Opinions

The Southern District of Illinois offers a database of opinions. These opinions were entered between the period of 2/1987 and the present. To conduct a detailed search, enter a keyword or case number in the search box to the right.

 

Opinions can also be viewed via the U.S. GPO's Federal Digital System

Date Filedsort ascending Summary Case Number PDF
06/21/2022

In re: Lunn vs. Lunn

Summary: The Debtor filed a complaint seeking to avoid a judicial lien in favor of his former spouse pursuant to 11 U.S.C. § 522(f)(1)(A). The lien secured the former spouse’s interest in the equity in the parties’ marital residence. As a preliminary procedural matter, the Court noted that this action should have brought as a motion rather than an adversary proceeding pursuant to Federal Rules of Bankruptcy Procedure 4003(d) and 7001(2) and construed the complaint as such. Then, relying on the Supreme Court’s ruling in Farrey v. Sanderfoot, 500 U.S. 291, 114 L.Ed. 337, 111 S.Ct. 1825 (1991), the Court denied the Debtor’s motion. The Court explained that § 522(f)(1)(A) does not simply allow a debtor to “undo” a judicial lien. Instead, it permits the debtor to avoid the “fixing” of a lien on the debtor’s interest in property. This implies that the debtor must have had a pre-existing interest in the property at the time that the creditor’s lien fixed. Here, a species of common ownership in the parties’ marital property was created under state law when the divorce petition was filed. This common ownership interest remained until the entry of the judgment of dissolution of marriage establishing the parties’ property interests—the same judgment which simultaneously created the judicial lien in favor of the former spouse. Hence, the Debtor did not possess a pre-existing interest at the time that the lien fixed, and, therefore, the former spouse’s lien was immune to the Debtor’s challenge under § 522(f)(1)(A).

22-3007 View
01/13/2022

In re: Bryan M McGee

Summary: When the Chapter 13 Debtor and his Co-Debtor spouse divorced, the case was deconsolidated. The Trustee then filed a Motion to Compel asking the Debtor to amend Schedules D and E/F to list only the debts he owed and to object to all claims no longer part of the Debtor’s case. The Trustee argued that he needed the Debtor to take that action so that the Trustee would know what claims to pay in the Debtor’s deconsolidated case. The Debtor argued that he was potentially obligated for all the debts listed on his original schedules by virtue of the Illinois Family Expense Act, and therefore the schedules and claims remained accurate as filed. The Trustee countered that there was no indication that the Debtor was liable for any claims under the Illinois Family Expense Act.

Emphasizing that the Bankruptcy Code requires a debtor to file accurate schedules, the Court denied the Trustee’s Motion, finding that to do otherwise would require the Debtor to file schedules and claim objections contrary to his considered judgment that the schedules are still accurate and that the claims should be paid as filed. The Court noted that the Bankruptcy Code and Rules provide for the Trustee to object to any claims that he believes are improper, and that he can request additional information from the Debtor who has a duty to cooperate with the Trustee in that regard. As to the Illinois Family Expense Act, the Court found it premature to rule on the applicability of the Act as no hearing had been held on the allowability of any claim based on that Act.

18-41056 View
12/29/2021

In re: Dallas R Law

Summary: Prior to filing Chapter 13 bankruptcy, the Debtor made $8,000.00 in preferential transfers. His Chapter 13 Plan proposed to pay $6,450.00 to general unsecured creditors, which the Debtor asserted satisfied the “best interests of creditors test” of 11 U.S.C. §1325(a)(4) as unsecured creditors would have received $6,450.00 in a Chapter 7 bankruptcy after deducting the Chapter 7 trustee fee of $1,550.00. The Debtor’s disposable income was $2,548.80 over the 60-month term of the Debtor’s Plan. The Debtor asserted that his proposed payment to general unsecured creditors satisfied the “disposable income test” of §1325(b)(1)(B) by exceeding his disposable income.

The Trustee objected to the Plan arguing that the “good faith test” of §1325(a)(3) required the Debtor to provide a pool for general unsecured creditors of $10,548.80 to account for the $8,000.00 preferences and the $2,548.80 disposable income. The Trustee contended that the Debtor’s Plan provided a windfall to the Debtor’s insiders at the expense of unsecured creditors, because if the Chapter 13 Trustee pursued the preferences, the unsecured creditors would receive both the disposable income and the preference recovery.

Addressing the “best interest of creditors test”, the Court noted that $33,144.85 in priority unsecured claims had been filed, and those claims would be paid first in a hypothetical Chapter 7 liquidation, leaving $0.00 for general unsecured creditors. The Debtor’s Plan exceeded that amount by proposing to pay $6,450.00 to general unsecured creditors. As to the “disposable income test”, the Court rejected the Trustee’s argument that the preferences should be added to “disposable income”. Distinguishing Watters v. McRoberts, 167 B.R. 146 (S.D. Ill. 1994), the Court noted that a preference action only arises upon the bankruptcy filing and belongs to the bankruptcy estate, unlike the exempt personal injury recovery at issue in Watters

Finally, the Court found that the Debtor’s Plan met the “good faith test” because it complied with the explicit provisions of the Bankruptcy Code and the only element of “bad faith” asserted by the Trustee was the amount that the Debtor’s Plan proposed to pay to general unsecured creditors. The Debtor’s Plan satisfied both the “best interests of creditors test” and the “disposable income test”, and the proposed payment to general unsecured creditors exceeded the amount required by both of those provisions.

 

21-40223 View
12/01/2021

In re: Dana M Robinson

Summary: When the Debtor filed her Chapter 13 bankruptcy in January 2021, she did not know that she had a federal tax liability for 2020 and did not list the Internal Revenue Service in her schedules or Chapter 13 Plan. She subsequently filed an Amended Schedule E/F and an Amended Chapter 13 Plan adding the IRS as a creditor on August 12, 2021, after the governmental claims bar date of July 26, 2021 had passed. The IRS then filed a late claim on August 24, 2021, and the Chapter 13 Trustee filed an Objection. The Debtor followed with a Motion for Leave to File Time-Barred Claim on September 14, 2021, seeking to file a claim on behalf of the IRS. The Chapter 13 Trustee filed an Objection to the Debtor’s Motion, asserting that the Debtor had not filed her Motion within 30-days after the claims bar date, as required by Bankruptcy Rule 3004, and had not shown “excusable neglect” as required by Bankruptcy Rule 9006(b)(1) for an enlargement of time.

The Court sustained the Trustee’s Objection to the late filed IRS claim. Although the IRS did not receive notice of the bankruptcy until after the claims bar date, the IRS had not filed a motion seeking additional time to file its late claim as required by Bankruptcy Rule 3002(c)(6).

The Court overruled the Trustee’s Objection to the Debtor’s Motion for Leave to File Time-Barred Claim and granted the Debtor additional time to file a claim on behalf of the IRS. The Court applied the guidelines set forth by the U.S. Supreme Court in Pioneer Inv. Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 380 (1993) and found “excusable neglect” on the part of the Debtor as required by Bankruptcy Rule 9006(b)(1) for enlargement of time.  

 

21-60008 View
09/30/2021

In re: Illinois Star Centre, LLC

Summary: The Court held an evidentiary hearing to determine the value of a retail shopping center (the “Mall”) operated by the debtor, and the adjacent real property (the “800 building”), owned by a non-debtor entity. Both properties were sold together for $3,200,000.00, so the Court had to determine how to allocate the proceeds from the sale of the Mall and 800 Building using information provided by appraisers from both parties. After making certain adjustments from the appraisals, the Court found that the mall has a value of $1,650,000.00, while the 800 building has a value of $1,550,000.00.

17-30691 View
09/22/2021

In re: Robert J Roedl

Summary: The U.S. Trustee filed a Motion asking the Court to disgorge the fees of Debtor’s counsel and/or to impose sanctions. The U.S. Trustee asserted that counsel failed to conduct a proper investigation into the financial affairs of the Debtor, which led to the Debtor’s failure to disclose a zero-turn lawnmower on his bankruptcy schedules. In particular, the U.S. Trustee contended that a reasonable investigation of the Debtor’s financial affairs required counsel to review the website judici.com, which would have revealed the Debtor’s divorce case and the judgment awarding the lawnmower to the Debtor.

While encouraging the review of public databases, the Court found that the failure to disclose the lawnmower in this case resulted from a lack of candor on the part of the Debtor rather than a failure to investigate on the part of Debtor’s counsel that would warrant disgorgement of fees or sanctions.

20-31140 View
04/09/2021

In re: Shay Allen

Summary: The Debtor had previously disclosed in her Voluntary Petition and all of her Chapter 13 Plans that she had a Back Pay claim with her employer but had not received it yet. The Debtor informed the Chapter 13 Trustee that she was not going to receive any of the Back Pay claim in 2020, but the Trustee’s review of her 2019 tax returns showed that she had in fact received payment. The Trustee then filed a Motion to Compel requiring the Debtor to file Amended Schedules I and J and another Amended Plan if necessary. The Debtor complied and in her Third Amended Plan she sought to decrease the plan duration from 60 to 36 months and to provide an increase in monthly payments over the last 12 months. The Trustee objected to the Third Amended Plan and wanted the Debtor to provide all of her disposable income effective January 2020 or provide a non-modifiable pool of $8,766.56 representing the difference in disposable income and monthly plan payments from January 2020 to November 2020. The Debtor objected to Trustee’s objection arguing that the Trustee was seeking a retroactive increase in plan payments that was impermissible under 11 U.S.C. § 1329.

The Court found that the Trustee was not seeking a retroactive increase in monthly plan payments since the parties had contemplated that some or all of the Back Pay claim would be paid to the creditors through the plan once it was received. The Court then determined that it could not rule on the whether the Third Amended Plan was confirmable, and the Confirmation hearing was reset to allow the parties to address the issues raised under 11 U.S.C. § 1329.

 

18-60420 View
03/17/2021

In re: Gateway Wireless v. Addy Source

Summary: Plaintiff-Debtor filed a Complaint to Avoid and Recover Transfers Pursuant to 11 U.S.C. §§547, 548 and 550. Defendant filed a Motion to Dismiss the Complaint asserting that because the bankruptcy case was closed prior to the Complaint being filed, the Plaintiff was barred by the statute of limitations described in Section 546(a)(2) of the Bankruptcy Code. In denying the Motion to Dismiss, the Court found that the Debtor fell under an exception to Section546(a)(2), in that Section 546(a)(2) no longer applies as a limit if the order closing the bankruptcy case is vacated. The day after the bankruptcy case was closed, the Debtor had filed a Motion to Set Aside the final decree, which the Court had granted. Because the final decree had been vacated, the Court held that the Debtor was not time barred by Section 546(a)(2) from filing its Complaint.

20-03028 View
03/17/2021

In re: Gateway Wireless v. GTR Source

Summary: Plaintiff-Debtor filed a Complaint to Avoid and Recover Transfers Pursuant to 11 U.S.C. §§547, 548 and 550. Defendant filed a Motion to Dismiss the Complaint asserting that because the bankruptcy case was closed prior to the Complaint being filed, the Plaintiff was barred by the statute of limitations described in Section 546(a)(2) of the Bankruptcy Code. In denying the Motion to Dismiss, the Court found that the Debtor fell under an exception to Section546(a)(2), in that Section 546(a)(2) no longer applies as a limit if the order closing the bankruptcy case is vacated. The day after the bankruptcy case was closed, the Debtor had filed a Motion to Set Aside the final decree, which the Court had granted. Because the final decree had been vacated, the Court held that the Debtor was not time barred by Section 546(a)(2) from filing its Complaint.

20-03039 View
03/03/2021

In re: Nick Brunstein and Judith Driskill-Brunstein

Summary:  The Debtors filed their First Amended Plan where they provided to pay the Creditor’s claim at 0% interest. The Creditor objected and asserted that under Till v. SCS Credit Corp, 541 U.S. 465 (2004), the Plan needed to be amended to provide for the present value of its claim, with interest as calculated under Till. The Debtors opposed the payment of additional interest, asserting that the Creditor would receive more than it would under the original contract.

            The Creditor’s objection raised two issues. The first issue was whether the Debtors were required to pay interest at all under Till. In sustaining the objection in part, the Court found that Debtors were required to pay interest under Till. The next issue became what the appropriate dollar amount of interest the Creditor was entitled to under Till. In overruling this part of the objection, the Court found that the Creditor had not established the method of determining the total amount of interest to be repaid and granted the debtors time to file an Amended Plan to which the Creditor could object.

20-30542 View

Pages