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Also that they can move that the case be dismissed with prejudice. Whether he can waive an individual debtor's attorney client privilege for prepetition communications is presently uncertain. The Court concluded that "the right to assert, or to waive, the attorney-client privilege, passes from the debtor to a bankruptcy trustee where . The Court held that "any attorney-client privilege which the debtor had passes by operation of the law to the bankruptcy trustee." that the debtor's position was argued primarily by the insurance company lawyers who defended the debtor in the wrongful death action. If a vacancy occurs, a new trustee will be elected or appointed under 703. Chapter 11 Trustee Section 1104 governs the appointment of a trustee or examiner in chapter 11 cases. Amount of Secured Claim Section 506 determines the amount of a secured claim. Finally 364(d) allows a second lien to be given to obtainadditional credit as long as adequate protection is given to the existing lien holder. Section 361 protects a broad range of creditor interests and will depend on the factual situation in each case concerning both the nature and the use of the collateral. The statutory scheme of Section 361 indicates that adequate protection is intended to encompass a broad range of creditor interests and does not mandate an interpretation of the creditor's interest as a whole of the economic bargain. A party in interest may move for relief of the stay, which the court will properly grant after notice and a hearing. In addition, the court ruled that Creditor is entitled to relief from the stay pursuant to §§362(d)(3) because the real property collateral is single asset real estate and Debtor failed to file a plan of reorganization or make monthly payments to secured creditors within the ninety day period prescribed by the code section. In Debtor's Chapter 13 plan, she treats the debt by providing that it will be paid outside of the plan by her estranged husband. The Court denied Creditor's Motion for Relief from the Automatic Stay. Furthermore, the Court held that, in addition to the relief granted under §§1301(c), the Bank was also entitled to a modification of the automatic stay for purposes of completing its Foreclosure Action. Reaffirmations are related to Redemptions and the concept of "Ride Through".

Creditors should note that they can move for dismissal under 1307 or 1112. If control over that privilege passes to a trustee, it must be under some theory different from the one we embrace in this case. The Court found that neither the attorney-client privilege, the work-product doctrine nor the constitutional rights asserted by the debtor, bar the production of documents requested by the trustee from debtors' counsel. it involves recovery of assets of the estate in the nature of pre-petition civil action." , 216 B. The trustee was attempting to depose the debtor to determine if the estate might have a cause of action for bad faith refusal to settle and malpractice against the liability insurance carrier and appointed attorney of the debtor. A candidate is elected the new trustee if 20% of those unsecured creditors vote for him and he receives a majority of votes of the creditors who hold a majority of the claims. If the creditor is unhappy with the trustee, then that creditor may be able to get the trustee removed or later take legal action against the trustee. Determination of Secured Status and Valuation of Security Interest C.1. Section 506 is intertwined with 361 as the valuation of the collateral is very important in determining if the creditor is adequately protected.363(e) provides that the court will stop the sale/lease of property to maintain adequate protection. The following could provide adequate protection: a large equity cushion, requirement of payments to the creditor, or a interest in a stream of future rents. Obtaining relief from the Automatic Stay Relief from the automatic stay is governed by 362(d). The Court found that the potential sale of the real property was too speculative. Creditor having a claim against Debtor's estranged husband secured by a note on which Debtor is not liable sought relief from stay to pursue foreclosure of the collateral in Debtor's possession. The Court held that because the Note clearly showed that the third party was the real owner of the property, and Debtor was in reality the cosigner on the obligation, the Bank should be granted leave to seek recovery from the party who received the benefit of the transactions. If the reaffirmation is not evidenced by the proper paperwork, the reaffirmation can be annulled. Generally, courts construe objections to the debtor's discharge against the objector and liberally in favor of the debtor.

As it relates to creditors or other parties in interest, they may make a motion to convert a case under Chapter 7 to only Chapter 11. The Fourth Circuit held that the court could dismiss the Chapter 11 case or reconvert the case to a Chapter 7 if it found subjective bad faith or that the Chapter 11 was objectively futile. Local Rule 2081-1(c) of the South Carolina Bankruptcy Court provides that a debtor has 180 days from the date of the petition to file a plan and disclosure statement.

See Section 706(b) (allowing for conversion to Chapter 11); Section 706(c) (prohibiting conversion to Chapter 12 or 13 without debtor's consent). H11,098 (September 28, 1978); S.17414 (October 6, 1978). From Chapter 7 to Chapter 13 A Chapter 7 Debtor may convert his case to a Chapter 13 even after the debtor has received a Chapter 7 discharge. However, the Fourth Circuit also held that the debtor was entitled to a hearing on the issue of objective futility. From Chapter 13 to another Chapter Section 1307(a) gives the debtor an absolute right to convert a Chapter 13 into a Chapter 7. 3/30/2001), the South Carolina Bankruptcy Court, the Court found that sufficient cause existed to convert the Chapter 11 case to a Chapter 7 through a two-step process: (1) the Court examined whether "cause" exists to dismiss the Chapter 11 proceeding or convert it to a Chapter 7 and (2) the Court examined whether to dismiss or convert was in "the best interest of creditors and the estate." The Court found the following facts supported conversion (1) there had never been any prospect of rehabilitation of Debtor's business, (2) during the bankruptcy case, Debtor had continued to borrow substantial sums of money beyond its revenues from its primary secured creditor and post-petition lender for the stated purpose of preserving and eventually selling its assets for the benefit of all of its creditors, (3) the format of borrowing was approved based upon the assurances of counsel and the representation that the liquidation would be quick, to minimize expense, and produce a dividend to unsecured creditors; however, the delay in the case was overall unreasonable and while Debtor had incurred a significant post-petition debt, only limited sales had taken place; (4) debtor failed to timely act in regards to the motions filed in the case requesting the Court's approval of the post-petition financing agreement and borrowed funds prior to court approval and (5) the Court was further concerned that the arrangement involving the payment of Debtor counsel's fees tainted his independence in the case. If the debtor fails to meet this deadline, this alone justifies the conversion or dismissal of a case.

7/9/99), the Court held that the debtor was precluded from challenging a pre-petition state court award of attorney's fees pursuant to the Rooker-Feldman Doctrine. The Court reasoned it was not barred because (1) the waiver provision was operative only in the event of Debtors'' default of the agreement and the Court found that Debtors complied with the agreement; (2) the state court did not determine the issue of the automatic stay''s applicability; and (3) the waiver agreement is not self-executing but is only one factor a court considers when determining whether relief from stay is appropriate. However, the Court recognized that the debtor had raised a significant question regarding whether the service of the Summons and Complaint in the foreclosure action was effective. In determining damages, the Court considered the effect of the dismissal of the case and held that the vacation of the dismissal did not retroactively reinstate the automatic stay during the period when the case was dismissed; however, by reinstating the case, the automatic stay was simultaneously reimposed from the date of reinstatement. Creditor motioned for relief from the automatic stay with respect to Debtor's collateral, a 5.7 acre vacant parcel of land generating no income, as well as collateral pledged by a third party who had not filed for bankruptcy protection. The question of when a tax is assessed is a matter of federal law, so that when federal taxes are in dispute, the Court must look to the definition of the Internal Revenue Code, which provides that assessment is the notation in the Secretary of the Treasury's records. Gleissner Section 523 provides that certain specific obligations of the debtor may be excepted from discharge under two conditions.

2/21/97)(JW) Section 362(d)(1) and state family court concurrent jurisdiction; Court modified automatic stay to allow the state family court to decide issues related to support, equitably division of marital property and to allow the debtor to obtain a divorce decree. The Court first decided that neither res judicata nor the Rooker-Feldman doctrine barred the Court from determining the case. 1/12/98)(JW) Section 362; The Court denied a creditors motion for relief from the stay in a Chapter 13 case even though the case was a second filing. As a result, the Court concluded that such facts constituted sufficient "cause" to grant relief from the stay pursuant to §§362(d)(1). The Court found Creditor in contempt and again ordered it to return the vehicle immediately to Debtors. 21, 2001)(JW) Section 362(d)(1), (d)(2), and (d)(3), Relief From Automatic Stay. All property taxes due in the year before the commencement of the case also receive 8 priority. Objections to Discharge under Section 523 By Richard R.

9/17/01)(JW) Section 542(a), Turnover; and Section 362, Violation of Automatic Stay. 1995)(JW) Section 362; Waiver of Stay; A prepetition forbearance agreement that was executed by a Chapter 13 debtor-mortgagor and a mortgagee and which contained a waiver of stay provision did not continue beyond the cure of default that existed when the agreement was entered. Debtor also argued that the post-petition validation of the recording would prevent Debtor of his ability to file an avoidance action under §§544. If the executory contract or lease is in default, the Trustee still may assume the contract or lease, but the trustee must either cure, compensate, or provide adequate assurance of future performance under the lease. The court uses a business judgment standard in determining whether to approve a rejection, assumption or assignment. To recover fees the lessor must demonstrate that the lease contains a clear contractual provision allocating the right to collect fees, the provision is lawful, and that the lossess are for actual pecuniary lossess resulting from the defaults under the lease - attorneys actions were taken primarily to collect sums due under the lease or to enforce an obligation of the leasee. If the debtor delineates all of his funds, then that last subsection's creditors are paid pro-rata. The 9 priority subsections are as follows: Priorities should be given a narrow, strict interpretation. Such things as a prepetition pension plan, lump sum employment contracts and criminal fines or environmental penalties are not administrative expenses. "Creditors may not claim lump sum payments, as administrative expenses, due upon termination pursuant to their employment contracts with the debtor because (1) the claims did not arise from a transaction with the debtor possession; (2) the consideration supporting the right to payment was neither supplied nor beneficial to debtor in possession; and (3) the payments were not actual and necessary costs and expenses of preserving the estate." Cir. The total amount allowed is now ,650.00 (the maximum amount allowed under subsection 3) multiplied by the number of employees covered under the plan less the actual distributions these employees previously received under subsection (a)(3). Unsecured claims of those who raise/store grain or are fishermen -Each such individual may have a priority claim of up to , 650.00. Consumer Creditors priority -This priority is for consumers who have deposited money for the purchase, lease or rental of property or services. With the recent change relating to the Individual Retirement Account (an "IRA"), providing for an unlimited exemption for IRA's under South Carolina law, we may see an increase in pre-petition planning by debtor. With this increase in pre-petition planning, we may see an increase in complaints objecting to the discharge of the debtor's obligations.

Debtor argued that if the automatic stay was annulled in this case, the creditor would be permitted to better its position post-petition in that its lien would be perfected against third parties. Subsections (b), (c) and (d) state limitations on the Trustee's power to assign or assume a lease or executory contract. Section 365(b)(1)(B) does not create an independent right to a fee award. Practice dictates that each subsection of 507(a) is to be fully paid to the creditors before moving on to the next subsection. Administrative expenses also may include bank charges, insurance, assumed lease obligations, leases, executory contracts. Unsecured Claims under 502(f) - in involuntary cases claims that arise after commencement but before the order of relief that arise in the ordinary course of the debtor's business or financial affairs receive priority status. These claims arise with all types of employees from the traditional to home nursing care workers. Unsecured claims for contributing to an employee benefit plan -These claims must arise from services given within 180 days before the filing of the petition or the end of the debtor's business. 1987) (judgment creditor may attach IRA account as not exempt from alienation). Subrogation may occur in relation to nondischargeable taxes, as discussed below and when the debts ordinarily would not be dischargeable but they are paid by some insurance company or surety.

That court held: The right to assert an attorney-client privilege is acquired by the trustee in bankruptcy in a situation where. trustee has become entitled to and the estate is owner of assets in the nature of a debtor's pre-petition causes of action against third parties. The Court concluding that the trustee could waive the privilege and held: when the trustee seeks to determine whether the bankruptcy estate holds a cause of action against an insurance company and the attorney it appointed for potential bad faith in settlement and malpractice during a state court case, which judgment precipitated the debtors' bankruptcy, the trustee holds the right to waive the attorney-client privilege. If a creditor is uncomfortable with the appointed trustee, the creditor can then call for the election of a new trustee under Section 702. The trustee must also monitor payments under the plan. Adequate protection may be achieved by using cash payments, replacement liens, or any other method that provide an equivalent of the entity's interest in property. Relief from the Automatic Stay for Lack of Adequate Protection. Debtor argued that the real property collateral will appreciate in the future and that its later sale will be the only way for him to reorganize. The Bank was the holder of a second mortgage lien on a parcel of real property. Reaffirmations should contain an attorney affidavit whereby the attorney states that he examined and investigated the reaffirmation to his client.

A conversion constitutes a new order for relief, but does not change the petition's filing date.

Effect of Conversion The effect of Conversion is governed by Section 348. Lastly, under 348 (f) if a debtor converts a chapter 13 into a chapter 7 the property's valuations and allowed secured claims will apply in the converted case (reduced by the amount paid in the Chapter 13). Cases often show that dismissal may not be always appropriate where the debtor acted in bad faith or is abusing the bankruptcy system and the dismissal will only serve to injure creditors.

Since the debtor has the absolute right to dismiss, most creditors do not seek to convert the case to another Chapter. The moving party bears the burden of showing cause for the conversion.

Nevertheless, Section 1307(c) does provide certain enumerated reasons for converting the case to Chapter 7 or dismissing the case in the best interests of the creditors if the moving part can show (1) unreasonable delay (2) nonpayment of the required fees and charges (3) failure to timely file a plan; (4) failure to commence making payments; (5) denial of confirmation; (6) a material default; (7) revocation of the order of confirmation; (8) termination of the current plan pursuant to its own terms; or (9) if the U. Trustee's office requests conversion because of the debtor failure to provide certain required information. Similarly, the case can be converted to Chapter 11. If the debtor is a farmer, the case cannot be converted without the debtor's consent. A court may convert a case from a Chapter 11 to a Chapter 7 if the debtor seeks Chapter 11 protection for subjective bad faith or if the case is objectively futile.

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