relating to that issue.

Michelle M. Harner
Yolande E. Essangui, Case No. 16-12984-MMH Yolande E. Essangui v. SLF V-2015 Trust, et al., Adversary No. 16-00201-MMH
Oct 02, 2017

Yolande E. Essangui v. SLF V-2015 Trust, et al., Adversary No.16-00201,
Main case 16-12984

The issue before the Court is whether a private loan extended for educational purposes is dischargeable in a debtor’s chapter 7 case. Section 523(a)(8) includes three subsections addressing educational debt that is excepted from discharge. The parties do not argue that either section 523(a)(8)(A)(i) or 523(a)(8)(B) is applicable to this case. Rather, the defendant asserts that its debt is covered by section 523(a)(8)(A)(ii), as “an obligation to repay funds received as an educational benefit, scholarship, or stipend.” 11 U.S.C. § 523(a)(8)(A)(ii). Based on the facts of this case, the Court holds that the private student loan at issue is not an educational benefit under section 523(a)(8)(A)(ii) and, therefore, is dischargeable in the debtor’s chapter 7 case. To hold otherwise would ignore the plain language of the statute and render subsections (A)(i) and (B) largely meaningless. Indeed, if subsection (A)(ii) covers any loan for educational purposes, much of the language in the remainder of the section is superfluous. The Court accordingly entered an Order granting the debtor’s motion for summary judgment and denying the defendant’s motion for summary judgment.

Michelle M. Harner
Bankruptcy Case of Jacqueline Chorba, Case No. 17-16032-MMH
Mar 08, 2018

Bankruptcy Case of Jacqueline Chorba, Case No. 17-16032-MMH
Adversary: Jacqueline Chorba v. MOMA Funding, LLC, Adversary Case No. 17-00380-MMH

A creditor holding a right to payment under applicable nonbankruptcy law generally may file a proof claim in a debtor’s bankruptcy case under section 501 of the U.S. Bankruptcy Code. In the chapter 13 case underlying this adversary proceeding, the Defendants filed proofs of claim based on defaulted debt purchased from another entity. The Plaintiff (Debtor) then filed a complaint against the Defendants that, as amended, objected to the Defendants’ proofs of claim and asserted two separate causes of action against the Defendants for alleged violations of the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act. The Court had to consider the effect of plan confirmation and preemption on the Plaintiff’s complaint, as well as several of the principles articulated by the U.S. Supreme Court in Midland Funding, LLC v. Johnson, 137 S.Ct. 1407, 1412 (2017). The Court ultimately determined that (i) confirmation of the chapter 13 plan was not an adjudication of the claims on the merits; (ii) under Midland Funding, the Defendants’ proofs of claim, based on their right to payment on the purchased debt, could stand, subject to objections raised through the claims allowance process; and (iii) the Plaintiff’s claims that the Defendants’ act of filing the proofs of claim violated Maryland law were preempted by the Bankruptcy Code.

Michelle M. Harner
Bankruptcy Case of Byung Mook Cho, Case No. 17-22057-MMH; Jointly Administered with The New Belvedere Cleaners, Inc., Case No. 17-22058
Mar 13, 2018

Bankruptcy Case of Byung Mook Cho, Case No. 17-22057-MMH; Jointly Administered with The New Belvedere Cleaners, Inc., Case No. 17-22058

Whether a contract is executory depends on the facts of the particular matter, the language of the subject agreement, and the consequences under applicable nonbankruptcy law of either party ceasing to perform any ongoing or remaining obligations under the contract. Here, the core purpose of the settlement agreement was to resolve the pending legal disputes between the parties, providing certainty and finality to each affected party. In exchange for the transfer of a certain business and a cash payment, the parties agreed to dismiss the litigation between them; the non-debtor parties agreed to dismiss, and to take certain other action in, related litigation involving a third party; and the parties agreed to refrain from disparaging each other and their respective businesses. Considering the totality of the circumstances and the core purpose of the settlement agreement, the Court determines that the settlement agreement is an executory contract and subject to rejection in the Debtors’ chapter 11 cases.