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.
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|Date Filed||Summary||Case Number|
In re: HIE of Effingham LLC
Summary: This case involved three issues: (1) whether notice of a proposed abandonment of property must be given to all creditors; (2) whether statements regarding the validity of a lien made by a Chapter 11 debtor-in-possession in an order conditioning use of cash collateral are binding on a subsequent Chapter 7 Trustee seeking to avoid the lien pursuant to 11 U.S.C. § 544(a)(3); and (3) whether a mortgage that fails to recite the interest rate and maturity date of the underlying indebtedness is sufficient to impart constructive notice of an interest in property to a subsequent bona fide purchaser.
As to the issue of abandonment, the Court held that the express language of Rules 6007(a) and (b) and §§ 554(a) and (b) of the Bankruptcy Code requires that all creditors receive notice of proposed abandonment, regardless of whether the abandonment was sought by a trustee, a debtor in possession, or a creditor. In addition the Court acknowledged that generally, orders granting abandonment are considered irrevocable. However, irrevocability of an abandonment order is predicated on the assumption that the abandonment was properly granted in the first place. Where notice is not given to all creditors, a proposed abandonment is ineffective.
The Court rejected the defendant’s assertion that the debtor in possession had waived the estate’s right to challenge the validity of the mortgage lien. The Court reasoned that a determination in a cash collateral order that a lien is valid is not equivalent to a determination that such lien may not be avoided in subsequent litigation.
As to the complaint to avoid the mortgage pursuant to § 544(a)(3), the Court rejected the Trustee’s argument and granted the defendant’s motion to dismiss. The Court determined that the language of § 11 of the Conveyances Act is permissive rather than mandatory and that the failure to include the interest rate and maturity date of the note was not necessarily fatal to the mortgage. Instead, the Court looked at the quantum of information that was provided and determined that it was sufficient to apprise the Trustee of the defendant’s interest. The Court further reasoned that even if state law required a mortgage to include the interest rate and maturity date, this information was incorporated by reference to the underlying note.
In re: Newberry v. United States of America et al
Summary: Chapter 7 debtor filed a complaint against the United States Department of Agriculture and the United States Department of the Treasury for offsetting the debtor’s tax refund against an obligation owed by the debtor and her former spouse for a mortgage deficiency judgment. The setoff occurred after the debtor filed bankruptcy, but before the United States sought relief from the stay. The Court held that the United States had a valid right of setoff, but reserved ruling on the question of whether debtor was entitled to damages.
In re: Robert Bruegge v Farmers State Bank of Hoffman
Summary: The Chapter 7 trustee filed a complaint to avoid the mortgage lien of Farmers State Bank of Hoffman pursuant to 11 U.S.C. § 544(a)(3). The trustee argued that because the defendant’s mortgage did not state the interest rate or maturity date of the underlying note, it failed to comply with § 11 of the Illinois Conveyances Act (765 ILCS 5/11) and, therefore, did not impart constructive notice to a third party such as the Trustee. In rejecting the trustee’s argument and granting summary judgment in favor of the defendant, the Court held that the (1) the terms of § 11 are permissive rather than mandatory and failure to include the interest rate and maturity date is not necessarily fatal to the mortgage; (2) the defendant’s mortgage incorporated the interest rate and maturity date by reference; and (3) the information contained in the defendant’s mortgage was sufficient to apprise the trustee of the defendant’s interest.
In re: Michelle Nordike
Summary: The Court held that the express language of Rules 6007(a) and (b) and §§ 554(a) and (b) demands that all creditors receive notice of a proposed abandonment, regardless of whether the abandonment is sought by a trustee, a debtor in possession, or a creditor or other party in interest. This requirement was not modified by Local Rule 4001-1 or by the history of practice in this District. In addition, the Court held that the abandonment provisions of the order granting Carrollton’s combined motion were revocable even though orders granting abandonment generally are considered irrevocable. The Court reasoned that the irrevocability of an abandonment order is predicated on the assumption that the abandonment of estate property was properly accomplished in the first instance.
In re: Anthony J. Filarski
Summary: Debtor’s objections to claims were sustained when the creditor failed to file a timely response. Creditor moved for reconsideration of the order sustaining the objections. The motion to reconsider was granted since the creditor moved for reconsideration only one day after the order was entered, neither party would be prejudiced by reconsideration, the creditor’s motion was filed in good faith, and reconsideration did not impede the effective administration of the case
In re: Merna Kuhl
Summary: Chapter 7 trustee filed a motion requiring the debtor to turn over the value of funds in three bank accounts that she jointly owned with non-debtor family members, and that were funded exclusively by the debtor's non-filing spouse. Court found that debtor exercised control over one of the accounts. Trustee's motion granted in part and denied in part.
In re: Yolanda Ross
Summary: Chapter 7 debtor filed an application to waive the filing fee. Trustee objected and argued that when comparing debtor's income to the official poverty guidelines, the Court must consider the debtor's gross income. The Court held that based on the procedures established by the Judicial Conference of the United States, it is the debtor's net income, not gross, that must be considered. The trustee's objection was overruled and the application was granted.
In re: Ronald Earl and Lisa Marie Stephens v Regions Bank
Summary: Chapter 13 debtors sought to avoid the second mortgage on their home on the basis that the first mortgage exceeded the property’s value. Regions Bank, the second mortgage holder, moved for summary judgment, arguing that the first mortgage encumbered only the interest of Ronald Stephens and not that of the joint debtor, Lisa Stephens. The Court held that the mortgage encumbered Lisa’s one-half interest in the property, leaving no equity to support the Bank’s second mortgage. The motion for summary judgment was denied and judgment was entered in favor of the debtors.
In re: Banterra Bank v Gary and Trudy Crocker
Summary: The bankruptcy court issued various rulings relating to confirmation of a chapter 13 plan and a creditor’s failure to object, including, but not limited to, the following: (1) denied creditor’s objection to the first amended plan, (2) approved the second amended plan, and (3) denied creditor’s motion to convert or dismiss. Creditor appealed, raising seven issues. District court affirmed the bankruptcy court’s order of confirmation in its entirety.
In re: Peoples Nationals Bank NA v Cort and Lisa Jones, et al
Summary: This is a district court decision reversing and remanding, and holding that Illinois law requires a mortgage to describe the nature of the debt secured, amount secured, due date and interest rate.